Nashville, Tenn.-Starting Jan. 1, getting the sales tax exemption on fertilizer and other farm inputs in Tennessee will require certification by the state revenue department. That’s fine with agriculture interests, but in some cases the word hasn’t been spread to those who will need the certificate. “We’re very nervous about that,” Tennessee Farm Bureau spokeswoman Redone Rose told Green Markets. Rose said an informal survey of the 350 delegates at the Farm Bureau’s recent annual meeting found that 20-25 percent had not received applications sent out by the state. Some were among the state’s largest farmers. She said the department pre-identified about three quarters of those known to qualify for the certificate, but others need to get on the website or get an application from their farm store and send it in, because dealers will be required to see the certificate and keep a copy on file. The “Agricultural Sales and Use Tax Certificate of Exemption Program” is part of a streamlined sales tax system that’s been in the work for five years by Tennessee and 42 other states, plus the District of Columbia and local governments. Business is interested in more simplified and uniform laws for easier compliance in all states. But one state legislator, Rep. Phillip Pinion, warned that hobby farmers, individuals who raise horses, and others may be upset when they might have to start paying as much as 9 3/4 percent in state and local sales taxes on their farm store purchases. They may not qualify for the exemption. “I think we’re going to hear a whole lot more about it,” Pinion added. Sales tax exemptions are also on the minds of farmers in Arkansas, where Gov. Mike Beebe has indicated he may eliminate the remaining 3-cent levy on groceries in 2008. He won’t know for sure until his advisers produce their economic forecast. Beebe, however, told Arkansas Farm Bureau members at their recent state convention not to worry about eliminating the exemption on farm inputs. He thanked them for supporting him on halving the 6-cent grocery tax, and promised that any future plans would not affect tax exemptions on farming products such as seed and fertilizer.
U.S. Gulf/Tampa: Import ammonia prices were moving up fast and furious last week, at least at non-Tampa locations, with reports of new business as high as $445/mt DEL. This was for a cargo sold by PCS Sales for first-half January. A second-half cargo was also reportedly sold, but was to be priced later. In addition, PCS was reported to be on the buying end of a December cargo in the high $430s/st FOB.
As Green Markets went to press there was no firm word on new business at Tampa, which was last done at $359/mt DEL. Speculation was that buyers would wait as long as they could before pulling the trigger on higher prices based on the new numbers across the Gulf. One observer surmised last week that they would be lucky to get away with $450/mt DEL, which would be a $91/mt increase.
Much of the price momentum was attributed to the Black Sea market, which was reported to have hit as high as $400/mt FOB. Sources predicted that that particular cargo may be destined for the U.S., and may have a delivered value of nearly $500/mt DEL by the time it hits the U.S. Gulf.
In the meantime, sources say it is hard to find any barge material in NOLA on which to base a price. The previously done $350/st FOB now appears too outdated. Reports of $425/st FOB have been circulating in recent weeks, without much confirmation.
Eastern Cornbelt: The ammonia market was quoted at $600-$620/st FOB regional terminals for spot tons, with the low reported in Illinois and the upper numbers in Ohio. Spring prepay was pegged at the $630-$635/st FOB mark for confirmed sales, with some suppliers referencing a $650/st FOB level for prepay ammonia.
Western Cornbelt: Sources continued to quote spot ammonia pricing in the $590-$620/st FOB range in the region, with delivered ammonia in Missouri pegged at $620-$625/st from southern production points. An Iowa source reported spring prepay ammonia being offered at the $635/st FOB level last week, while Nebraska sources quoted limited prepay offers for as low as $605/st FOB spot locations in the state.
Effective Dec. 7, Agrium’s ammonia postings in the Leal, Velva, Grand Forks, and Beulah sales area in North Dakota firmed to $655/st FOB and $675/st DEL.
Southern Plains: Anhydrous ammonia was pegged at $540-$550/st FOB regional production points for cash tons, where available. One source said spring prepay was offered earlier in the month at the $550/st FOB mark, but most sources who talked of current prepay offers last week quoted a $555-$565/st range FOB production points. Out of pipeline terminals in Kansas, the ammonia cash market was pegged at roughly $575/st FOB to the dealer.
Effective Dec. 5, Agrium’s anhydrous ammonia postings firmed to $580/st FOB Clay Center, Kan., $575/st FOB Conway, Kan., $570/st FOB Mocane, Okla., and $550/st FOB Borger, Texas. Agrium’s delivered ammonia postings in Texas from the Borger facility moved on that date to $575/st north of Interstate 40 and $580/st south.
South Central: Anhydrous ammonia was pegged at $545/st FOB Memphis, Tenn., to the dealer, with the upper end of the range at the $575/st mark FOB Henderson, Ky.
