All Posts from October 18, 2010

Fertilizer company president indicted

News

A federal grand jury in San Francisco indicted Peter Townsley, 49, of British Columbia, Canada, with eight counts of mail fraud, two counts of making false statements, and one count of conspiring to commit mail fraud. The indictment was unsealed Oct. 12 after Townsley was arrested Oct. 9 at the Los Angeles Airport. The indictment charges Townsley with engaging in a scheme to defraud purchasers of organic fertilizers, and the agency that approves fertilizers as organic, by falsely representing his company’s fertilizer to be an organic product when he knew that the product contained prohibited synthetic materials.

The news of the “spiking” of organic fertilizers with synthetics broke in California in early 2009 (GM Jan. 5, Jan. 29, Feb. 2, 2009).

According to the indictment, Townsley was the president of California Liquid Fertilizer (CLF), a business formerly located in the Salinas Valley in Gonzales, Calif. CLF sold what it represented as organic fertilizers to organic farms in California. Beginning in approximately April 2000 and continuing until December 2006, Townsley allegedly engaged in a scheme to defraud that involved a CLF product called Biolizer XN.

The indictment charges that in 1998, Townsley signed and submitted applications to the Organic Materials Review Institute (OMRI), an agency that approves fertilizers and other products as organic, to have OMRI certify the Biolizer XN product as organic.

Townsley’s final application on behalf of CLF stated that Biolizer XN was a liquid organic fertilizer composed of ocean-going fish and fish byproducts, feathermeal, and water. In reliance on these representations, in February 1999, OMRI approved Biolizer XN to be listed as an organic fertilizer. CLF then began marketing Biolizer XN as an organic fertilizer that was OMRI listed.

The indictment alleges that in approximately May 2000, Townsley knowingly changed the chemical ingredients in Biolizer XN so that it no longer contained fish or feathermeal; instead, it allegedly contained synthetic ingredients, including ammonium chloride and subsequently ammonium sulfate. Despite knowing that the new formulations did not contain fish and feathermeal, had not been approved by OMRI, and contained synthetic ingredients, Townsley allegedly continued to sell Biolizer XN as an organic product until December 2006. CLF only stopped selling the Biolizer XN as an organic product when the California Department of Food & Agriculture launched an investigation of the product.

The indictment states that Townsley, via CLF, marketed and sold approximately $6 million worth of Biolizer XN between May 2000 and December 2006.

In addition to labeling Biolizer XN as organic and OMRI-approved, the indictment alleges that Townsley submitted annual renewal applications to OMRI stating that Biolizer XN continued to contain organic inputs when he knew that it did not. As a result, OMRI continued to list Biolizer XN as a certified organic fertilizer and Townsley continued to label and market Biolizer XN as an organic product.

Townsley is free on a $150,000 bond

The maximum statutory penalty for each count of mail fraud, in violation of Title 18, United States Code, Section 1341, and for each count of conspiracy to commit mail fraud, in violation of Title 18, United States Code, Section 1349, is 20 years of imprisonment, a fine of $250,000, plus restitution.

The maximum statutory penalty for each count of making false statements, in violation of Title 18, United States Code, Section 1001, is five years of imprisonment and a fine of $250,000.

The Week in Fertilizer Stocks

Fertilizer Stocks
Producer Symbol Price Week Ago Year Ago
Agrium AGU 86.33 75.40 53.04
CF Industries CF 116.81 98.64 90.51
Intrepid Potash IPI 30.95 26.77 25.53
Mosaic MOS 66.55 61.53 50.44
PotashCorp POT 147.17 140.90 93.23
Terra Nitrogen TNH 109.15 99.47 100.68
Distribution/Retail
Andersons Inc. ANDE 41.20 38.34 36.49
Deere & Co. DE 75.09 71.90 43.75
Scotts SMG 52.70 51.51 42.95

Market Watch

Ammonia, Ammonium Nitrate, Ammonium Sulfate, Asia, Bangladesh, Black Sea, California, China, Eastern Cornbelt, Indonesia, Market Watch, Middle East, Nitrogen Solutions, Pacific N.W., Phosphate, Potash, South Central, Southeast, Southern Plains, Sri Lanka, Sulfur, Tampa, U.S. Exports, U.S. Gulf, U.S. Imports, Urea, Western Cornbelt

AMMONIA

U.S. Gulf/Tampa: Price ideas are moving up for November, according to most sources last week.

U.S. ammonia imports for August were off 8 percent, according to the U.S. Department of Commerce, to 557,298 st from the year-ago 605,967 st. However, for July-August, they were up 23 percent, to 1.29 million st from 1.054 million st.

Eastern Cornbelt: Anhydrous ammonia was steady at $650-$675/st FOB, depending on location, with the low quoted in the Illinois market for prompt tons.

Western Cornbelt: Anhydrous ammonia remained at $620-$650/st FOB regional terminals for prompt tons, depending on location. One source pegged the Hoag, Neb., market at the $635/st FOB level last week, and a Missouri contact quoted delivered ammonia at $630/st from southern production points.

Effective Oct. 14, Agrium’s ammonia postings in the Leal and Beulah sales area in North Dakota firmed to $635/st FOB and $655/st DEL.

Southern Plains: Anhydrous ammonia was quoted at $555-$580/st FOB regional production points, depending on location, and $600-$610/st FOB Kansas pipeline terminals. Effective Oct. 4, Agrium’s ammonia posting FOB Borger, Texas, moved to $585/st, up $50/st from the Sept. 13 posting.

South Central: Anhydrous ammonia was quoted at $620/st FOB Memphis, Tenn., for spring, with the upper end of the range at $650/st FOB Henderson, Ky., for fall tons.

