White Plains, N.Y.-Bunge Ltd. said March 3 that it is correcting net sales and cost of goods sold that were overstated in its 2007 unaudited quarterly financial statements and its Feb. 7, 2008 press release containing its preliminary results for 2007 (GM Feb. 11, p. 9). These corrections represent an approximately $7 billion reduction in net sales and cost of goods sold, and have no impact on Bunge’s previously reported volumes, gross profit, segment operating profit, net income, or earnings per share, or on the company’s consolidated balance sheets or statements of cash flows. The corrected financial information is included in Bunge’s 2007 annual report on Form 10-K filed today. Bunge identified these errors during its year-end closing process. This takes net sales down to $37.8 billion. The corrections resulted from Bunge’s review of its accounting for, and financial statement presentation of, certain transactions primarily in Bunge’s agribusiness segment. As a result of changes in certain systems in 2007, certain intercompany sales were classified as third-party transactions in both net sales and cost of goods sold and were not eliminated in the consolidation process. Additionally, certain transactions related to Bunge’s trade structured finance activities were reported on a gross basis in net sales and cost of goods sold. These transactions should have been reported on a net basis. The company has also reviewed and conducted reconciliations for 2005 and 2006 of sales accounts in subsidiary general ledger systems with the company’s consolidation and financial reporting system. Additionally, the company reviewed trade structured finance transactions for 2005 and 2006 to assure appropriate accounting treatment and financial statement presentation. As a result of these reviews, management has determined that the effect in 2006 and 2005 was immaterial. Bunge is remediating the control deficiencies that led to the need for these corrections, and which the company has determined constitute material weaknesses in its internal control over financial reporting in 2007.
U.S. Gulf/Tampa: The markets were quiet last week, with no new benchmarks reported.
January imports into the U.S. were about level with year-ago numbers. January 2008 saw 717,984 st come into the States, versus the year-ago 718,825 st, according to the U.S. Department of Commerce. For the fertilizer year-to-date (July 2007-Jan. 2008), imports are up 8 percent, to 5 million st from the year-ago 4.6 million st.
April gas closed at $10.230/mmBtu on NYMEX March 13, the first time gas has topped the $10 mark in a near month in some time. However, with NOLA barges last done at $610/st FOB, does anyone much care? At least not the way they did in the early part of the decade.
Eastern Cornbelt: Ammonia pricing remained at $675-$685/st FOB in Illinois last week, with dealer reference prices as high as $700-$710/st FOB in the region.
Western Cornbelt: Anhydrous ammonia was pegged at $650-$670/st FOB in the region for spot tons, with the low reported in Nebraska. One source talked of spring prepay still available at the $675/st FOB level in Iowa, but that program was not confirmed.
Northern Plains: The anhydrous ammonia market was up from last report, at $695-$705/st FOB for prompt tons and reportedly as high as $715/st FOB for spring prepay shipments later in the season. Sources talked of fall prepay ammonia offers circulating at the $700/st FOB level, and one source reported a fair amount of interest from buyers of ammonia for the 2009 crop year.
In North Dakota, delivered ammonia was reported in a fairly broad range at $725-$750/st last week, with the upper level reflecting newer dealer list prices.
Eastern Canada:Anhydrous ammonia pricing was up from last report at $760-$775/mt FOB in Ontario.
Black Sea:Sources report the price is remaining steady and firm. Producers are sold out for March but, say observers, the April order books are still empty. Reportedly, buyers are holding off as long as possible. They are waiting to see what U.S. Gulf demand is like before they step in.
Traditionally, April shows a dip in prices. Whether this year will follow past trends is up in the air. Sources say the strength of the first quarter was unprecedented. Even if the price does soften, said one Asian trader, the price will remain at historically high levels.
Sources still debate just how high the price has gone. Producers claim $590/mt FOB is a reasonable high end. Of course, they would prefer $600/mt FOB, said one observer.
Without any new business to judge movement, many in the industry maintain prices remain at $565-$575/mt FOB.
Reports are circulating that other area gas-producing countries are jacking up their prices. Turkmenistan, Uzbekistan, and Kazakhstan will sell their gas to Gazprom for resale at higher rates than in previous years. How much of this gas will be forwarded to Ukrainian plants is unclear.
What is clear is that even with the successful settlement of the long-running battle over the cost and payment of Gazprom material to Ukraine, the new arrangements by neighboring countries with Gazprom could mean continued higher prices for buyers in the FSU and Western Europe.
Middle East: If buyers approach producers expecting to replicate the near $500/mt FOB price paid by Transammonia for FACT/India, they will be surprised at the response. Sources say the deal with Trammo might appear to reflect a softening of the market. Buyers looking for late March or April tons, however, may end up paying closer to the $530/mt FOB paid to Qafco a couple of weeks ago.
Observers say the situation in the Middle East is confusing but bullish.
Demand for material from India is keeping most of the producers busy loading contract cargoes.
One trader suggested that Trammo might be willing to take a loss on the FACT deal to provide a different basis for some of its other contracts that take their cues from open tenders. With the lower FACT price, said this source, Trammo might be able to secure a lower price from contracted suppliers in the long term.
The offers by Sabic and Qafco (see India section) indicate even producers figure prices will soften in the second quarter.
Despite the wide spread, ammonia watchers in the area say the FACT tender has indicated a firm low end, while other business concluded just before the tender results were announced indicate a firm high end. One trader said it may take another couple of weeks for the price range to shake itself out and return to a more traditional spread.