Black Sea: The ammonia producers are closing the year with a bang. Reports were plentiful that the price has reached $400/mt FOB. Other recent trades were reported to have been within the $380-$390/mt FOB range.
An Asian source noted that with the U.S. Gulf prices moving up and European producers shutting down, the sky is the limit on Yuzhnyy prices. Add to the mix the news that Gazprom will be charging Ukraine $179.50/thousand cubic meters for its natural gas.
European demand is up because of the increases in natural gas prices. For the past couple of months European ammonia producers have not been able to turn out ammonia at levels competitive with the Black Sea suppliers.
Material from the Black Sea has added costs. The delay in shipments through the Bosporus Straits is adding a built-in delay to some deliveries.
Turkey restricts the flow of ammonia vessels through the straits to one ship at a time, and only during daylight hours. With shorter days through the winter, the number of vessels that can transit the waterway is reduced accordingly.
Best estimate for prices is now pegged at $380-$400/mt FOB.
Middle East: Producers are sold out. And this time, said one trader, they really mean it. In the past most producers would feign full books until some extra money was placed on the table. In the past week, however, no amount of money offered to a number of producers was able to shake free extra tons.
Finally, sources say, Mitsui was able to pick up a cargo at $335/mt FOB from Qafco. And with that purchase, the last of the non-contracted tons was gone.
Reports are circulating that at least one contracted cargo from Iran had to be cancelled because of the delays in getting the IPCC #3 plant up and running.
Many of the tons that were to have been loaded this year were covered through swap deals with other producers. And now the IOUs are growing to a point that no spot tons are expected for the first quarter.
Adding to the pressure on supplies is increased demand from Europe.
The Middle East suppliers will end the year with record high prices, now pegged at $335-$345/mt FOB.
India: Buying is expected to remain high. The 2007 purchases exceeded expectations, as DAP producers looked for material to satisfy a hungry domestic market.
The buyers are disappointed that prices are not expected to come off as more facilities in the Middle East open. Indian buyers are facing competition from buyers throughout Asia, and especially China.
Asia: In Korea, Namhae has reportedly settled its contracts for 2008 – but no one is willing to discuss particulars.
Still in talks are negotiators from SFC and various trading houses and suppliers. Sources expect to see contracts concluded by the end of the year.
By and large, buyers in Asia are complaining about the ever-increasing price of ammonia, but no one is howling. Sources say the end users are able to successfully pass on the increased costs to their customers.
This is in sharp contrast with the way the market moved a few years ago, when each dollar increase in price was fought with tenacity similar to two dogs competing for the same bone.
New and upgraded facilities in China continue to pull more tons to the Middle Kingdom.
The Bayer plant in Shanghai is expected to need 80-100,000 mt/y, representing nearly a one-third increase in demand. Other production facilities up and down the coast are also looking to increase their take of ammonia in the next year.
Lastly, industry players will be meeting in Bali, Indonesia, for the annual IFA Asian regional conference this week. Sources expect the record high prices will be a general source for discussion.
Traders keep looking to Indonesia for help.
It seems KPA and KPI are oversold. The Japanese partners in these plants are said to be looking to the state-owned companies to pick up extra tons to cover their contracts. At the same time, traders looking to grab some spot tons are also wooing the same firms.
UREA
U.S. Gulf: Granular barge prices caught their breath and moved up last week, with most players calling new prompt sales within the $435-$445/st FOB range. January was being called $445-$455/st FOB.
Prills were also reported to be moving up, with sources calling them $415-$435/st FOB.
Eastern Cornbelt: Granular urea was pegged at $475/st FOB in Illinois to the dealer. Ohio sources pegged the Cincinnati market at $475-$490/st FOB, depending on supplier.
Western Cornbelt: Granular urea pricing continued to firm, with the dealer market pegged at $465-$475/st FOB in the region. The low was reported FOB St. Louis, Mo., while the upper end of the range reportedly reflected dealer list prices in Iowa.
Southern Plains: Granular urea was quoted at $455-$465/st FOB the Tulsa market last week, with the upper end reflecting dealer postings.
South Central: Granular urea pricing was up from last report at $455-$465/st FOB regional terminals.
Southeast: Granular urea was pegged at $460-$475/st FOB port terminals. List prices included $470/st FOB Savannah, Ga., $480/st FOB Wilmington, N.C., and Brunswick, Ga., and as high as $495/st FOB Norfolk, Va.
China: Rumors are circulating that the central government may alter the export duty. Reports vary from a raise in the tariff to an extension of the existing 30 percent rate through the entire year.
One trader said he heard from his Chinese sources the government is considering raising the tariff to 40 percent. Again, variations on this theme include having the new rate for the first three quarters of the year and then lowering it to an as of yet undetermined amount for the last quarter, to keeping the higher rate all year.
Domestic prices are combining with international demand to push prices higher. The current export level is pegged in at $350-$360/mt FOB.