Pacific Northwest: Effective Oct. 14, Agrium’s anhydrous ammonia postings firmed to $635/st rail-DEL in Oregon, Washington, and northern Idaho; $655/st truck-DEL in Washington and Oregon east of the Cascades, and in northern Idaho; and $685/st truck-DEL in Montana and northern Wyoming.

Also effective Oct. 14, Agrium’s aqua ammonia posting firmed to $161/st FOB Central Ferry and Finley, Wash.

Middle East: Producers remain fully booked, with demand just edging out supply. Even with the tight market, however, the lack of regular spot deals is playing against efforts by producers to get the contract price to move up.

The FACT/India tender earlier this month put the market around $415-$425/mt FOB, and nothing has changed since then, said one trader. However, the industry seems to be gearing up for higher prices.

Sources report that Iran has a cargo available for November shipment, but is not ready to make a deal. Reportedly, the producer – like many in the industry – still sees room for the price to go up in the next 30-45 days. One trader noted that sellers have no reason to settle early for any sales, because demand is strong enough to keep the price moving up.

Industry sources report that the tons Mitsui buys from Iran will mostly be going to India now.

Until recently, many of the cargoes ended up in South Korea as part of Mitsui’s contract to buyers there. Now, say sources, the Koreas no longer want to have to deal with the complications of working either with the yen or through UAE currency traders.

The U.S. government has an embargo against the use of its currency in deals involving Iranian products. This embargo forces buyers of Iranian ammonia to either use a different currency or work with exchange houses in the UAE.

The change could have a rollover effect on other deals in the region, said one source.

The tons that used to go to South Korea will now most likely go to India and a few other buyers. And tons from Arab producers that once went to India and elsewhere will be sent to South Korea.

One Asian trader noted that dislocation will be temporary as the new shipping schedules and potential swaps are worked out.

Black Sea: Sources report the price is beginning to edge upward again. One trader said that some of the movement in the Yuzhnyy price seems to be related more to currency fluctuations rather than to a real shift in the price of the product.

While some say the price has moved into the mid-$420s/mt FOB, others are saying $420/mt FOB has yet to be breached. A commonly heard range for the region is $415-$425/mt FOB.

Asia: Mitsui sold a cargo of 7,000 mt to a Vietnamese buyer at $485/mt CFR. Given the destination and the price, said one trader, the tonnage could only come from Indonesia.

The Vietnamese port cannot handle vessels much larger than this shipment. And the freight rate from the Arab Gulf for this size would mean either deep discounts from the producer or favorable freight rates.

Traders in the area did not see either event happening.

Rumors are circulating that either the Mitsui or Mitsubishi plant in Indonesia is getting ready for a routine maintenance turnaround. Sources report inquiries circulating to shore up some extra tons. This usually happens when one of the plants is getting ready for a shutdown. The owners want to make sure all contracts can be covered with a minimum of hassles in a changing market.

Demand remains strong in the region. Sources say demand is outpacing supply. Buyers keep asking for the “plus 10 percent” portion of their contracts to be filled. At times, however, suppliers are trying to enforce the “minus 10 percent” provision.

UREA

U.S. Gulf: Urea barges turned around last week and shot up. Most attributed this to positive crop reports from the USDA, while others suggested it might be last minute buying before river close. Most put new sales in the $350-$360/st FOB range for granular.

August imports were up a whopping 103 percent, to 457,814 st from the year-ago 225,667 st. July-August imports were up 84 percent, to 832,192 st from the year-ago 452,575 st.

Eastern Cornbelt: Granular urea was quoted at $390-$405/st FOB regional terminals last week, with the low out of spot river locations in Illinois. The Cincinnati urea market was tagged at a firm $395/st FOB at midweek.

Western Cornbelt: Granular urea remained at $380-$390/st FOB regional terminals, with the upper end reported in the Iowa market and the low in the Missouri boot heel. Effective Oct. 14, Agrium’s granular urea postings firmed to $425/st FOB North Dakota terminals at Alton, Carrington, Colfax, Scranton, and Grand Forks, and $430/st rail-DEL in Minnesota, Wisconsin, and the Dakotas.

Southern Plains: The granular urea market was tagged at $390-$395/st FOB Enid and Inola, Okla., also with tight supplies reported. Koch’s urea posting firmed on Oct. 6 to the $390/st mark FOB Enid.

South Central: Granular urea pricing had firmed to $370-$380/st FOB regional terminals, and suppliers at the low end of that range acknowledged that the market has to firm to keep pace with replacement costs. An Arkansas source quoted the terminal price at the $375/st FOB level in his location last week. One source also quoted an offer of spring prepay urea at the $380/st FOB level early last week.

Southeast: Granular urea pricing had firmed to $390-$395/st FOB Wilmington, N.C., and Norfolk, Va.

Pacific Northwest: Effective Oct. 14, Agrium’s urea postings firmed to $425-$435/st DEL in Montana and Wyoming, depending on location; $440/st FOB West Woodburn, Ore.; $445/st FOB Washington warehouses at Glade, Warden, and Wilson; and $450/st DEL in Washington, Oregon, Idaho, and northern Nevada.

Indonesia: Kaltim closed two urea tenders last week that set market watchers scratching their heads. Both tenders showed a marked increase in the price of urea in the region.

The granular tender for 30,000 mt closed Oct. 12. In the end, the company sold 90,000 mt, with an award price that moved the market to its highest point this year. After looking at the bids, traders tried to figure out who the end users could be.

The winning price was bid by Trada at $347/mt FOB. Kaltim then went to the next two bidders – Indevco and Universal – to see if they would match that price.