For now, the price is pegged at $508-$530/mt FOB.
India: The FACT tender was awarded to Transammonia at $238/mt CFR for both the March and April cargoes. This price represents a softening in the market as spring approaches. The FACT tender was for 15,000 mt divided into two equal shipments. Offers in the tender follow:
March
April
Offerer
US$/mt CFR
US$/mt CFR
Transammonia
578
538
Qafco
576
570
Sabic
590
570
Freight from the Middle East to west coast India is pegged at $30/mt.
Sources report the April offers by Middle East producers indicate they are anticipating a softer April and May.
Indonesia: Kaltim is reportedly cutting back on the production of ammonia because of a shortage of inputs. Apparently the government has ordered the national natural gas company to put a stronger emphasis on LNG production.
One Asian trader noted that the 5,000 mt scheduled to be loaded for PhilPhos this week will most likely be the last exportable cargo from Kaltim for a while.
The reduction in Kaltim output was a blow to KPI and KPA. Sources said both joint ventures often looked to the state-owned plant for extra tons to fulfill their contracts. Reportedly, both operations remain overbooked.
Poland: The Polish Oil and Gas Co., which is the only supplier of gas to all fertilizers plants, wants to raise gas prices by 30 percent in April. However, the Office for Energy Regulation is in favor of a smaller sum. Fertilizers plants fear that any high hikes would boost fertilizer prices by 25-30 percent. “It would be a shock for production of our and other plants and the market would face breakdown and loss of foreign markets,” said Police plant spokesman Rafal Kuzminiczorek.
UREA
U.S. Gulf: While some players were jubilant that movement had begun in the Southern Plains and better weather was reported across much of the country’s heartland, few saw much change to NOLA prices. Instead, sources cited higher inland price ideas for urea, with sellers saying improved numbers for NOLA would surely follow. Some sellers were wanting those better numbers now, quoting product in the $370-$375/st FOB range. However, others last week reported trades as low as $355/st FOB, with business working its way back up to $365/st FOB as the week progressed. This gave sellers hope they would see more green and the $370s/st by St. Paddy’s Day.
January imports were up 69 percent, to 1.02 million st from the year-ago 604,222 st. July-January imports are up 50 percent to 4.2 million st, up from the year-ago 2.8 million st.
Barge traffic was slow moving on the Arkansas River last week, but one tow was able to leave Rosedale and included at least three urea barges. Traveling upriver has been made difficult because of the high speed of the current on the river. Rain was expected this weekend and that could make the situation worse, depending on the amount of water the Corps of Engineers releases from the dam.
Urea was moving up at warehouses at Inola, and most began charging $400/st FOB after Koch hiked its price to $410/st FOB. Movement from terminals was brisk as dealers sought to fill their urea bins, which were running near empty. Farmers, especially in Kansas and Missouri, were beginning to start work in the fields, and additional urea was sold for wheat topdressing.
Eastern Cornbelt: Granular urea was reported in a broad range at $415-$445/st FOB, with the low quoted in Illinois on a spot basis and the upper end out of inland shipping points in Ohio.
Western Cornbelt: Granular urea was pegged at $410-$425/st FOB regional terminals to the dealer, with the upper end reported in Iowa later in the week. Although unconfirmed by the company, numerous sources reported that Koch’s Enid, Okla., plant was down at midweek for maintenance issues. One said he was told the facility would be online again by Thursday afternoon, while another said it might not be operational until early the following week.
One thing that was confirmed was that topdress movement of urea on wheat ground in parts of the Southern Plains region had kicked into high gear last week. Koch reportedly reposted urea at $400/st FOB Inola, Okla., and $410/st FOB Enid, reflecting an increase of $10-$15/st from last report. Several sources reported light inventories due to the stepped up demand, Enid’s problems, and the high water conditions on the Arkansas River.
Northern Plains: Granular urea pricing was down considerably from last report. Sources tagged the dealer market at $415-$420/st FOB the Twin Cities, with rail-delivered urea at the $455/st level in North Dakota.
Northeast: Granular urea was quoted at $442-$445/st FOB Baltimore, Md., and Philadelphia, Pa., with dealer reference prices reportedly in the $450-$452/st FOB range. In the Southeast, pricing had reportedly dropped to the $430/st mark FOB some port terminals. Several sources said they expect that market to firm up again when spring movement begins in earnest.
Eastern Canada: Granular urea pricing in the region was down slightly from last report at $605-$615/mt FOB to the dealer.
India: Clearly the big news is the MMTC tender. About 225,000 mt was offered at prices that show a definite bullish trend.
The anticipation and then calling of the tender alone moved the Yuzhnyy price from the low $320s/mt FOB to nearly $400/mt FOB.
Oddly, the Middle East price only moved slightly.
Sources say with only one cargo from Yuzhnyy offered in the tender, the real competition was between the Middle East and China. Once the tender results are looked at in that light, said one observer, it is not surprising to see a small shift in the Middle East.
Buyers for India are in a bind with this tender, say sources.
The country desperately needs the cargoes. Shipments must start soon, but the prices offered are at record levels. Questions are being raised as to how well the Indian treasury will be able to handle the subsidies necessary to ensure farmers do not have to pay exceedingly high costs for fertilizer this year.
Making the financial decision more difficult is the overlay of politics. With national elections slated for this year, the ruling party is loath to pass on dramatically higher costs to the volatile rural population.
Representatives from MMTC, STC, and IPL were moving around the major producing areas during February and early March. They were hoping to secure some pre-tender deals at significant discounts.