The government had originally imposed the 30 percent duty to make Chinese urea less attractive to the export market and help ensure cheaper material for local farmers. With the dramatic increase in global prices and strong demand for Chinese product, sources say it remains popular even after the 30 percent duty is calculated into the final delivered price.
An increase in the export duty will only raise the global price, said one observer, rather than reduce the demand for Chinese tons for foreign buyers.
India: Buyers are out knocking on doors again. Sources say traders and producers from Egypt to Indonesia have been approached. The last tender only netted India an additional 150,000 mt at a time when the best estimates said the country needed to end the year buying 500,000 mt. As a result, sources say another tender could be called as early as this week.
The demand from India is expected to be the main topic of discussion at the IFA regional conference in Bali, Indonesia, this week.
Part of the discussions will be how many tons the Indians actually need and how much longer record high prices will hold on. Sources say the Indians might be willing to go to the $430s/mt CFR, a price level rejected in the last tender. The problem is that Middle East producers are now looking at the $440s/mt CFR.
At the same time, Chinese prices have moved up to the $430s/mt CFR. The price could go even higher if the Chinese government raises the export duty, as one rumor states it will.
All in all, prices that were rejected just a couple of weeks ago have now become the floor.
If talks with traders and producers are successful, say sources, Indian buyers will end up settling in the $430s/mt CFR. One trader noted only Chinese urea fits the bill at that level. Middle East tons are much higher, if producers hold to their $410/mt FOB pricing idea from the last tender.
And sources say there is no reason the Middle East suppliers should back down.
One observer noted that while India needs more tons to meet the basic requirements for the application season, he is not sure the buyers need to take the full 400-500,000 mt that is tossed about.
One source said if India can hold off, there is a chance the market could soften as the first quarter 2008 progresses. Others say, however, the possibility of a higher Chinese export duty and demand from the rest of the world could keep prices up a bit longer. By the time India is forced into the market again, sources say, other countries could also be in a buying mood and the price could shoot even higher.
Middle East: Industry observers are in general agreement that the producers have full order books into January. With the Black Sea too expensive for competition into Asia and China raising its prices beginning Jan. 1, the Middle East cargoes that come available will be competitive.
Sources say Indian buyers are knocking on doors looking for some pre-tender deals below the $410/mt FOB offered in the last tender. Observers note that even though the producers are publicly saying $410/mt FOB is now the floor, the Indian buyers are not being shown the door when they suggest something just a little lower.
One trader, speculating on what India is facing, noted that even if the producers accepted a bid of $400/mt FOB, it would still mean a minimum delivered price of $435/mt CFR.
The Indians rejected anything over $410/mt CFR in the last tender.
There are now growing reports that the $410/mt FOB offered in the last Indian tender is now a thing of the past.
One producer reportedly sold a cargo to Koch for the U.S. market at $412/mt FOB. It is unclear if the rest of the producers will be willing to slide back in the face of continued demand, even for the sake of lining up sure business with a long-time client such as MMTC or IPL.
For now, the market in the area is pegged at $405-$415/mt FOB.
Black Sea: Sources say the buying frenzy is taking a breather. Reportedly, Latin American buyers have eased off their requests. Sources say, however, this is most likely more tied to the upcoming holiday season than to any slackening in demand.
Buying was fast and furious during the past few weeks. Observers say the orders on the books will satisfy buyer and seller needs into January. Come the middle of January, however, industry sources expect to see renewed interest in tons for Latin American and Turkish buyers.
Reports that prices have softened were dismissed by traders. The best correction anyone could point to was a report that $395/mt FOB was done. That deal, however, was quickly eclipsed by reports of $400/mt FOB serving as the lowest bid producers will accept.
As of last week the price was pegged at $395-$405/mt FOB, with doubts the $395/mt FOB could be repeated.
NITROGEN SOLUTIONS
U.S. Gulf: Prompt barges were hard to find. The last done were put within the $325-$340/st FOB ($10.15-$10.63/unit) range. Buyers were reportedly offering as high as $350-$355/st FOB for prompt business, but were finding no sellers at those numbers.
Eastern Cornbelt: Sources in Illinois and Ohio pegged the UAN market at the $11.25/unit FOB mark for cash or prepay last week.
Western Cornbelt: UAN-32 was also continuing its climb, with most sources quoting the dealer price last week at $360-$370/st ($11.25-$11.56/unit) FOB regional terminals.
Southern Plains: UAN was in very tight supply, with reports that some suppliers had pulled in their pricing due to lack of availability. Where available, the UAN market was quoted in a broad range at $10.71-$11.43/unit FOB regional terminals last week, with the lower numbers reported out of production points in Oklahoma on a spot basis. One supplier talked of recent spring prepay sales of UAN-32 at the $370/st ($11.56/unit) FOB level, and there were reports of spring prepay being offered as high as $380/st ($11.88/unit) FOB in the Texas panhandle.
