All Posts from November 18, 2013

Ammonium Sulfate

Ammonium Sulfate, California, Eastern Cornbelt, Market Watch, Pacific N.W., Western Canada, Western Cornbelt

Eastern Cornbelt: Granular ammonium sulfate was unchanged at $270-$280/st FOB in the Eastern Cornbelt. Ammonium thiosulfate remained at $340-$355/st FOB.

Western Cornbelt: Granular ammonium sulfate was steady at $255-$275/st FOB in the Western Cornbelt, with both the high and low ends of the range quoted in Missouri last week. An Iowa source put the dealer market commonly at the $265/st FOB level.

Ammonium thiosulfate was pegged at $315-$335/st FOB at mid-month, depending on location.

California: Ammonium sulfate was reported at $260-$290/st FOB in California, depending on grade, location, and supplier. Sources pegged the standard market at $260-$275/st FOB Lathrop, Calif. Effective Nov. 7, IRM’s posting for Tranzform and WesternPremium ammonium sulfate dropped to $290/st FOB Chico, Calif., with WesternStandard ammonium sulfate moving to $280/st FOB Chico and Woodland, Calif.

Yara reported on Nov. 13 that its distribution agreement with American Plant Food Corp. (APF) for bulk standard ammonium sulfate at Yara’s dry facility in Stockton has come to an end. Yara said it will instead dedicate resources and warehouse space at Stockton to its recently introduced Amidas™ fertilizer, which the company describes as a 40-0-0 5.5 percent sulfur homogeneous fertilizer that combines urea and ammonium sulfate into one particle.

Yara said the 7.3:1 nitrogen to sulfur ratio in the product is optimal for grain crop fertilization, while ammonia volatilization is reduced by acidity formed from ammonium sulfate.

APF, which is headquartered in Galena Park, Texas, will continue to supply the California market with ammonium sulfate from its Woodland inventory.

Pacific Northwest: Effective Nov. 7, IRM’s posting for Tranzform and WesternPremium ammonium sulfate dropped to $255/st FOB warehouse and $265/st rail- or truck-DEL in Oregon, Washington, Idaho, and Montana, with WesternStandard ammonium sulfate pricing falling to $215/st FOB and $225/st DEL in those states. Those levels reflect a $35/st drop from the company’s previous postings.

Ammonium thiosulfate was steady at $310-$330/st FOB in the Pacific Northwest, depending on location and supplier.

Western Canada: Granular ammonium sulfate was pegged at $380-$385/mt DEL in Western Canada.

Kerimov to sell Uralkali stake to Onexim

Breaking Industry News

Suleiman Kerimov, OAO Uralkali’s major shareholder has agreed to sell his stake in the company, a move that may persuade Belarus to extradite Uralkali CEO Vladislav Baumgertner back to Russia. The sale may also open the door to Belarus and Uralkali working together once again.

Russia’s Onexim Group said Nov. 18 that it has agreed to buy a 21.75 percent stake in Uralkali owned by the Suleiman Kerimov Foundation. The parties expect the transaction to close shortly. The deal does not require any regulatory approvals. The terms of the transaction are confidential, as agreed upon by the parties.

“The purchase of the stake in Uralkali is a long-term investment in a company that is unique from the standpoint of its position in its industry and its role in the world economy. We are certain that the potash industry has strong fundamentals and that Uralkali, as the world’s leading producer and the key player in the industry, has considerable potential for growth in value. Onexim Group, in turn, has extensive experience in managing major industrial assets and creating shareholder value in public companies,” said Dmitry Razumov, Onexim CEO.

“Over the time of our investment in Uralkali, we have achieved the strategic goal of putting together Russia’s two largest potash producers, which led to the creation of the global leader in the potash industry. We are now moving towards different goals and challenges. And we are positive that with the arrival of the new investor, Uralkali will enjoy new opportunities for its continued strategic development” – said Pavel Grachev, chairman of the Kerimov’s holding company Nafta Moskva.