Sources report the buyers were asking the Middle East suppliers for cargoes in the $360s/mt FOB or lower at a time when the price was pegged at $390-$400/mt FOB.
At the same time, Chinese suppliers have a strong domestic market to take their cargoes. They saw no need to reduce their prices.
Lastly, the Black Sea suppliers would not bring their prices down to compensate for the higher freight rates and opted to wait for demand from Africa and Latin America.
The MMTC tender looked to fulfill demand through September. The tender documents called for offers for March-June and July-September. Many offers came in only for the first portion.
One source noted that few trading houses would be willing to commit to a price for the third quarter unless it was extremely high. The unknowns of freight rates six months out, in particular, made some companies place high offers or skip the July-September shipments.
Producers might have been more willing to offer token cargoes into the third term just to be sure they had something on the books through the summer and into the fall. But even the Middle East suppliers only offered April-June cargoes or sent their regrets.
Many of the offers were valid only until March 13. Some others come due early this week.
Sources say a decision will have to be reached quickly to satisfy the tender documents and Indian farmers. How many tons MMTC will take is up in the air.
Soon after it makes its decision, however, sources expect to see STC and IPL come in with their tenders. And if purchases from this tender are limited, MMTC could come in again and again for fall and winter deliveries.
In the tender, Fertil/UAE and PIC/Kuwait sent their regrets. That left Qafco/Qatar, Sabic/Saudi Arabia, and EFC/Egypt as the sole Middle East offerers.
Tender results follow:
Offering Company
Origin
QTY ‘000 mt
Option
US$/mt
Discharge port
Ship Time
Remarks
FOB
CFR
Qafco
Qatar
50
Firm
405
Apr-Jun
25
S/O
Sabic
Saudi Arabia
75
Firm
404
Apr-Jun
75
S/O
EFC
Egypt
50
410
May-Jun
Transammonia
Open
45-100
S/O
455
Kandla
End Mar-Apr
1 or 3 lots at S/O
Helm
China
75
480
Vizag
Apr-Jun
25K each month
China
75
505
Vizag
Jul-Sept
25K each month
Kisan Inter.
Open
25-30
S/O
391
453.21
Vizag
Apr
25
405
471.30
Vizag
Apr
25
S/O
405
471.30
Vizag
Apr
Ameropa
China
50-60
410
449
Vizag
Apr-Jun
1 or 2 lots
ConAgra
China
50
441
Vizag
Mar-Apr
In 2 lots
Sinochem
China
25
398
May
Toepfer
Open
75
405
445
Kandla / Vizag
Apr-Jun
20-25K lots in each month
403
420
75
415
455
Kandla / Vizag
Jul-Sept
413
430
150
S/O
Swiss Singapore
China /AG
25-30
437
461
Kandla
Apr-Jun
75-90K at S/O
Sources report that MMTC representatives are moving to negotiate lower prices based on the tender results. Industry watchers say there is very little incentive for any producer to lower prices.
If MMTC cannot buy sufficient quantities to cover its demands through September, additional tenders will have to be called. For a major buyer like India, regularly calling massive tenders can only lead to higher prices, said a source.
Black Sea: Prices skyrocketed on the heels of the calling of the MMTC/India tender.
Sources report a confirmed sale at $393/mt FOB, with a rumored deal at $395/mt FOB by press time. Producers reportedly began asking $400/mt FOB by Wednesday of last week.
The cost of urea from the area steadily moved up as February waned. The first bump in prices came as a handful of traders moved in to cover shorts. Then some additional deals with Mexico and Brazil added strength to the demand.
One trader noted that with each sale the producers decided to move the price up $10/mt. By last week the market was back in record territory.
By week’s end the market was firmly set in the upper $390s/mt FOB with room to rise.
Middle East: Suppliers from this area are one of the best deals for MMTC/India in terms of convenient transportation and price, said one trader. The producers that offered in the tender – two sent regrets – only moved the price up a few dollars.
Observers noted that in the past these tenders were often opportunities to significantly run up the price. This time the increase was only $5-$10/mt.
Sources figure the producers are looking to nail down sales for the second quarter and then be in good shape to offer again for the future tenders for the third and fourth quarters.
One trader thought it might have made more sense for the producers to offer token cargoes well into September to ensure something on the books throughout the year. A contrarian noted, however, that if MMTC does not get what it needs in this tender – and it is looking as if that might be the situation – then additional tenders will need to be called. With subsequent tenders, sources say the price should keep climbing.
Based on the last-done business and the tender, sources now say the market for prills and granular has moved to $390-$405/mt FOB.
China: Once again, Chinese material dominates an Indian tender. Many of the offers in the MMTC/India tender are backed with Chinese urea. The offers are seen as economically viable despite the fact that all of the prices quoted include an unprecedented 35 percent export duty.
A strong domestic season and a heavy demand from India is a perfect combination for Chinese producers.
The only real competition to the Chinese tons into India comes from the Middle East. And if the offers made in the most recent tender are any indication, the Middle East suppliers have enough orders on hand to keep themselves comfortable and to feel they can be successful in pushing the price up.
All the tons being offered to India are reportedly prills. Sources say granular from China is running at a $20-$30/mt premium.
Indonesia: Sources now expect to see some Indonesian tons offered on the regional market late next month. Earlier estimates had urea exports holding off until mid-May.
Bangladesh: The government says the demand for urea is projected at 2.818 million mt for fiscal year 2007-08. As such, according to the Ministry of Agriculture, the country needs to import 1.3 million mt of urea to meet the total projected demand.