South Central: The UAN-32 market in the region had firmed from last report, with dealer pricing tagged at $335-$345/st ($10.47-$10.78/unit) FOB terminals to the dealer.
Southeast: The UAN-30 market was quoted at $300-$305/st ($10.00-$10.17/unit) Norfolk and Wilmington, but sources said incoming vessels will push that price up due to higher replacement costs. As for new vessel sales, sources said business has been done in the high-$360s/mt C&F, with indications that the next round will take place in the high-$370s/mt.
AMMONIUM NITRATE
U.S. Gulf: While firm word on new business was hard to find, price ideas were certainly up. Two cases in point: Terra raising its Mississippi postings to $355-$370/st FOB for non-barge product, and importers touting forward sales into the first quarter of $370/st FOB.
Western Cornbelt: Ammonium nitrate was pegged at $380-$385/st FOB in the region, reflecting another increase from the prior week.
Southern Plains: Ammonium nitrate was tagged at $360-$365/st FOB Catoosa, Okla., up roughly $25/st from last report.
South Central: Ammonium nitrate pricing continued to climb, with the terminal market quoted at $335-$365/st FOB in the region last week. Most dealer quotes were in the upper half of that range for new sales. Effective Dec. 17, Terra’s list prices for ammonium nitrate will firm $20/st to $355/st FOB Yazoo City, Miss., and $370/st FOB McComb, Miss.
Southeast: Ammonium nitrate remained firm at $335/st FOB Tampa, Fla.
AMMONIUM SULFATE
Eastern Cornbelt: Granular ammonium sulfate was pegged at $245-$250/st FOB.
Western Cornbelt: Granular ammonium sulfate remained at $245-$250/st FOB regional terminals to the dealer. Agrium’s ammonium sulfate postings will firm on Jan. 1 to $272/st DEL in Minnesota, Wisconsin, and the Dakotas.
Southern Plains: Ammonium sulfate was up $10/st from last report, with granular product quoted at $220-$250/st FOB in Texas. Postings FOB Plainview, Texas, moved up on Dec. 10 to $250/st for granular, $240/st for coarse, and $225/st for standard, with another increase likely in January.
American Plant Food Corp.’s ammonium sulfate postings in Texas also moved up on Dec. 10. New reference prices for granular sulfate include $220/st FOB Freeport, $230/st FOB Galena Park, $240/st FOB Fort Worth, and $250/st FOB Littlefield. Coarse ammonium sulfate postings moved on Dec. 10 to $205/st FOB Freeport, $215/st FOB Galena Park, $225/st FOB Fort Worth, and $235/st FOB Littlefield. APF’s standard ammonium sulfate postings moved on that date to $195/st FOB Freeport and $225/st FOB Littlefield, and N-Pac Compacted sulfate firmed to $235/st FOB Galena Park.
South Central: Granular ammonium sulfate was reported in a broad range at $245-$265/st FOB, with the upper end reflecting the dealer price FOB Vicksburg, Miss. The low end of the range was reported in Arkansas.
Southeast: Granular ammonium sulfate was quoted at a firm $250/st FOB Hopewell, Va., and Augusta, Ga., with the former location reportedly offering prepay at that level for a small program effective Dec. 4. DSM Chemicals postings since Nov. 19 include granular sulfate at $275/st DEL in Florida, with standard grade sulfate listed at $195/st FOB Augusta for customers outside Florida, and $212/st rail-DEL in Florida.
Pacific Northwest: Effective Jan. 1, Agrium’s ammonium sulfate postings will firm to $277/st FOB and $282/st DEL in Washington, Idaho, Oregon, Utah, and Nevada. Delivered ammonium sulfate postings in Montana and Wyoming will also firm on that date to $282/st.
PHOSPHATES
Central Florida: As export and NOLA DAP barge prices continue to rise, watch for prices in Central Florida to soon follow. Sometime around the first of the new year, the asking price will likely climb by $20/st FOB or more, say sources. However, considering that neither Mosaic nor CF had any prompt phosphates to sell, the impact in the short term will probably be minimal.
The record high prices for phosphates were accurately predicted by exactly nobody. Prices will continue to increase until they reach the tipping point, when farmers will lose money by using them. For the time being both farmers and fertilizer companies appeared to be safe, as the prices of corn, soybeans, and wheat remain strong and threaten to go higher. The biggest threat in this country is the possible implosion of the ethanol market, but about five million fewer acres of corn are expected to be planted next year, which should help keep prices firm for that alternative energy.
Agrifos will begin a two-week turnaround in early February, which will temporarily shorten supplies – as if they were not already short enough.