They did.

Bids in the tender showed that a majority of the companies thought the market was either soft or stable. Only the Trada bid was higher than the most recent tender business of $343/mt FOB. Sources say each company provided bids for the full 30,000 mt, with the full expectation that Kaltim would offer additional tons if the price was right.

A tally of the bids follows.

Kaltim Granular Tender – October 12, 2010
Company Bid US$/mt FOB
Trada 347.00
Indevco 343.00
Universal 343.00
Fertcom 341.75
Liven 340.75
Brio 338.75
Helm 338.50
Summit 338.50
Parna 338.00
Samsung 336.00
Central Control 335.00
Fietra 334.75
Swiss Singapore 333.00
Toepfer 325.00
Transglobe 321.00
Kolon 320.00

The winning companies were all local traders representing international trading houses. The awards at $347/mt FOB and the international partners are as follows.

Local Company Representing Quantity (mt)
Trada Transammonia 50,000
Indevco Keytrade 30,000
Universal BBSC 10,000

Even as the granular tender closed, Kaltim called a prilled tender that closed Oct. 15.

The company said the minimum offer amount for sale will be 20,000. Sources say, however, the company could end up moving as many as 70,000 mt in the deal.

Results of the tender follow.

Company

Kaltim Prilled Tender – October 15, 2010
Bid US$/mt FOB
Fertcomm 338.75
Central Control Integrated 338.25
Summit 337.75
Trada 337.25
Parna Artha 337.00
Helm 335.00
Swiss Singapore 335.00
Liven 333.00
Fietra 332.00
Indevco 332.00
Universal Harvest 328.00
Brio Agrichem 326.25
Transglobe 325.00
Kolon 323.00
Samsung 321.00

Bids in the tender were for 20,000 mt. As of press time, awards were not issued. The prilled price came in about where sources expected, based on the granular tender. The usual premium for granular over prilled is about $5-10/mt.

But the high price still has people wondering who will be willing to pay these levels.

All told, Kaltim has to have commitments to export 256,000 mt of urea by the end of the year.

The government issued new export permits to Kaltim, PIM, Kujang, and Pusri for the rest of 2010, with the proviso that all cargoes are sold and shipped by December 31.

Pusri is expected to call a prilled tender for 50,000 mt this week. It, too, will have to step up on its exports. Its allotment was set at 152,000 mt.

Besides allowing for more exports this year, the government has also strengthened the penalties against buyers that walk away from their purchases.

In the past, buyers caught the wrong way in the market would just not pick up their awards. The penalty used to be just a few points on the deal for non-performance. Now, buyers must submit a performance bond and a bid bond. The combination is sufficiently tough enough, said one trader, to ensure buyers take their awards in a timely manner.

Middle East: The price of Egyptian urea has dropped at least $15/mt say sources. Others argue the price has come down $25/mt.

The consensus, say sources, is that the Egyptian price is coming back in line with the rest of the global market.

Some argue that weakened demand from the U.S. and Europe led to the price drop. For whatever reason, the price is down. There seems to be agreement that the price has settled at $275-$285/mt FOB.

While Egypt is adjusting, the price in the Arab Gulf remains firm.

Sources report no changes in the pricing ideas from producers. They also report that producers are well booked through this month and into November.

Black Sea: The Yuzhnyy price seems to have stopped its slide, say sources. Talk earlier this month of prices approaching $320/mt FOB was not heard last week as traders talked more about prices in the low $330s/mt FOB.

One trader noted that a lot of the urea market in the area depends on how traders are playing the market at any given time.

At the end of September there seemed to be a concentrated effort to soften the Yuzhnyy price. Now, say sources, the price is rebounding.

One trader attributed the return to stronger prices to rumors that another Indian tender will be called within the next 15 days.

For now, the price seems to be settling at $330-$335/mt FOB.

China: Exports started to flow once again Oct. 16. Sources report ships are lined up ready to be loaded. The only delays this time around, said one trader, will be the priority given to imports.

Chinese port operators want the inbound ships unloaded before any exports are taken care of.

About 650,000 mt needs to be loaded and shipped in the next 45 days just to satisfy demands from the most recent Indian tender.

The export duty dropped back to 7 percent, and is slated to remain at that level through the end of the year.

Sources are now speculating that the “off season” export duty rate might be pushed back to 10 percent next year.

Reportedly, the government is pushing older, less efficient, and more polluting plants to close. At the same time, the central authorities want plenty of tons on hand for the spring application season.

Sources say the only way to ensure fewer tons are exported and are placed in domestic warehouses instead is to raise the export duty and change the windows of export opportunity.

For now, speculation is that the duty will rise to 110 percent Jan. 1.

One trader noted, however, that this has been the standard speculation for the past two years. And each time, he said, Beijing has extended the period of low tariffs by 45 days. The price at the port is reported at $325-$335/mt FOB.

Sri Lanka: A tender for 48,000 mt of bagged urea closed Oct. 8. The Ministry of Agriculture called for the tender, with offers to reflect FOB and CFR prices as well as 180 and 270 day credit plans. Delivery is for February 2011.

Offers showed that traders see a strong market for the product and a stable – if not weak – freight market.

The tally of the tender follows.