NITROGEN SOLUTIONS
U.S. Gulf: Storage space is reported to be full, making it hard to find a place to put new trades. As a result, price ideas continue to be under pressure. Most sources called the market $300-$305/st FOB ($9.38-$9.53/unit), with speculation that a savvy buyer could pull the price below the $300/st market, assuming they had a place to put the cargo.
July-January imports are up 69 percent, to 2.1 million st from the year-ago 1.24 million st. However, January imports were actually off 20 percent, to 278,588 st from the year-ago 348,257 st.
Eastern Cornbelt: UAN pricing was down slightly from last report, with most sources tagging the regional market at $11.25-$11.65/unit FOB terminals to the dealer. Sources reported little new business to test those numbers, however.
Western Cornbelt: UAN was quoted at $11.20-$11.65/unit FOB regional terminals to the dealer. There was talk of lower priced tons out of some locations, even a report of product at the $10.75/unit FOB level in western Iowa, but sales at those numbers were not confirmed. Several suppliers said interest from UAN buyers remained low until the spring season kicks into gear.
Northern Plains: UAN was down slightly from last report as well, at $11.70-$12.00/unit FOB regional terminals, depending on location and time of delivery. In North Dakota, UAN-28 remained at $350/st ($12.50/unit) DEL for prompt tons within a limited shipping area, and up to $360-$365/st ($12.86-$13.04/unit) DEL for spring prepay.
Northeast: The UAN-30 market was quoted at $319-$328/st ($10.63-$10.93/unit) FOB regional terminals, with dealer reference prices quoted at the $325/st ($10.83/unit) mark or higher FOB Baltimore and Philadelphia. No current prices were reported out of terminals in upstate New York. On a delivered basis, Pennsylvania sources tagged the market last week at the $359/st ($11.96/unit) level. As for replacement costs, sources tagged the current vessel market in the high$340s to $350/mt C&F.
Eastern Canada: The UAN market was quoted at $13.68-$13.89/unit FOB, with several Ontario sources reporting the common dealer price for UAN-28 at the $385/mt ($13.75/unit) FOB level last week.
AMMONIUM NITRATE
U.S. Gulf: The barge market remained quiet last week. Most players put the market within the $355-$360/st FOB range.
January imports were up 33 percent, to 135,585 st from the year-ago 102,033 st. July-January imports are up 31 percent, to 691,015 st from the year-ago 527,955 st.
Western Cornbelt: Ammonium nitrate remained at $385-$395/st FOB in the region.
Eastern Canada: The ammonium nitrate market was up considerably from last report at $505-$510/mt FOB in the region.
AMMONIUM SULFATE
Eastern Cornbelt: Granular ammonium sulfate was firm at $295-$300/st FOB in the region, with delivered sulfate pegged as high as $320/st in Illinois.
Western Cornbelt: Granular ammonium sulfate was quoted at $295-$300/st FOB in the region.
Northern Plains: Granular ammonium sulfate pricing had reportedly firmed to $300/st FOB the Twin Cities. Delivered product was pegged at $322-$325/st in North Dakota, and up to $330-$335/st in South Dakota and northern Minnesota, depending on supplier. Agrium’s ammonium sulfate postings firmed on March 7 to $322/st DEL in North Dakota, Minnesota, and Wisconsin, reflecting a $15/st increase from the company’s March 1 postings.
Northeast: Granular ammonium sulfate had reportedly strengthened to $322/st FOB Philadelphia, with rail-DEL sulfate pegged at the $329/st level in southern Pennsylvania.
Eastern Canada: Granular ammonium sulfate was pegged at $354-$365/mt FOB, up slightly from last report. In Western Canada, the ammonium sulfate price firmed again on March 11 to $425-$430/mt DEL.
U.S. Imports: July-January imports are up 23 percent, to 220,590 st from the year-ago 179,432 st. However, January imports were off 7 percent, to 35,839 st from the year-ago 38,616 st.
PHOSPHATES
Central Florida: With inventories extremely low, new, prompt sales of railcars from Central Florida were out for lunch last week – a very long lunch. However, that did not keep prices – at least asking prices – from continuing to rise.
CF issued a price list for orders between March 12 and March 14 that put the new price of its DAP at $900/st FOB by truck or rail, up from $820/st FOB. Until very recently CF had been offering a $2/st FOB discount for MAP, but last week changed its pricing to charging $10/st FOB more for MAP than DAP.
Meanwhile, most activity in the Southeast was still on hold last week while farmers were waiting for their fields to dry. Conditions in the Northeast were not favorable for field work.
The Central Florida DAP price range remained at $745-$795/st FOB last week, but do not expect to find that available from anyone. The price range is determined based on actual sales, which did not exist. Mosaic was asking somewhere around $900/st FOB for prompt shipments of DAP and MAP, after dropping its $4/st FOB discount for MAP. PCS Sales’s Central Florida reference price was to go from $820/st FOB to $900/st FOB beginning Monday, March 17. Discounts for national accounts were no longer available. MAP supplies continued to be scarce. In Texas, Agrifos’s truck price increased from $830/st for truck and $825/st FOB for rail to $925/st FOB for trucks and $920/st FOB for rail shipments, but the company was not actively seeking to make new sales.
U.S. Gulf: The weather in Oklahoma last week was considerably drier than it has been in some time, but another front was expected to bring more rain this past weekend, so field work had yet to start. Normally that area is the first to get to work, but that will not be the case this season. Conditions were somewhat better in Missouri and Kansas last week, where some field work was beginning, and sales of fertilizers were on a sharp increase.