Last week, no producers and only one trader made any sales of phosphates. The one trader’s deal was done on a delivered price using PotashCorp product from North Carolina, so the actual FOB price was not available and will not affect the price range.
Last week Central Florida DAP remained an even $500/st FOB, but don’t expect to buy any phosphates at that price. Mosaic has basically abandoned posting an asking price for DAP because of a lack of supply, but bumped its asking prices to $520/st FOB and $516/st FOB for MAP, which were still well below the export price. PotashCorp’s Central Florida reference price hiked its price to $510/st FOB from $490/st FOB, and CF’s asking price increased from $455/st FOB for DAP and $452/st FOB for MAP to $520/st FOB for DAP and $517/st FOB for MAP. MAP supplies were said to be essentially unavailable. In Texas, Agrifos’ truck price last week increased from $500/st FOB to $565/st FOB, and its rail price from $495/st FOB to $560/st FOB for DAP.
U.S. Gulf: Ice storms paralyzed life in much of the Midwest last week, as large trees shattered, power poles and lines tumbled, and roads closed. In those areas, business froze. Still, prices continued to climb.
Normally at this time of year, most fertilizer firms have spent more time decorating their offices and planning their menus for holiday parties than working, but there has been little time for that this year. Business in general has continued at a rapid pace, and no one wants to miss a chance to cash in on the upswing in the marketplace. The biggest drawback last week – besides the weather – was a lack of available prompt barges. With the shortage of barges warehouses became the target of buyers, and prices soared at that level as well. In the river system, warehouse prices rose to between $560-$575/st FOB, and prices were the highest in the closed river areas.
“Guys bought heavily and pushed the (phosphate) market from $450/st FOB to $550/st FOB” (in the past few weeks), a source said. “Those were fill tons, and now snow and ice have hit and there’s no field activity.”
Offers to sell last week were running from as low as $538/st FOB to around $560/st FOB, but actual sales were down. One source noted that many barges that were ordered before the huge run-up in price have yet to be loaded. When those barges hit the market, prices could stabilize. Some who have yet to fill for the spring will continue to wait to see if prices will fall before they make a move. However, at that point, logistics could become the biggest problem.
Based on actual sales last week, the NOLA DAP barge market rose to a new plateau of $550/st FOB, and will probably continue to rise at least into the new year.
Eastern Cornbelt: The regional phosphate market was in “uncharted territory,” according to one source. The heavy fall usage prompted some sources to speculate that spring demand would be down considerably from last year, but “apprehension and anxiety” remained about product pricing and availability. New dealer reference prices for DAP were reported at $560-$565/st FOB river locations, and up to $580/st FOB inland. MAP was roughly the same as DAP, and was in very tight supply.
TSP in Ohio was quoted at a firm $550-$570/st FOB warehouses. 10-34-0 was in very tight supply, with the market quoted at $460-$465/st FOB, where available.
Western Cornbelt: Phosphate pricing took a wild ride from the previous week, with both DAP and MAP up dramatically. One source reported booking DAP tons early in the week at a $545/st FOB level in Missouri, but by Thursday that number had firmed to $565-$570/st FOB. MAP, which was in tighter supply than DAP, was quoted at $555-$575/st FOB in the region by midweek.
10-34-0 pricing was marching up as well, with the regional market quoted at $440-$465/st FOB last week. The low end of the range was reported in Missouri, with the higher numbers in Iowa to the dealer.
Icy weather conditions pretty much put a halt to fieldwork in the region last week, but sources continued to talk of very heavy movement this fall. One source said volumes were well above last year’s numbers, and another reported a 20 percent increase in volumes and a 12 percent increase in covered acreage compared with 2006.
Southern Plains: DAP was quoted at $560-$565/st FOB Catoosa to the dealer, with reports of some suppliers referenced as high as $590/st to the dealer at the port. MAP was virtually nonexistent, but sources claimed spot sales, if any were to be had, would take place in the $575-$580/st range FOB the port. Those numbers were up dramatically from last report.
10-34-0 was also in very short supply, and sources reported little new business to test the market. As a result, some claimed the last sales took place at the $400/st FOB level, while others said dealer pricing had now firmed to as high as $450/st FOB in Kansas for any available spot tons.
Phosphoric acid postings from Agrium for December include superphosphoric acid (SPA) at $735/st rail-DEL and merchant grade acid (MGA) at $725/st rail-DEL in Colorado, Kansas, New Mexico, Oklahoma, and Texas. A $70/st increase is scheduled in January for both products, followed by $10/st per month increases in February, March, April, and May.
South Central: The phosphate markets were quoted in a very broad range, which reflected the rapid increase in price since last report. Sources quoted the regional warehouse market for DAP and MAP at $545-$565/st FOB to the dealer, with the low end of both ranges reported at Vicksburg. TSP was in an equally broad range at $505-$545/st FOB regional warehouses, where available. The upper end of both those ranges was roughly $80/st higher than last report.