Yara buys water crop sensor tech company; ends AS distribution agreement with APF

Breaking Industry News

Yara announced on Nov. 18 that it has acquired the German water sensor company ZIM Plant Technology GmbH. ZIM’s crop water sensor technology is mostly used in high-precision irrigation systems to improve yields and water use efficiency. The deal is expected to close Jan. 1, 2014, subject to normal closing conditions.

“We will incorporate the knowledge and technology into Yara’s existing Crop Nutrition solutions, providing a valuable add-on for our offering to irrigated farming,” said Egil Hogna, Yara’s senior vice president and head of Downstream. “This clearly improves Yara’s leadership position within the growing fertigation segment. This is a strategic step for Yara into a new segment of the precision farming business, and it is also a response to our ‘Creating Impact’ strategy of addressing resource scarcity.”

Yara said integrating the water precision tool with Yara’s expertise in precision application of water soluble and liquid fertilizers will multiply the market potential for both. Freshwater availability is predicted to become one of the major global challenges, the company said, as agriculture currently uses about 70 percent of freshwater withdrawals. If water use efficiency is not improved, the agricultural sector alone will need more water by 2030 than is sustainably available. As a conservative estimate, Yara said the water sensor technology reduces water usage by 20 percent, so farmers who use it will reduce water consumption while increasing yields and crop quality.

“After receiving several innovation awards, I am excited to see that my invention will now be implemented on a large scale through Yara,” said Prof. Dr. Ulrich Zimmermann, founder of ZIM.

In other news, Yara reported that its distribution agreement with American Plant Food Corp. (APF) for bulk standard ammonium sulfate at Yara’s dry facility in Stockton, Calif., has come to an end. Yara said it will instead dedicate resources and warehouse space at Stockton to its recently introduced Amidas™ fertilizer, which the company describes as a 40-0-0 5.5 percent sulfur homogeneous fertilizer that combines urea and ammonium sulfate into one particle.

Yara said the 7.3:1 nitrogen to sulfur ratio in the product is optimal for grain crop fertilization, while ammonia volatilization is reduced by acidity formed from ammonium sulfate.

APF, which is headquartered in Galena Park, Texas, will continue to supply the California market with ammonium sulfate from its Woodland, Calif., inventory.

The Week in Fertilizer Stocks

Fertilizer Stocks

The Week in Fertilizer Stocks


Producer Symbol Price Week Ago Year Ago
Agrium AGU 90.57 88.07 96.29
CF Industries CF 218.71 210.76 195.24
CVR Partners UAN 17.47 17.92 23.75
Intrepid Potash IPI 15.55 16.15 20.18
Mosaic MOS 48.16 46.96 49.10
PotashCorp POT 21.14 32.19 37.68
Rentech Nitrogen RNF 20.25 19.50 37.37
Terra Nitrogen TNH 183.50 198.86 213.70
Distribution/Retail
Andersons Inc. ANDE 83.41 76.63 40.66
Deere & Co. DE 82.85 81.56 84.74
Scotts SMG 58.98 57.66 39.77

K+S to cut costs as earnings drop

News, News Briefs

Kasel — K+S Group unveiled a “fit for the future” program last week as it plans to cut some €500 million in expenditures over the next three years. It said it could lead to the reduction of a number of employees. Citing uncertainty in the potash market, it reported 25.6 percent drop in earnings before income tax (EBIT, or operating earnings) to €115.8 million on revenues of €817.7 million, down from the year-ago €155.4 million and €916.6 million, respectively. Potash/Magnesium EBIT was down 32.3 percent, to €107 million on revenues of €456.7 million, versus the year-ago €158.1 million and €560.5 million, respectively. Nine-month K+S EBIT was €556.3 million on revenues of €2.97 billion, versus the year-ago €622.1 million and €3 billion, respectively. Nine-month Pot/Mag EBIT was €498.2 million on revenues of €1.63 billion, versus €605.8 million and €1.81 billion, respectively. For 2013, K+S believes revenues will be close to 2012’s €3.9 billion, with the decline in potash offset by improvements in salt. EBIT is expected to exceed €600 million, down from 2012’s €804.1 million.