Even if conditions were better in Oklahoma, the fast current of the Arkansas River was making it difficult or impossible for most barge traffic to begin moving north from Rosedale, where barges were beginning to stack. Many barges destined for that area were being held at New Orleans to avoid storage at Rosedale. Warehouses at Inola and Catoosa were running low on most products and will likely run out before the river begins to cooperate.
Pastures may not receive their normal applications of phosphates this season because of the high price, but that loss will be made up from increased sales to those who grow corn. With reduced production due to sulfur shortages, phosphates will continue to be in short supply and at higher and higher prices for the foreseeable future.
Most at the dealer level were said to have plenty of phosphates and potash in their bins, but were short on urea, which was the big seller last week.
Prices at terminals began to rise sharply last week, with postings at Inola rising to $880/st FOB from $830/st FOB a week earlier. On the Illinois and the Mississippi rivers, prices were in the $900/st FOB range.
Although the Mississippi River north of St. Louis was still closed last week, barges were already en route to be ready for the opening of the locks around March 15. The river was experiencing a heavier than normal flow, which will make it more difficult for barges to head north once that is possible.
NOLA DAP barge sales last week had a wide range, with some able to buy and sell low at the previous week’s general range, while others were bringing a premium price. The NOLA DAP barge price range for the Gulf’s river system was $840-$895/st FOB. Mosaic sold a MAP barge at $920/st FOB, which put the range for MAP well above that of DAP. Mosaic was asking $920/st FOB for DAP and MAP, while CF’s price list for March 12 – March 14 was $910/st FOB for DAP and $920/st FOB for MAP barges.
Eastern Cornbelt: Sources continued to report ever-higher phosphate prices. One Illinois source placed the low end of the range at the $865/st FOB warehouse level for the last spot DAP business, but others said the DAP market had firmed to the $900/st FOB mark or higher in the region. One source confirmed dealer pricing in central Illinois at the $945/st FOB level for limited tons at midweek. Reference prices for DAP from CF for the March 12-14 order and ship period firmed to $944/st FOB Peoria, Ill., and $947/st FOB Cincinnati, Ohio.
An Illinois source pegged the 10-34-0 market at a firm $725-$750/st FOB for very limited spot tons.
Western Cornbelt: The big fertilizer story last week continued to be the rapidly firming phosphate market. One supplier was referenced at $870/st FOB for DAP and MAP at midweek, but another increase was imminent based on current replacement costs. Sources said there were still spot prices as low as $850-$860/st FOB as well, but it won’t last long. A Missouri River source on Thursday reported DAP at $885/st FOB with MAP $10/st higher, but said another increase on March 14 would send those levels up close to the $950/st FOB level.
CF reposted DAP at $944/st FOB St. Louis for the March 12-14 shipping and ordering period. The company’s postings FOB Inola, Okla., for that same period included DAP at $947/st and MAP at $957/st.
Even with those numbers in circulation, there continued to be reports of dealer-to-dealer business taking place for as low as $750/st FOB for DAP. “We’re going to see that for awhile from people with good positions,” said one source, noting that those deals were increasingly few and far between, and were way behind current replacement costs.
10-34-0 pricing for the limited tonnage available had reportedly firmed to $725-$750/st FOB, reflecting a $100/st increase from the prior week. Sales at both ends of that range were confirmed by regional sources last week.
Northern Plains: The phosphate markets continued to move up rapidly in the region. Sources tagged the regional warehouse market for DAP at $950-$955/st FOB after another round of increases, which one source said reflected a $80-$100/st increase from the previous week. MAP was $10/st higher than DAP at $960-$965/st FOB, with the upper end reported out of a North Dakota warehouse location at midweek. CF referenced DAP at $950/st FOB and MAP at $960/st FOB Pine Bend, Minn., for the March 12-14 order and shipping period.
North Dakota sources reported a few spot loads of 10-34-0 coming in from Canada in the $675-$680/st DEL range last week, but tons were very limited at those numbers. A Minnesota source speculated that 10-34-0 would be priced as high as $725/st FOB in his location, if you could find any for sale.
Effective March 1, Agrium’s phosphoric acid postings jumped to $950/st rail-DEL for both super phosphoric acid (SPA) and merchant grade acid (MGA) in Minnesota and the Dakotas. Additional per month increases of $10/st are slated for both products in April and May.
Northeast: The DAP and MAP markets were once again up dramatically from last report, but sources acknowledged that warehouse prices still had to move up considerably to reflect current replacement costs at the Gulf and Central Florida. Sources quoted MAP at $860-$894/st FOB regional warehouses at midweek. DAP was roughly the same as MAP, where available. Several sources said the next round of price hikes would see those warehouse levels in the mid-$900s/st FOB, and the increases were imminent.
10-34-0 spot tons had reportedly firmed to as high as $700/st rail-DEL or FOB tank in the region. One source said that level represented a $300/st increase from the most recent quarterly contract price.
Eastern Canada: Sources continued to report rapidly firming markets for phosphates. MAP pricing in the region had reportedly firmed to $1,038-$1,050/mt FOB in Ontario, with DAP roughly $5/mt less than MAP. TSP was pegged at $995/mt FOB, reflecting a $225/mt increase from last report. In Western Canada, MAP pricing reportedly firmed on March 11 to $965-$1,000/mt DEL.