U.S. Export: PhosChem’s deal last week to supply India with 500,000 mt of DAP was the major news in the export market last week. That was great news for the phosphate industry, but created fear in the remainder of the domestic market. PhosChem will begin making deliveries as early as February next year, and will continue through October 2008. Supplies for the spring season were already predicted to be tight, and that will not help, some complained. However, PhosChem pointed out that it has dedicated more phosphates for the domestic market this year and next year than normal. In part, of course, that has resulted because of higher domestic prices. However, world prices for phosphates have soared during the past year, and show no sign of slowing down.
The situation worldwide could worsen. The price of North African phosphate rock appears to be headed north of $200/mt, sulfur on the world market was also above $400/mt, and ammonia is hardly a bargain. Companies and countries that must import phosphate rock and buy sulfur at premium prices will be at a severe disadvantage and may have to curtail production until the situation changes, or lose money. U. S. phosphate producers are in a much better position than their competitors in the world. The large producers own their own rock supplies and buy molten sulfur in the Gulf well below the world market price for dry sulfur, so they can continue earning huge profits as prices rise. Even a major hike in sulfur prices during the first quarter would do little to hurt their profits.
PhosChem’s Indian deal will bring prices based on whatever the market price will be at the time of shipment, which was an indication high and higher prices were here to stay – at least for the next year. More than likely, two-to-four years, say sources.
In addition, PhosChem made a DAP sale of 4,000 mt into Central America at $590/mt FOB, and another DAP deal to ship 14,000 mt into South America at $597/mt FOB. The price for the next sale was set at $605/mt FOB, which will probably occur before the first of the new year.
Based on the most recent sales, the export DAP price range last week moved up to $590-$597/mt FOB, up from $545-$570/mt FOB the previous week.
POTASH
Eastern Cornbelt: Most sources pegged the regional warehouse market for potash at $375-$400/st FOB for brokered material, with some suppliers reportedly referencing as high as $440-$450/st FOB for limited tons. No spot sales were confirmed at those higher numbers – yet.
Western Cornbelt: Potash remained in very tight supply. The market last week was quoted at $380-$400/st FOB warehouses to the dealer for limited tons, but product was “out almost everywhere,” according to one source
Southern Plains: Potash was quoted at $317-$325/st FOB Carlsbad, N.M., for strictly located tons, depending on grade. Out of regional warehouses, the market for granular potash was pegged at $380-$400/st FOB last week, if any was available. Effective Dec. 1, potash postings from Intrepid Potash FOB Carlsbad moved to $317/st for 60 percent granular and 62 percent standard, $320/st for 62 percent fine standard, and $325/st for 62 percent granular.
Great Salt Lakes Minerals Corp., a subsidiary of Compass Minerals based in Overland Park, Kan., will increase prices on sulfate of potash (SOP) specialty fertilizer products by $65/st on shipments to the U.S. and Canada and by $100/st on all international shipments effective Jan.14, 2008. The increases are being introduced to support the company’s previously announced investments in capacity and efficiency at its Ogden, Utah, solar evaporation facility. In a Dec. 13 press release, the company said the investments will help it meet the growing worldwide demand for SOP as an environmentally friendly, organic specialty fertilizer.
South Central: Where available, the potash market was tagged at $360-$380/st FOB regional terminals to the dealer. Inventories remained extremely tight, and several sources reported heavy fall potash applications in their trade area. Effective Dec. 1, Intrepid Potash’s 60 percent red granular potash posting FOB McComb firmed to $362/st.
Southeast: The only price reported for potash was a $346/st DEL level, based on producer postings, but sources were doubtful that any product could still be had at that number based on strict allotments. “Potash is as snug as anyone has ever seen it,” said one, noting that price increases would take effect in the new year.
SULFUR
Tampa: Sulfur supplies continued to struggle to keep pace with demand last week, as several refineries reported “issues” with plants. Valero’s Texas City facility, which produces about 600/lt day, was out of action for about two weeks after a power failure caused problems and temporarily crippled production, but was expected to begin production again late last week. The company’s Port Arthur refinery, a producer of 900-1,000/lt day of sulfur, was also having problems, but was expected to return to full service soon. The St. Charles facility, which makes about 350/lt, had a temporary problem, and also expected a quick return in about two days.
Meanwhile, the amount sulfur producers will seek to bump prices for the first quarter became even murkier last week. The lowest increase suggested was around $70/lt up from this quarter, to more than $100/lt. High world prices and strong profits by phosphate producers were given as justifications for the big-hike proposals.
Sulfur suppliers were attempting to reach supply agreements for next year, which has been made much more difficult due to shortages. One source described the situation as “a panic.” Price has become almost irrelevant, as long as supplies can be secured.