Company Quantity (mt) FOB US$/mt CFR US$/mt

Sight CFR US$/mt 180 days CFR US$/mt 270 days
Midgulf 48,000 355.00 375.00 385.00 392.00
ETA (Prilled) 2 x 12,000 355.00 375.47 386.47 391.47
ETA (Prilled) 2 x 12,000 406.07 – 417.97 423.17
ETA (Granular) 2 x 12,000 379.00 389.97 399.97 406.97
ETA (Granular) 2 x 12,000 421.68 – 432.17 439.47
Swiss Singapore 24,000 378.50 393.50 399.00 405.00
Incitec 24,000 370.00 – 400.00 –
Transammonia 48,000 – 393.00 400.00 –
Valency 24,000 367.91 399.91 406.00 412.00

Bangladesh: A shipment of imported urea to Bangladesh is being delayed due to problems with a vessel at the outer anchorage of the Chittagong Port on Oct. 14. According to media, on Oct. 13 at around 2:30 p.m. water began leaking into the Ocean Pearl, a Saint Kitts flag carrier, through its keel. The vessel, carrying 8,000 mt of urea, arrived at Alpha Anchorage on Sept. 3, and is reportedly sinking. As a result, port authorities have sent a tugboat and both the navy and coast guard to assist the ship.

South America: Sources report the price offers into Brazil are sliding. Prills are pegged at $360-$365/mt CFR. Just a couple of weeks ago, industry sources were discussing $370-$375/mt CFR prices.

One trader noted that $370/mt CFR might be possible for a granular cargo, but that most of the talk has been about prills.

Overall, the main selling opportunities lie in South America, say sources. Demand for urea is picking up as the southern cone moves into its wet season.

NITROGEN SOLUTIONS

U.S. Gulf: Price ideas for UAN barges continued to be strong at $270-$280/st FOB ($8.44-$8.75/unit), with little or none available.

UAN imports were off 58 percent in August, to only 32,864 st from the year-ago 78,502 st. July-August imports were off 41 percent, to 90,099 st from the year-ago 151,861 st.

Eastern Cornbelt: Ohio sources quoted the UAN-28 market at $280-$290/st ($10.00-$10.36/unit) FOB Cincinnati for prompt or spring prepay, with dealer pricing out of some inland terminals in the state at the $303/st ($10.82/unit) level. An Illinois source quoted spot UAN-32 pricing at the $325/st ($10.16/unit) FOB level at midweek.

Western Cornbelt: The UAN-32 market was quoted in a broad range at $310-$335/st ($9.69-$10.47/unit) FOB, with both the upper and lower end once again reported in Missouri on a spot basis. Most sources pegged the common market last week at $320-$325/st ($10.00-$10.16/unit) FOB river terminals to the dealer, with some suppliers reportedly referenced as high as $340/st ($10.63/unit) FOB – but with no tons to sell.

Southern Plains: UAN-32 was quoted at $295-$300/st ($9.22-$9.38/unit) FOB regional production points for prompt tons, with spring prepay pegged in the $310-$315/st ($9.69-$9.84/unit) FOB range.

South Central: The UAN-32 dealer market was pegged at $295-$305/st ($9.22-$9.53/unit FOB regional terminals on the low end, with some contacts in Arkansas quoting dealer reference levels solidly at the $320/st ($10.00/unit) FOB level last week.

Southeast: Sources quoted UAN-30 at $275-$280/st ($9.17-$9.33/unit) FOB Wilmington and Norfolk, Va., with the low reported early in the week and the upper end as the week advanced. Out of inland terminals in Georgia, sources said UAN-32 prices continued to lag at $280-$290/st ($8.75-$9.06/unit) FOB last week.

UAN-32 vessel tons were pegged at the $313/mt CFR mark last week.

California: Effective Oct. 15, Agrium’s UAN-32 postings firmed to $333/st ($10.41/unit) FOB Sacramento, $355/st ($11.09/unit) truck-DEL in Central California, and $360/st ($11.25/unit) truck-DEL in Northern California. Those levels reflect a $20/st increase from the company’s Sept. 23 postings.

Pacific Northwest: Agrium’s UAN-32 postings firmed on Oct. 15 to $340/st ($10.63/unit) rail-DEL in Washington, northern Idaho, and Oregon excluding Malheur County; $345/st ($10.78/unit) rail-DEL and $350/st ($10.94/unit) truck-DEL in Nevada, southern Idaho, and Oregon’s Malheur County; and $350/st ($10.94/unit) DEL in Montana and northern Wyoming. Agrium’s UAN-28 posting firmed on Oct. 15 to $306/st ($10.93/unit) DEL in Montana and northern Wyoming.

AMMONIUM NITRATE

U.S. Gulf: The most recent business was called $300-$302/st FOB for barges, though some sources still believe product could be found sub-$300/st FOB.

August imports were up 5 percent, to 35,320 st from the year-ago 33,507 st. July-August imports were up 10 percent, to 67,791 st from the year-ago 61,807 st.

Western Cornbelt: Ammonium nitrate had firmed to $330-$340/st FOB regional terminals, up $15/st from last report.

Southern Plains: Ammonium nitrate was steady at $320-$330/st FOB the Tulsa market.

South Central: Ammonium nitrate was pegged in a broad range at $300-$325/st FOB regional terminals to the dealer, with the low reported in the Arkansas market in early October.

Southeast: Ammonium nitrate remained at $315-$320/st FOB Tampa.

AMMONIUM SULFATE

Eastern Cornbelt: Granular ammonium sulfate was pegged at $230-$240/st FOB in the region, up from last report, with the upper end FOB E. Liverpool, Ohio.

Western Cornbelt: Granular ammonium sulfate was quoted at $220-$230/st FOB in the region. Effective Oct. 13, Agrium’s granular ammonium sulfate posting moved to $260/st rail-DEL in Minnesota, Wisconsin, and North Dakota.