Western U.S: Effective March 17, Agrium’s MAP postings will firm to $995/st DEL in Montana and Wyoming; $1,000/st DEL in southern Idaho, Utah, Nevada, and Oregon’s Malheur County; $1,000/st FOB and $1,005/st DEL in Washington, northern Idaho, and Oregon excluding Malheur County; and $1,010/st FOB or rail-DEL in California and Arizona. Those levels reflect a $185/st increase from the company’s Feb. 26 list prices in those locations.
U.S. Export: Neither PhosChem nor any other North American phosphate provider reported any new export sales last week, primarily due to a lack of inventory. However, interest was still being expressed by buyers from Latin America and, of course, India.
The prior week the magic number of $1,000/mt FOB was struck, and that will not come down right now. Expectations were that the world will continue to suffer from a shortage of phosphates that will only get worse. The high prices of fertilizers – and therefore, food – have made it difficult for the United Nations to meet its goal to provide food for desperately poor countries, and many will go hungry. With increasing amounts of phosphate and other fertilizers going to grow ethanol and other biofuels, that situation will continue to worsen.
The export DAP price range last week was unchanged at $950-$1,000/mt FOB, but prices will be higher with the next sale, say most sources.
POTASH
Eastern Cornbelt: Potash out of regional warehouses was up as well at $545-$560/st FOB, depending on grade and location. One Illinois source reported recent business firmly at the $550/st FOB level for spot tons. Agrium’s red premium potash postings for the March 10 forward shipping period firmed to $525/st rail-DEL in Illinois, Indiana, Ohio, and Michigan.
Western Cornbelt: Potash pricing continued to ratchet up as well. Sources tagged the warehouse market last week at $545-$550/st FOB in the region, with the low reported for red granular potash out of spot Missouri River locations. Agrium’s red premium potash postings for the March 10 forward shipping period firmed to $524/st rail-DEL in Iowa, Missouri, and Nebraska. As for potash barge sales at the Gulf, rumors circulated last week of business concluded anywhere from $550/st to $590/st FOB, indicating continued upward pressure.
Northern Plains: Potash was quoted at $545-$550/st FOB in Minnesota for allocated tons that are being resold. One North Dakota source said they are waiting on some allocated potash purchased earlier at $450/st DEL from Saskatchewan, but noted that new pricing, if available, would be substantially higher.
Effective for March 10 forward, Agrium’s red premium potash postings firmed to $526/st FOB Shakopee, Minn. The company’s mine postings FOB Vade, Sask., firmed on that date to $488/st for standard and $493/st FOB for red premium potash for the Minnesota, Dakota and Montana sales area. On a rail-DEL basis, Agrium’s red premium potash postings firmed on March 10 to $519/st in northern Minnesota and North Dakota, and $521/st in southern Minnesota, South Dakota, and Wisconsin.
Northeast: Potash remained in extremely tight supply. Sources who had allocations for the shipping period beginning March 1 quoted delivered potash pricing in the $447-$488/st range in the region, depending on grade, but those numbers were certainly not available for new sales.
Effective for the March 10 forward shipping period, Agrium’s red premium potash postings firmed to $545/st rail-DEL in Pennsylvania, Virginia, West Virginia, Maryland, Delaware, New Jersey, New York, Massachusetts, Connecticut, Rhode Island, Vermont, New Hampshire, and Maine. The same price applies in Kentucky and Tennessee, while $555/s rail-DEL is the new posted level in Alabama, Georgia, Florida, and the Carolinas.
Eastern Canada: Potash pricing continued to firm in the region. The warehouse market was quoted at $473-$494/mt FOB in Ontario, depending on grade, location, and supplier. The mine price FOB Sussex, New Brunswick, was quoted at $440-$445/mt as of March 1.
K-Mag was quoted at $345-$357/mt FOB in Ontario, and sulfate of potash was reported at $565-$570/mt FOB last week.
Western U.S: Agrium’s red premium potash postings firmed on March 10 to $539/st rail-DEL and $544/st FOB in southern Idaho, Utah, and Oregon’s Malheur County; $544/st rail-DEL and $549/st FOB in Washington, the Idaho panhandle, and Oregon excluding Malheur County and the Willamette Valley; and $549/st rail-DEL and $554/st FOB in Oregon’s Willamette Valley.
U.S. Imports: July-January imports are up 9 percent, to 6.33 million st from the year-ago 5.81 million st, according to the DOC. However, January imports were actually off 5 percent, to 1.07 million st from the year-ago 1.13 million st.
SULFUR
Tampa: The sulfur shortage situation continues and, if anything, got worse last week, which has been the case for months. Industrial customers clamored for supplies, and phosphate companies scrounged the planet in search of more. A rumor held that The Mosaic Co. was arranging a purchase of two vessels of liquid sulfur from Europe at a high but unknown price. “That’s probably not wise before quarter two negotiations begin,” a source commented. “It will give the sulfur industry encouragement. Historically, Mosaic has bought sulfur in Europe, but said it currently had nothing in the works. Profits in the phosphate industry continued to soar, but that cannot be sustained without an adequate supply of sulfur.”
For traders and others who do not own in-house sulfur supplies, the high capital cost of doing business has created a cash crunch. With prices five times higher than a year ago, and possibly rising to 10 times more soon, the cost of the capital has made doing business difficult, because margins have remained low while credit limits must be increased. Considering many earn only a few dollars a ton, “We’d be better off putting the money in a savings account and drawing interest.”
Negotiations for second quarter contract prices had not begun last week, but will be contentious when they do in another couple of weeks.
