All Posts from September 17, 2012

CHS partners with Montana co-op to build dry fert warehouse

CHS Inc. and Mountain View Co-op, Black Eagle, Mont., announced on Sept. 10 that they have formed a limited liability company to build a 35,000 ton dry fertilizer warehouse at Collins, Mont. Construction on the warehouse is underway, with completion expected mid-summer 2013.

Products stored at the new facility will include urea, phosphates, potash, ammonium sulfate, and micronutrients. Mountain View will be the facility’s exclusive fertilizer retailer, serving growers throughout its trade area in north-central Montana. According to its website, Mountain View currently operates a grain elevator at the Collins location.

“Over the years, we’ve noticed a continued shift to earlier planting, and an increase in the time it takes fertilizer manufacturers to get products to us to meet growers’ needs,” said Bruce Clark, Mountain View’s general manager. “This new facility will enable us to meet our growers’ increased demand for nitrogen and sulfur products, to ensure healthy, profitable crop production.”

CHS said the new warehouse supports its strategic aspirations of investing in projects that leverage cooperative enterprise capabilities and focus on grower needs.

“Urea normally produced and shipped from Canada is increasingly being used locally by Canadian farmers, greatly limiting product availability,” said Cheryl Schmura, CHS vice president, Crop Nutrients. “The strategic location of the Collins fertilizer hub plant means customers in this region will have a secure, competitive supply.”

Mountain View operates 10 agronomy locations within a 100-mile radius of Great Falls, Mont., serving farmers growing dryland winter wheat and barley, malt barley, and irrigated hay. In addition to its Collins location, Mountain View’s facilities are in Big Sandy, Brady, Conrad, Fairfield, Fort Benton, Great Falls, Dutton, Lincoln, Power, and White Sulphur Springs.

Uralkali results up; cites small competitors for loss of export market share

Uralkali reported a 33 percent increase in EBITDA, to $1.4 billion, for the first half ending June 30, 2012, up from the year-ago $1.05 billion. Net profits were up six percent and revenues 13 percent. Profits were $842 million on revenues of $2.23 billion, compared to the year-ago $794 million and $1.97 billion, respectively.

Overall potash sales volumes were off 3 percent, to 5.1 million mt from 5.3 million mt. China was Uralkali’s largest customer at 30 percent, followed by Russia at 20 percent, Brazil at 12 percent, Southeast Asia at 11 percent, Europe at 10 percent, and India at only 8 percent. The U.S. was at 5 percent. While domestic sales were up 3 percent, to 1 million from 900,000 mt, exports were off 7 percent, to 4.1 million mt from 4.4 million. However, export prices were up 17 percent, to $380/mt FCA from the year-ago $324/mt FCA. Domestic prices were also up, at $270/mt FCA from $190/mt FCA. Production was down, at 4.8 million mt from the year-ago 5.2 million mt.

Uralkali sees a slump in global potash deliveries in 2012 to 50 million mt, down from 2011’s 57 million mt. However, it believes high commodity prices and drought conditions will spur both demand and the price for potash for 2013, and that deliveries will move back up to 55-57 million mt. Major areas for increases in 2013 include the U.S., Brazil, and Southeast Asia. For the remainder of 2012, Uralkali sees ongoing challenges in India, which includes weak sales volumes due to high prices and a deficient monsoon, as well as decreased subsidies. The company says Indian volumes for 2012 will likely be down at 3.5-4 million mt, limiting the room for a possible price increase. “We don’t expect miracles out of India, but we do believe that the market will also steadily improve,” the company told analysts, citing high crop prices and low application rates. It also says there is a lack of clarity with respect to the Chinese contract, with that market being seasonally slow in addition to the accumulation of high port inventories, though it expects to have talks with the Chinese in October or November and be able to conclude contracts for 2013. Macroeconomic concerns, such as the European situation, are also a factor. The company expects stable prices for the rest of 2012, with increases for first quarter 2013 and beyond spurred on by good demand.