Southern Plains: Effective Oct. 4, American Plant Food’s granular ammonium sulfate postings in Texas firmed to $210/st FOB Freeport, $220/st FOB Galena Park, $235/st FOB Fort Worth, and $250/st FOB Littlefield. Coarse ammonium sulfate postings from the company firmed to $200/st FOB Freeport, $210/st FOB Galena Park, $225/st FOB Fort Worth, and $240/st FOB Littlefield, while standard grade moved to $195/st FOB Freeport and $235/st FOB Littlefield. APF’s N-Pac Compacted posting firmed on Oct. 4 to $225/st FOB Galena Park.

Ammonium sulfate postings FOB Plainview, Texas, also firmed on Oct. 4 to $250/st for granular, $240/st for coarse, and $235/st for standard.

South Central: The granular ammonium sulfate market was tagged at $225/st FOB on the low end last week. Effective Oct. 4, granular ammonium sulfate postings from American Plant Food firmed to $240/st FOB Mermentau, La.

Southeast: Granular ammonium sulfate was up as well. Sources quoted the granular sulfate market at $185/st FOB Hopewell, Va., and $190/st FOB Augusta, Ga., with delivered postings from DSM at $205/st in Georgia and $210/st in Florida.

Pacific Northwest: Effective Oct. 13, Agrium’s granular ammonium sulfate postings firmed to $255/st FOB warehouses in Washington, Oregon, Idaho, Nevada, and Utah; and $260/st DEL in those states plus Montana and Wyoming. Those prices reflected a $10/st increase from Sept. 13 postings.

PHOSPHATES

Central Florida: Producers had nothing available for prompt sales last week, and traders were struggling to find anything available on almost any basis. As the summer season comes to end, the fall season is empty, so the only real option is winter for fill.

Also, Mosaic and the Sierra Club and other opponents met a couple of weeks ago in negotiations to begin mining the 10,500-acre expansion the company was seeking, but no word has leaked out on whether anything was settled – or when mining can begin.

The most dangerous period of the six-month hurricane season was half over late last week, and no storms had threatened Florida. By the end of November, the jet stream will make it difficult, if not impossible, for a strike in the state. Fingers were crossed.

Last week, CF posted its prompt DAP price of $530/st FOB, but had nothing available to sell. Mosaic’s posted price was $540/st FOB for forward buys in late December and January. Based on posted prices, since nothing else was available, the Central Florida DAP price range last week was $530-$540/st FOB. PCS was making sales at “competitive prices.” Agrifos was considering offers to buy on a “case-by-case basis,” and truck sales were the most likely to be accepted. Agrifos had no MAP available for sale.

U.S. Gulf: Two weeks ago, NOLA DAP and MAP barges on the river were running low, but that changed last week. What was believed to be the last barge available before river closing was sold, and at a very nice price – $570/st FOB. It’s not likely anything else will be available until November.

Offers to sell barges for late October and early November were running between $545/st FOB and $555/st FOB, and it was likely those prices will be going up this week, assuming something becomes available.

Most of the action last week was at terminals and warehouses, where dealers and farmers were looking for anything that might become available. In some cases, the only thing available in warehouses was product that had already been sold and was awaiting pickup.

“Farmers may have to wait until winter to get what they need,” a source said. Most should be able to get what they need, assuming the weather doesn’t delay deliveries.

Mosaic, which had nothing available until late December or January, had a posted price of $560/st FOB. It, too, was running low at many of its warehouses, and especially low in North Dakota.

Terminal prices were running between $585/st FOB and $600/st FOB.

The big push was already underway when the USDA issued its revised crop report. The price for December 2010 corn rebounded after dropping the previous week to hit $5.73/bushel late last week, while corn for December 2011 moved up to $5.19/bushel on the futures board.

The Russian DAP that will be available very soon – if not already – was bringing a low price of $545/st FOB, while Moroccan was selling at the same price as U.S. produced, $555/st FOB. The Moroccan DAP is dark, like the U.S.- produced DAP, but the Russian is blonde. While the Russian was a higher quality, it was harder to sell. However, dealers can blend it.

The NOLA DAP barge price range was both higher and lower than the previous week’s range of $550-$565/st FOB, and changed to $545-$570/st FOB last week. Asking prices late last week were $555-$565/st FOB. NOLA DAP prices barges will likely creep upward during the next week. MAP was bringing a premium of about $10/st FOB last week.

Eastern Cornbelt: Phosphate and potash prices continued to firm, with reports of very limited supplies.

Sources pegged the DAP market at $605-$625/st FOB in the region, with the low in the Illinois market and the upper end confirmed in eastern Ohio. MAP was $15-$20/st higher than DAP where available. The 10-34-0 market had reportedly firmed to $ $460-$470/st FOB, with the upper end once again reported in the Ohio market.

Western Cornbelt: Sources said most warehouses in the region remained low or out of phosphates and potash at mid-month, and the markets continued to firm. Sources continued to expect brisk plowdown business, although product availability was a big concern. “I’m not sure how we’ll have a fall fertilizer season, since we can’t get any product,” said one Missouri contact. “We’ve cleaned the system out pretty fast.”

Other sources lamented the cautious and noncommittal attitude from their farmer customers. “We just can’t get the farmers to tell us much,” said one. “I don’t think they realize the chain of events to get product in place. It becomes our problem.”

DAP had firmed to $595-$605/st FOB regional warehouses, with most sources touting the upper end of that range as the week advanced. MAP was pegged in a broad range at $620-$640/st FOB, with both the high and low reported on a spot basis in Missouri. An Iowa source quoted MAP in his market firmly at $625/st FOB last week for very limited tons, if available at all.