U.S. Imports: Sulfur imports were up 51 percent in January, to 206,179 st from the year-ago 136,628 st. The extra tonnage is coming from Canada. January 2008 imports from the country were 158,410 st versus the year-ago 88,615 st.
Total July-January sulfur imports are up 43 percent to 1.23 million st from the year-ago 855,033 st. Imports from Canada stand at 921,708 st versus the year-ago 508,062 st.
West Coast: Spot sulfur sales from the West Coast were said to have exceeded $600/mt FOB last week.
Vancouver: Sulfur suppliers were in the process of conducting negotiations with Brazil last week for new semester contract prices. Sulfur producers were said to be seeking between $500-$600/mt FOB, which would be a significant increase from the current $150/mt FOB price Brazil had been paying.
MARKET NOTES
Poland: The country has again returned to the idea of liquid gas construction on the Baltic coast at Swinoujscie. Earlier talks with Algeria and Norway on gas delivery have been fruitless, but recently the Polish Oil and Gas Co. has received offers of gas delivery from Qatar and France. The French firm wants to build this terminal and participate in gas distribution in Poland. However, the Polish Farmers Party is opposed to the terminal, instead preferring the country develop gas reserves in western Poland.
India: The following in-principle decisions have been taken by the country’s Group of Ministers. However the same have to be formalized through the Department of Fertilizers by the Cabinet.
Regarding the Maximum Retail Price (MRP) of fortified/coated subsidized fertilizers with micro nutrients other than zinc and boron, the manufacturers/importers may be allowed to charge higher prices, which may be up to 5 percent of the MRP except for zincated urea and boronated SSP, for which a selling may be up to 10 percent of the MRP;
Inclusion of sulfur as a subsidized nutrient under the subsidy regime, with suitable cost recovery from farmers;
Revival of closed units, conversion of Fuel Oil/Low Sulphur High Sulphur (FO/LSHS) plants to gas, and setting of new ventures in fertilizer through Special Purpose Vehicle (SPV) be encouraged subject to their product mix being conducive to promoting balanced fertilization. In addition, “least cost” solutions may be found that do not rely on budgetary support;
Uniform freight subsidy regime for all subsidized fertilizer;
Nutrient-based subsidy of fertilizers and rationalization of existing selling prices;
All products included in Fertilizer Control Order (FCO) be gradually brought under subsidy regime;
Encourage production of SSP by linking subsidy to input prices;
Production of micronutrients, which is reserved, or small scale sector be opened for manufacture by fertilizer industry;
Encourage production and usage of fortified and coated fertilizer;
Regarding prices of fertilizers various options be given which induce balanced and sustainable use of fertilizers;
An independent Fertilizer Regulatory Authority be set up.
Bangladesh: Government officials are reviewing changes to subsidies as well as other changes that could better assure adequate supplies of fertilizer. This also includes increased production domestically to save on the costs of pricey imports.
Pakistan: The country’s second largest urea manufacturer, Engro Chemical Pakistan Ltd., informed the country’s stock exchanges that it was going to form a joint venture with Ferphos of Algeria to produce DAP, sulfuric acid, phosphoric acid, and associated utilities. The project is expected to be constructed in a period of four years in Algeria after the completion of a feasibility study by the joint venture. It said in a statement the complex will consist of one plant to produce 3,000 mt/d of DAP, three 4,500 mt/d sulfuric acid units, three 1,500 mt/d of phosphoric acid units, and associated utilities facilities. The company explained that it had participated in an open and transparent international tendering process that took place in May 2007 and secured the top position as Ferphos’ preferred partner for the creation of this joint venture. However, it was pointed out that Engro Chemical Pakistan was still waiting for the official confirmation of its selection as the Ferphos partner from the government authorities concerned in Algeria. This decision is expected within the next few weeks after the resolution of some issues regarding the exact location of the project site.
An Engro official told the local media that Engro would have a majority stake in the venture. He said the cost to develop the proposed phosphate project would be $1-$1.5 billion, and added that the complex would be mainly for exports.
Industry veteran Kim Colvin has joined Mississippi Phosphates Corp. as director of terminal development and procurement. He will assume responsibilities in the area of raw material procurement and take a lead role in the development of the company’s terminal assets and the marketing of terminal services.
“I am pleased to announce that MPC is broadening its senior staff with the addition of Kim Colvin,” said Ed McCraw, MPC chief operating officer. “He brings to us extensive experience from both domestic and international perspectives and is a proven leader with a demonstrated track record of success in the agriculture sector.”
Prior to joining MPC, Colvin served as an industry consultant and held senior management positions at Keytrade USA Inc., Duke Energy Merchants, PCS Sales, and International Minerals & Chemicals. A native of Jackson, Miss., Colvin relocated in March to MPC’s headquarters in Madison, Miss.
Agrium Inc. said March 10 that Derek Pannell has accepted an invitation to sit on Agrium’s board of directors commencing Feb. 27, 2008. A managing partner of Brookfield Asset Management Inc., Pannell is a director of Teck Cominco Ltd., Major Drilling Group International Inc., and Brookfield Infrastructure Partners LP. He was president and CEO of Noranda/Falconbridge from 2001 to October 2006 and vice president, operations, of Compañia Minera Antamina from 1999 – 2001. He is a graduate of Imperial College in London, England, and the Royal School of Mines, London, England (ARSM), and an engineer registered in Quebec and Peru.
Pannell succeeds Neil Carragher, who is retiring and has been on the Agrium board since 1996.