Uralkali also believes that smaller, aggressive competitors – Israel Chemicals Ltd. (ICL), Arab Potash Co. and K+S Group – took market share away from Belarusian Potash Co. (BPC) and Canpotex Ltd. in the first half. Uralkali cites price competition, mainly in Brazil and Southeast Asia, though U.S. players have argued ICL has had an impact on the U.S. barge market. Uralkali estimates that the three had a combined 29 percent share in the first half, up from the year-ago 27 percent, while BPC dropped a point from 42 to 41 percent, and Canpotex fell from 29 to 28 percent.

Uralkali also noted that it is in the process of increasing its own capacity, and expects to add some 1.5 million mt/y by the end of the year to the Berezniki-4 plant’s present capacity of 11.5 million mt/y. It has also commenced construction on the Ust-Yayvinsky mine, which will have an annual capacity of 2.8 million mt/y and will be used to replace the depleting capacity of the Berezniki-2 mine.

USDA lowers forecast for corn, soybeans, cotton; record high rice yields expected

In its Sept. 12 Crop Production report, USDA said U.S. corn production is forecast at 10.7 billion bushels, down less than 1 percent from the August forecast and down 13 percent from 2011. This represents the lowest production in the U.S. since 2006.

USDA dropped its projected average corn yield again, to 122.8 bushels/acre based on conditions as of Sept. 1, down 0.6 bushel from the August forecast and 24.4 bushels below the 2011 average. If realized, this will be the lowest average yield since 1995, USDA noted. Corn area harvested for grain is forecast at 87.4 million acres, unchanged from the August forecast but up 4 percent from 2011.

“The Sept. 1 corn objective yield data indicate the lowest number of ears per acre since 2005 for the combined 10 objective yield states (Iowa, Illinois, Indiana, Kansas, Minnesota, Missouri, Nebraska, Ohio, South Dakota, and Wisconsin),” the report said.

Referring to August weather conditions, USDA said “limited, early-month precipitation in portions of the Corn Belt was beneficial to late-planted fields, but did little to help drought-affected, mature corn.” USDA noted that “producers in some states chose to chop corn for silage or bale it for hay as it would provide better nutrition for livestock given crop conditions this year.”

USDA also released its World Agricultural Supply and Demand Estimates (WASDE) report on Sept. 12, which projected corn ending stocks for 2012/13 at 733 million, up 83 million bushels. The season-average farm price for corn was projected at $7.20-$8.60 per bushel, down 30 cents on both ends of the range from last month.

USDA estimated U.S. soybean production at 2.63 billion bushels, down 2 percent from August and down 14 percent from last year. Based on Sept. 1 conditions, soybean yields are expected to average 35.3 bushels/acre, down 0.8 bushel from last month and down 6.2 bushels from last year.

Compared with last month, USDA’s yield forecasts for soybeans are lower or unchanged across the Great Plains and most of the Corn Belt “as lingering drought conditions continued to hamper yield expectations.” Soybean area for harvest in the U.S. is forecast at 74.6 million acres, unchanged from August but up 1 percent from last year.

The WASDE report projected soybean ending stocks at 130 million bushels for 2012/13, down 15 million from last month, while the season average soybean price remained unchanged from last month at $15-$17 per bushel.

All U.S. cotton production is forecast at 17.1 million 480-pound bales, down 3 percent from last month, but up 10 percent from last year. Yield is expected to average 786 pounds/harvested acre, down 4 pounds from last year. The WASDE report estimated cotton ending stocks at 5.3 million bales, while the marketing-year average price received by cotton producers was narrowed to 62-78 cents per pound.

U.S. rice production is forecast at 196 million cwt, up 3 percent from August and up 6 percent from last year. USDA said rice planted area is now estimated at 2.70 million acres, up 1 percent from the June estimate and up slightly from last year. Area for harvest is expected to total 2.68 million acres, up 1 percent from June and 2 percent higher than 2011.

Based on conditions as of Sept. 1, the average U.S. rice yield is forecast at a record high 7,334 pounds/acre, up 138 pounds from August and up 267 pounds from last year. Record high rice yields are forecast in Louisiana and Texas, USDA said.

The 2012/13 all rice season-average farm price is forecast at $13.70-$14.70 per cwt, down 40 cents per cwt on each end of the range from last month.