At Beaumont, 40,000/mt of sulfur prill were being loaded for delivery to Brazil in a deal made by ICEC, a source said. However, that will pretty well eliminate remaining sulfur supplies there, and nothing was planned for shipment in January, at least not last week.
The U.S. Department of Agriculture’s Animal Health Inspection announced a $7.75/railcar tariff on trains entering the country, and the Department of Homeland Security will impose an $8.25/car tariff, as well. The new taxes will increase the price of sulfur entering the country by $0.16/ton.
West Coast: Prill suppliers on the West Coast were anticipating considerably higher prices for spot sulfur shipments in January, but no new agreements had been reached as of late last week.
Vancouver: Spot prices for sulfur out of Vancouver were said to be in the $250-$300/mt range, which would still be a bargain on the world market. Negotiations for new first quarter sulfur contracts for China were still underway last week, and prices were anticipated to increase to around $400/mt DEL. The Chinese were known to be low on sulfur inventories, which does not help their bargaining position.
Effective Dec. 3, 2007, Patrick “Pat” Avery was named president and chief operating officer of Intrepid Mining LLC and all of its affiliated companies. Prior to joining Intrepid Mining, he served in various capacities for J.R. Simplot Co., a privately-held food and agribusiness company, for over ten years. Most recently, he managed all aspects of Simplot’s AgriBusiness fertilizer and chemical business. As senior vice president of mining and manufacturing for Simplot, he was responsible for production, optimization, capital and project management, lean manufacturing, and Six Sigma efforts. In such capacity, he was responsible for ten facilities, a $600 million operating budget with 5 million tons of fertilizer.
Avery holds a B.A. in Biology and Chemistry from the University of Colorado, an M.S. in Engineering from Loyola, and an MBA from Pepperdine University.
Doug Wonnacott joins Viterra as senior vice president, Agri-products, effective Dec. 17, 2007. He will be based in Regina, Sask., and replaces Doug Weinbender, who retired earlier this year.
Since 2006, Doug was vice president and director of crop nutrients for Agriliance LLC, in Inver Grove Heights, Minn. He was instrumental in the turnaround of Agriliance’s fertilizer distribution business and most recently supported the divestment of its crop nutrients business to CHS Inc. He joined Agriliance in 2003 as vice president of supply and was responsible for the supply chain management of fertilizer, agricultural chemicals, and business services for fertilizer facilities, manufacturing sites, and Canadian retail sites.
Doug began his career in the chemical industry in 1981 as a market analyst. He completed an MBA in Marketing and International Business at the Richard Ivey School of Business Administration at the University of Western Ontario.
Saskatchewan Wheat Pool Inc., doing business as Viterra, is Canada’s leading agri-business, with extensive operations and distribution capabilities across Western Canada, and with operations in the United States and Japan.
The Agricultural Retailers Association announced on Dec. 13 that Glen Brandt, founder of Brandt Consolidated Inc. in Springfield, Ill., is this year’s recipient of the ARA Lifetime Achievement Award. “It is my honor to recognize the great contributions to the industry by Glen Brandt,” said Jack Eberspacher, ARA president and CEO. “Glen started his family business in 1953 and has led it into the 21st century to become a global enterprise, run by his son Rick, whose brands are sold coast-to-coast and on six continents. He has dedicated his life’s work to serving our nation’s growers by pursuing state-of-the-art products, application methods and technologies. Glen is without a doubt one of the very best, and a leader among leaders.” Brandt Consolidated offers many agricultural products, including liquid and dry fertilizers, anhydrous ammonia, crop protection chemicals, micronutrients, seed, propane and feed. In addition, it provides service-oriented products such as GPS receivers, yield monitors, the HighQ Decision Support System, custom application, soil sampling, and the soybean CystStopper Program.
Philanthropist and fertilizer industry veteran Charles Franklin Burroughs Jr., 94, passed away Dec. 7. He retired as president of the Royster Co. in 1980, after over 40 years with the company. He was a 1936 graduate of Princeton University and an officer in the U.S. Navy during World War II. He is survived by three children, five grandchildren, and three great grandchildren. Contributions can be made to the Norfolk Academy, 1585 Wesleyan Drive, Norfolk, Va. 23502, or the Eastern Virginia Medical School P.O. Box 5, Norfolk, Va. 23501.