Viterra shareholders re-elected ten members of the board of directors March 12 and added two more. Joining the board are Bonnie DuPont and Larry Ruud. DuPont is a group vice president with Enbridge Inc. in Calgary. She earned her Master’s Degree from the University of Calgary and holds a Bachelor’s Degree (Great Distinction) with a focus in Program Administration & Evaluation and Psychology from the University of Regina.
Ruud is a partner with Meyers Norris Penny LLP and provides farm management consulting services in Alberta and B.C. He holds Master’s of Science and Bachelor’s of Science Degrees in Agricultural Economics from the University of Alberta. He owns and operates a farm near Vermilion, Alberta.
In other news, shareholders officially adopted the name Viterra Inc. for the company.
Hanfeng Evergreen Inc. said March 7 that it has appointed Brian Hayward and Lei Li to the board of directors, effective immediately. Hayward and Li replace Graham Warren and Kim Oishi, who are leaving the board to pursue other ventures. David Thomson will assume Warren’s position as chairman of the audit committee.
Sugar Land, Texas-The Coffeyville, Kan., Chamber of Commerce has awarded CVR Energy Inc.’s subsidiary, Coffeyville Resources LLC, the 2007 Industry of the Year Award. The award is given to an area business for its overall business growth, community involvement, and corporate philanthropy. “It is our way of saluting those companies who go above and beyond for our community,” said Lisa Kuehn, Chamber executive director. “Coffeyville Resources was chosen as the Industry of the Year not only for their economic and philanthropic contributions to Coffeyville, but also for their commitment to the community as it recovers from last summer’s record flooding of the Verdigris River.”
West Perth, WA, Australia-Bonaparte Diamond Mines NL said March 12 that is has submitted tenement applications for an additional 6,000 km of phosphate exploration area identified within the regionally mapped zones of increased phosphate concentration off the cost of Namibia, in southern Africa. The 3,000 km project is south of Walvis Bay and is known as the Meob Project. Another 3,000 km project is north of the Bay and is known as the Rocky Point Project. Bonaparte says mapping indicates the areas have P205 content greater than 5 percent by weight, with core zones containing over 20 percent. Bonaparte says sampling results on 1,000 km at Meob shows that phosphate concentration of the recovered seabed sediment can be significantly enriched by a simple screening process to separate the fine fraction, a process which is well within the current tried and tested marine mining and dredging operations. The new applications have been submitted by Bonaparte Tungeni Joint Venture Company, a Namibian registered company in which Bonaparte’s Namibian partners, Tungeni Investments cc, hold a 30 percent interest, while Bonaparte is the operator with 70 percent. The applications are subject to processing by the Namibian Ministry of Mines and Energy. If successful, the venture will hold a total exploration area of 7,000 km. “We are working to consolidate a set of highly prospective properties to develop together with our Namibian partners as the basis for the establishment of a viable marine phosphate mining industry in Namibia,” said Michael Woodbourne, Bonaparte managing director. Bonaparte describes itself as a company focused on diamond producing, maintaining a portfolio of highly prospective projects located in the established diamond producing provinces in southern Africa and Australia. It claims to be the only company in Australia that conducts marine diamond exploration and is one of only a few companies internationally that owns a marine diamond sampling system.
White Plains, N.Y.-Bunge Ltd. said March 12 that it will not proceed with its proposed public offering of senior notes at this time due to unfavorable market conditions. “We have concluded that current conditions in the debt markets are not conducive to completing our offering at this time,” said Jacqualyn Fouse, CFO. “We have sufficient capital to manage our business, and we have decided to wait for a more attractive environment before returning to the debt markets.”
Vancouver-Ringbolt Ventures Ltd. said March 10 that it has signed a letter of agreement with an American private company to acquire potash leases in the Paradox Basin in Utah. Ringbolt says the United States Geological Survey estimates that the Paradox Basin contains 2 billion tons of potash. The company is pleased with the geological location of the leases on an ancient saltwater inlet and with the nature of the potash deposits. The Vancouver, B.C.-based Ringbolt describes itself as a junior resource company whose primary focus is to acquire and develop assets in the agricultural sector. It says it recognizes the need for ag products that by all accounts will stay fundamentally robust for the foreseeable future, due to the forever increasing population of the world and the strong demand from the biofuel industry. It noted that the total U.S. potash production in 2007 only accounted for 12 percent of U.S. consumption, and the balance (88 percent) had to be imported.
Mission, Tex.-EPA Region 6 officials won’t say if Helena Chemical Co. will be on the hook for all or even part of the $6 million spent by federal and state agencies to clean up the old Helena plant that ceased operations in 1972. “We normally pursue cost recovery,” spokesman Dave Bary told Green Markets. “But that matter is under review by the enforcement staff, and we won’t know until the cost recovery staff makes a decision.” Bary did note, however, that there are more potentially responsible parties than just Helena. Cleanup has been on and off since the early 1980s at the site, where pesticides were formulated on a city block surrounded on three sides by homes. As a result of a lawsuit filed by EPA, former owners Helena Chemical and Tex-Ag Co. entered into a consent decree to clean up the contaminated property. In 1982 a district judge ruled all cleanup activities were complete. The state dug up the most highly contaminated soils and buried them in a repository onsite covered by asphalt. But the asphalt cap deteriorated over time and caused concern among residents, reported EPA, which in 2006 removed contaminated soils to a depth of 3½ feet and brought in clean backfill. A month ago, reported Bary, a remaining mix building was removed and soils sampled to see if additional contamination remains.
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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.