10-34-0 was quoted at $445-$465/st FOB, with the low in Nebraska and the upper end in the Iowa market.

Southern Plains: As a result of brisk movement in the region for plowdown and preplant wheat applications, supplies of most fertilizer products were extremely tight last week. “I’ve never seen so little product,” said one source. “We’re out of DAP and we’re out of potash.”

DAP was quoted at a firm $595/st FOB the Tulsa market for very limited tons. One source said the phosphate market was theoretical due to lack of availability, with the only recent DAP sale confirmed at the $605/st FOB mark. MAP was at a significant premium to DAP, with the only confirmed sales taking place at the $640/st mark FOB Tulsa.

10-34-0 in the Kansas market had reportedly firmed to $445/st FOB where available, up $65-$70/st from last report. Agrium reposted its SPA and MGA postings on Oct. 1 to $925/st rail-DEL in Colorado, Kansas, Oklahoma, New Mexico, and Texas.

South Central: The DAP market had firmed to $575-$585/st FOB/st FOB regional warehouses and was in particularly short supply. MAP was roughly $20/st higher than DAP, where available. TSP was quoted at $480/st FOB the Memphis market to the dealer.

U.S. Export: With U.S. domestic prices high and inventories low, little effort was being put into the export market last week.

One transaction was done last week by PhosChem, a 6,000-mt deal into Central America at $580/mt FOB Tampa.

However, prices in Brazil were only around $580/mt FOB, so no real effort was being put into selling into that market at current prices. Freight rates were between $35/mt and $40/mt, so that market does not look attractive.

Based on the sale last week, the export market price range was $570-$580/mt FOB. Prices will have to increase substantially in order to attract sellers of U.S. product.

Sri Lanka: The Ministry of Agriculture closed a TSP tender Oct. 8 for 24,000 mt. The tally of the results follows. Delivery is slated for February 2011.

Company Phosphates (mt) FOB US$/mt CFR US$/mt Sight CFR US$/mt 180 days CFR US$/mt 270 days
ETA 2 x 12,000 422.00 444.97 458.47 465.97
ETA 2 x 12,000 422.00 479.47 493.57 510.47
Swiss Singapore 12,000 432.00 452.00 459.30 462.50
Swiss Singapore 12,000 444.50 464.50 470.00 475.50
Valency 12,000 425.60 457.60 464.50 471.46

POTASH

Eastern Cornbelt: Potash had reportedly strengthened to $440-$465/st FOB, with the upper end reflecting new warehouse postings from at least one producer as the week advanced. One source said his suppliers pulled their prices early in the week in anticipation of new and higher reference levels for allocated tons. “I am still waiting on tons from summer fill at the terminals from the previous order,” he added. PotashCorp confirmed last week that it has stopped accepting orders at current published prices. It will issue a new price list within a few weeks and resume booking orders at that time.

Western Cornbelt: Potash had firmed to $440-$465/st FOB the warehouse, with the upper end reflecting new dealer reference levels based on updated postings from Mosaic. Missouri sources quoted the market at a firm $450/st FOB St. Joseph at midweek, while spot Missouri River locations remained at $440/st FOB for red granular and $447/st FOB for white.

Southern Plains: Potash out of regional warehouses had reportedly firmed to $440-$450/st FOB and was in tight supply. Intrepid Potash’s postings FOB Carlsbad, N.M., firmed on Oct. 1 to $375/st for 60 percent standard, $380/st for 60 percent granular, $382/st for 62 percent standard, $385/st for 62 percent fine standard, and $388/st for 62 percent granular. On Oct. 15, however, Intrepid hiked its Carlsbad potash postings again, to $430/st FOB for 60 percent standard, $432/st FOB for 62 percent standard, $435/st FOB for 60 percent granular and 62 percent fine standard, and $443/st FOB for 62 percent granular. The company’s potash postings FOB Moab and Wendover, Utah, firmed on Oct. 15 to $430/st for 60 percent standard and $435/st for 60 percent granular.

Intrepid’s Carlsbad postings for Sulfate of Potash Magnesia (Intrepid TrioTM) firmed on Oct. 15 to $216/st for standard and $246/st for granular.

South Central: The regional potash market had firmed to $425/st FOB on the low end last week, with the upper end of the range quoted at the $440/st FOB mark. One source talked of Israeli tons headed for the Gulf at the $420/st level, which he said would support the $440/st FOB warehouse price.

Agrium’s red premium potash postings for the Sept. 13 through Dec. 31 order and shipping period include $455/st rail-DEL in Kentucky and Tennessee.

Southeast: Sources said a potash price increase of $25/st was taking effect for new orders, though one contact said he could still place an order last week at the previous $455-$465/st rail-DEL level.

U.S. Imports: Imports were up 126 percent in August, according to the Department of Commerce, at 885,312 st from the year-ago 392,113 st. July-August imports were up 97 percent, to 1.38 million st from the year-ago 699,771 st.

Sri Lanka: The Ministry of Agriculture closed a 24,000-mt MOP tender Oct. 8. Delivery is slated for February 2011.

Company Potash (mt) FOB US$/mt CFR US$/mt Sight CFR US$/mt 180 days CFR US$/mt 270 days
ETA 2 x 12,000 420.00 432.97 444.97 452.97
ETA 2 x 12,000 466.77 479.47 487.87 –
Dragon Asia 12,000 or 24,000 392.00 450.00 459.50 467.00
Swiss Singapore 24,000 441.50 469.50 475.50 479.00
Toepfer 24,000 395.00 448.00 458.20 464.00

SULFUR

Tampa: The eyes and ears of the sulfur and phosphate industries were on the negotiations for fourth-quarter molten sulfur prices last week. Unfortunately for all the accountants in both industries, no new price was reached. It may take another couple of weeks to complete.