Los Angeles-Rentech Inc. announced its results for the fourth quarter and year ending Sept. 30, 2007 on Dec. 14, showing improved revenues due to the company’s nitrogen plant. Fourth-quarter revenues were $29.6 million, up from the year-ago $26.8 million. However, the company posted a net loss of $58.9 million ($.36 per share), versus a year-ago loss of $8.4 million ($.06 per share). Included in the fourth-quarter loss was a $38.3 million one-time non-cash impairment loss of $.13 per share related to the costs for the Rentech Energy Midwest Corp.’s conversion project through 2007. Rentech announced in early December (GM Dec. 10, p. 1), that it was halting the coal gasification conversion at this facility. Full-year losses were $91.7 million ($.606 per share) on sales of $132.3 million, versus the year-ago $38.6 million ($.30 per share) and $44.5 million, respectively. “We are extremely pleased with the strong performance of REMC, which has far exceeded our expectations,” said Hunt Ramsbottom, Rentech president and CEO. “We continue to expect robust demand and pricing for REMC’s fertilizer products and will continue to invest in the plant to ensure that we are able to extract the maximum value from the market opportunity for REMC’s products.”
Eldora, Iowa-United Suppliers Inc. reported sales of $992 million for the year ending Sept. 30, 2007, a 20 percent increase over last year’s sales of $829 million. After-tax earnings for the company were $50.2 million for the year, up 64.6 percent from 2006’s $30.5 million. Maurice L. Hyde, company president, attributed the increase in sales to increased utilization of insecticides and fungicides and an increase in corn acres. All three wholesale areas – agricultural chemicals, fertilizers, and animal feed – grew their market shares, Hyde reported. United Suppliers operates full-service retail outlets at more than 40 locations in Iowa, Missouri, Nebraska, and Wisconsin. The company is owned by retail farm supply dealers, and owner/membership by year-end 2007 consisted of 959 retail entities located in 17 Midwestern states. Patronage dividends to owner/members exceeded $42 million for the year, a 61 percent increase from the previous year. Membership equity exceeded $112.2 million at year-end, and after-tax returns on beginning of year equity remained strong at 52.9 percent. “We continue to be encouraged by our financial and relationship-building success and are confident that we have a solid foundation for future successes,” Hyde said. “We are confident that our proven business model and down-to-earth, no-nonsense business philosophy of ‘uniting resources and supplying solutions’ will provide an avenue for shared successes with our owners/members.” The fiscal year ending Sept. 30 was the company’s 44th year in business.
Milwaukee, Wisc.-Flush with great crop prices, farmers appear to be stepping up and making large equipment purchases toward the end of the year, according to recent statistics from the Association of Equipment Manufacturers. Sales of self-propelled combines were up 44 percent in November over the year-ago month, while year-to-date sales are up 15.6 percent. November sales of four-wheel drive tractors were up 88 percent in November and 21.6 percent YTD. However, farmers appear to be going for the big ticket tractors, as total farm tractor sales were off 1.5 percent in November. They were up .5 percent YTD.
Calgary-A combined Agrium Inc. and UAP Holdings Inc. would have approximately 870 retail outlets, Richard Downey, an Agrium spokesman, told Green Markets last week. As previously reported (GM Dec. 10, p. 1), this would be just under 15 percent of the market, with the next player coming close being Helena Chemicals Inc. Downey put Agrium legacy outlets at 500 and UAP’s number at 370. While Agrium closed some 40 outlets when it acquired Royster-Clark Inc., he said that since the UAP outlets are so well run and there is very little overlap that he expects very few, if any, to have to be closed. Downey said UAP has likely already closed any inefficient locations.
Madison, Wisc.-Reduced fertilizer and pesticide-related tonnage surcharges will mean lower fees for farmers and other purchasers, according to the Wisconsin Department of Agriculture. But there’s a slight problem, reported Lori Brown, agrichemical management bureau director. “While the good news is lower fees, the bad news is the timing of the budget and the timing of the tonnage and pesticide assessments don’t match up very well,” Bowman said. “Fertilizer dealers and distributors are assessed tonnage fees based on the law that is in effect at the time. Consumers purchasing fertilizer after July 1 paid the higher fees because that was what the law required then. When the budget was signed in October 2007, the reductions in tonnage fees were retroactive to July.” The department advises those who purchased fertilizer after July 1 to check with their dealer to determine what tonnage rate was charged. “If you purchased commercial fertilizer and were charged $1.25 per ton instead of the new lower rate of $1.06 per ton, you should discuss how to handle any overpayment with your dealer,” Bowman said. The same applies to pesticide fees that were also reduced to 0.95 percent of gross sales as of Oct. 1. The state will notify fertilizer dealers and distributors and pesticide manufacturers and distributors to encourage them to work with customers to determine how to best handle the adjustments. The Wisconsin Legislature lowered the surcharges to reduce the revenues in the agricultural chemical cleanup program fund, which is expected to drop by more than $1.75 million over the next two years.
Disclaimer of Warranty
All information has been obtained by Green Markets from sources believed to be reliable. However, because of the possibility of human or mechanical error by our sources, Green Markets or others, Green Markets does not guarantee the accuracy, adequacy, or completeness of any information and is not responsible for any errors or omissions or for the results obtained from the use of such information.