With prices in the Middle East at $170/mt FOB ($160/mt FOB with the discount most customers get), the domestic price of $95/lt made the Tampa rate far too low for those in the sulfur industry. Sources said the sulfur interests would not only like the $50/lt they gave up in the last quarter back, but a bit more as well. Even some in the phosphate industry agree, but how much higher was not close to being settled late last week.

The phosphate industry was more interested in keeping its own production running as hard as possible, because its market was booming last week. Phosphate inventories will remain low until at least the end of the year, assuming it can get the sulfur it needs for production.

China was still taking a back seat in sulfur buying, but that will likely change fairly soon. World prices will likely rise at that point.

U.S. Imports: Imports were up 101 percent in August, to 181,263 st from the year-ago 89,965 st. July-August imports were up 91 percent from 233,582 st to 447,058 st.

Management Briefs – October 18, 2010

Management Briefs

CHS has announced the pending retirements of three executives: Tom Larson, 62, executive vice president-Business Solutions, and Leon Westbrock, 63, executive vice president and chief operating officer-Energy, both retiring Oct. 29; and John Schmitz, 59, executive vice president and chief financial officer, retiring Dec. 31.

It was announced earlier that CHS President and CEO John Johnson, 62, plans to retire Dec. 31 (GM June 28, 2010). The search committee of the CHS board of directors remains on track with its process to name a new CEO, with an announcement expected prior to the farmer-owned cooperative’s annual meeting Dec. 2-3, 2010.

“This is a time of transition for CHS that we have anticipated with considerable preparation,” Johnson said. “Our comprehensive talent development efforts have provided the company with candidates with the depth of experience and leadership skills to succeed these individuals. The company has a clear strategic direction, developed with involvement from dozens of members of the current management team, all of which will enable the company to pursue its long-term goals and continue adding value for its stakeholders.

“And, in making their personal decisions to retire, Leon, Tom, and John also recognize that it is in the best interest of the company and its stakeholders to enable the new CEO to name their own leadership team.”

Larson’s background at CHS was in agronomy. He started out as an agriculture teacher before joining the former Cenex agronomy sales staff, later managing the local cooperative at Hoffman, Minn. He returned to the regional co-op in 1978 and held positions in marketing and planning, was director and later vice president of agronomy services for the former for Cenex/Land O’Lakes Agronomy Co., and led the former Cenex Supply and Marketing retail unit. He assumed his current position in 2005.

Israel Chemicals Ltd. announced that Amnon Sade, a director for the past 11 years, tendered his resignation effective Oct. 4.

Rentech Inc. has appointed Tom Samson as executive vice president and chief development officer, effective immediately. He will be responsible for Rentech’s project development and construction, technology licensing, and commercial affairs. Samson has more than 20 years of experience in development and management of power and utility projects, and in executive management of operating power companies. The majority of his career has been spent at Marubeni Corp. in the U.S., Europe, the Caribbean, and Abu Dhabi. This included serving as president and CEO of Marubeni TAQA Caribbean, a partnership of Marubeni and Abu Dhabi National Energy Co. (TAQA). He holds an honors degree in Energy Engineering from Napier University and is a Chartered Engineer and member of the Institution of Mechanical Engineers.

CF reportedly eyeing sale of terminals

News Briefs

Deerfield, Ill.-CF Industries Holdings Inc. is reportedly eyeing the sale of at least a handful of terminals in the Cornbelt, according to reports from industry sources in recent weeks. Those identified were in Cincinnati, Ohio (UAN and dry); Albany, Ill. (dry, UAN, and ammonia); St. Louis, Mo. (dry); and Peoria, Ill. (dry). CF had no comment. Sources note that any sale would be in line with CF’s promise to garner $135 million in synergies (GM May 31, Aug. 2, 2010) within 18-24 months from its recent acquisition of Terra Industries Inc.

USDA forecasts record-high soybean crop

News Briefs

Washington-The U.S. Department of Agriculture updated its corn production estimates on Oct. 8, and industry sources said the new figures added fuel to the fire driving up fertilizer prices. Corn production is forecast at 12.7 billion bushels, down 4 percent from the September forecast and down 3.4 percent from last year’s record production of 13.1 billion bushels, according to the latest Crop Production report by USDA’s National Agricultural Statistics Service (NASS). Based on Oct. 1 conditions, corn yields are expected to average 155.8 bushels/acre, down 6.7 bushels from the September forecast and down 8.9 bushels from 2009’s 164.7 bu/a yield, but still the third highest yield on record. Corn growers are expected to harvest 81.3 million acres, up 0.3 percent from the September forecast. Forecasted yields decreased from last month throughout much of the Cornbelt and Tennessee Valley, with Illinois showing the largest decline of 14 bu/a, Indiana and Iowa dropping 10 bu/a, and Missouri and Nebraska declining 9 bu/a from last month. On the heels of a warm growing season, U.S. soybean production is forecast at a record-high 3.41 billion bushels, down 2 percent from the September forecast but up 1 percent from last year’s record crop. Soybean yields are expected to average a record high 44.4 bu/a, down 0.4 bu/a from last month but up 0.4 bu/a from 2009. Compared with last month, soybean yields are forecast lower or unchanged in all major producing states except Illinois, Kentucky, Louisiana, Michigan, New York, and Wisconsin, with record-high yields expected in Illinois, Louisiana, Nebraska, New York, North Dakota, and Wisconsin. Soybean growers are expected to harvest a record-high 76.8 million acres, down 1 percent from the September estimate, but up 0.6 percent from last year’s acreage. All cotton production is forecast at 18.9 million bales, up 55 percent from last year. This is the first increase in cotton production in the U.S. since 2005. The cotton yield is forecast at 841 pounds/acre, up 64 pounds from last year. If realized, this will be the third largest yield on record.

Cargill 1Q income up 68 percent

News Briefs

Minneapolis-Cargill Inc. reported net earnings of $883 million in the fiscal 2011 first quarter ended Aug. 31, up 68 percent from $525 million in the same period a year ago. Excluding earnings from its majority investment in The Mosaic Co., Cargill earned $693 million, a 51 percent increase from $458 million in the year-ago period. First-quarter revenues rose 6 percent, to $27.8 billion. “Cargill posted a strong start to the new fiscal year,” said Greg Page, Cargill chairman and CEO. “Our results were led by the food ingredients and the commodity trading and processing segments, both of which experienced resurgence in volatility across agricultural commodity markets. The change put Cargill’s global breadth, trading and risk management skills more acutely into play as we worked with customers to help them manage their price risk and raw material needs.”

Innophos takes $12M write-down

News Briefs

Cranbury, N.J.-Specialty phosphate maker Innophos Holdings said Oct. 13 that it has learned that the Mexican Supreme Court affirmed an appellate court ruling upholding resolutions of the Mexican National Waters Commission, or CNA, requiring the company’s Mexican subsidiary, Innophos Fosfatados S.A. de C.V., to pay higher water duties for the 1998-2002 period. Innophos said the liability, net of income taxes, amounted to approximately $20 million at current exchange rates, and reiterated that it was fully indemnified for it by Rhodia, S.A., and affiliates under agreements by which Innophos purchased its business from those parties in 2004. Rhodia’s indemnity obligation was previously confirmed by New York’s highest court. Innophos stated it intended to record the liability and an off-setting receivable for the indemnity, resulting in no net charge. Innophos said the next step in the 1998-2002 case would be for the CNA to issue new resolutions consistent with the court ruling, and once those resolutions became effective, to make payment. Innophos said its representatives were working with Rhodia representatives to coordinate required payments in a timely manner. The company also announced that, as a result of the latest court decision, it was taking an earnings charge in the 2010 third quarter, net of taxes, of $12 million for a related, previously disclosed contingent liability for higher water duties for the period 2005 to present. That contingent liability is already the subject of an indemnity claim in pending New York State Supreme Court proceedings being pursued by Innophos against Rhodia for related losses. Finally, Innophos added that, if future rates were set at the levels upheld in the court decision, annual pre-tax expenses for water at its Coatzacoalcos, Mexico facility could increase by approximately $1-2 million at current exchange rates, depending on capacity utilization. In other news, Innophos said its board of directors declared a dividend of $0.17 per share of common stock. The dividend will be payable Oct. 29, 2010, to stockholders of record as of the close of business on Oct. 18, 2010.

Venezuela nationalizes FertiNitro

Featured, News

Venezuelan President Hugo Chavez has nationalized nitrogen maker FertiNitro, according to reports in the Latin American press. Private U.S. company Koch Industries Inc., which owns a portion of FertiNitro, could not confirm the news early in the week.

“We’ve seen the news reports of President Chavez’s ‘forced acquisition’ of FertiNitro,” a Koch spokesperson told Green Markets Oct. 12. “We have not received details on how this will affect the offtake going forward. We are still attempting to obtain details and other information.” Koch did not respond to inquiries made later in the week.

FertiNitro, located in the Jose Petrochemical Complex in Venezuela, ranks as one of the world’s largest nitrogen-based fertilizer plants, with nameplate daily production capacity of 3,600 mt of ammonia and 4,400 mt of urea. FertiNitro is owned 35 percent by a Koch subsidiary, 35 percent by Pequiven, 20 percent by a Snamprogetti S.p.A. subsidiary, and 10 percent by a Cerveceria Polar C.A. subsidiary.

Ironically, Fitch Ratings had just renewed FertiNitro Finance Inc.’s bonds at “CCC” Rating Watch Negative, despite improved performance by the company (GM Oct. 11, p. 16). Fitch told Green Markets Oct. 14 that it anticipates putting out a press release to update the news, but one was not received by press time.

FertiNitro’s presence in socialist Venezuela has always been a concern. Prior to Koch’s involvement in the project, which began in 1998, other U.S. companies considered involvement, but shied away.

A FertiNitro nationalization is just another in a long list of nationalizations by Chavez. Two more were announced at the same time – Industrias Venoco CA, a lubricant company; and a large ranch owned by a unit of the Vestey Group, a British company, with the latter reportedly done on amicable terms.

There is no word as to what will happen to the private stakes in FertiNitro, or to Koch’s 50 percent offtake agreement. To date, other nationalizations have resulted in reimbursement to the private players, arbitration, or minority ownership.

Any future Koch offtake is now in doubt due to quotes attributed to Venezuela Energy Minister Rafael RamArez in El Universal. “The Koch company grabbed our fertilizer and was selling it abroad at speculative prices,” he reportedly told workers at the plant Oct. 11.

Industry observers said last week that the news would likely have more impact on urea than ammonia. Urea, they say, would be more apt to find a home in Venezuela or other nearby Latin American countries, whereas ammonia, with limited storage and less demand in general in Venezuela or Latin America, might continue to find a home in traditional markets. Sources said Northwest Europe has been a regular destination for the product.

As for Koch, sources noted that if the company loses out on the offtake product it could bring more discipline to the urea market, as the company will have fewer options in sourcing product.

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