IPL fertilizer earnings off 37 percent

News, News Briefs

Melbourne — Incitec Pivot Ltd. reported a 37 percent drop in fertilizer segment earnings before income taxes (EBIT), to A$169.7 million on revenues of $1.46 billion for the year ending Sept. 30, 2013, versus 2012’s $270.9 million and $1.73 billion, respectively. IPL cited lower prices, a higher Australian dollar, and Phosphate Hill outages. Chemical EBIT was up 3 percent, to $327.7 million on revenues of $1.96 billion versus the prior year’s $318.8 million and $1.77 billion, respectively. However, Dyno Nobel Americas EBIT was off 9 percent due to lower commodity prices impacting profits at the St. Helens plant. The unit also suffered from lower earnings from its coal segment. Company-wide, IPL reported a 27 percent drop in net profit after tax, to $372 million on sales of $3.4 billion, versus 2012’s $510.7 million and $3.5 billion, respectively.

Orica NPAT off 7 percent

News, News Briefs

Melbourne — Orica Ltd. reported a 7 percent drop in net profits after taxes (NPAT), to A$601.6 million on revenues of $6.9 billion for the year ending Sept. 30, 2013, compared to 2012’s $650.2 million and $6.7 billion, respectively. Orica cited reduced demand for ground support products and explosives, partly offset by higher volumes in its Chemicals business. Chemicals and ground support both saw lower prices. For 2014, Orica believes NPAT will exceed 2013, but notes that volatile market conditions add a greater degree of uncertainty.

Citing big yield improvements, USDA raises forecast for corn, soybeans, rice

News

U.S. growers are expected to produce a record high 14.0 billion bushels of corn this year, according to USDA’s latest Crop Production report, released on Nov. 8. The report also forecasts increased soybean and cotton production, fueled by significant yield increases over last year.

USDA’s 14.0 billion corn estimate is up 1 percent from the previous forecast, and up a full 30 percent from 2012. Based on conditions as of Nov. 1, corn yields are expected to average 160.4 bushels/acre, up 5.1 bushels from the previous forecast, and 37.0 bushels above the 2012 average. If realized, this will be the highest average yield since 2009, with corn growers in 18 states expected to achieve record yields this year.

The increased production figures come in despite a smaller harvested corn crop. Corn area harvested for grain is forecast at 87.2 million acres, down 2 percent from the previous forecast, and down slightly from 2012. USDA also lowered its estimate of area planted to corn this year, reporting a 2 percent drop from its earlier estimate, to 95.3 million acres.

USDA also released the latest World Agricultural Supply and Demand Estimates (WASDE) on Nov. 8, which showed corn ending stock for 2013/14 up 32 million bushels, to 1.89 billion bushels. USDA estimates increases to total corn use, which it said would offset much of the supply increase, while corn exports are up as well, to 175 million bushels due to larger supplies and lower prices.

The projected season-average farm price range for corn was lowered 30 cents, to $4.10-$4.90 per bushel. “Cash and futures prices have responded to rising yield prospects over the past two months, sharply reducing the outlook for 2013/14 farm prices,” USDA said.

U.S. soybean production is forecast at 3.26 billion bushels, up 3 percent from the previous forecast, and up 7 percent from last year. If realized, production will be the third largest on record. Based on Nov. 1 conditions, yields are expected to average 43.0 bushels/acre, up 1.8 bushels from the previous forecast and up 3.2 bushels from 2012.

Soybean area for harvest in the U.S. is forecast at 75.7 million acres, down 1 percent from both the previous forecast and last year. USDA also reduced the planted area for soybeans, dropping its estimate by 1 percent to 76.5 million acres.

USDA’s WASDE report estimates U.S. soybean exports for 2013/14 at 1.45 billion bushels, up 80 million bushels, reflecting increased supplies and a “record pace of sales through late October.” Soybean ending stocks are projected at 170 million bushels, up 20 million from the September forecast. The U.S. season-average soybean price range for 2013/14 is projected at $11.15-$13.15 per bushel, down $0.35 on both ends of the range.

The WASDE report projects a 26 million bushel increase to U.S. wheat supplies for 2013/14, citing higher estimated production and an increase in expected imports, particularly from Canada. Projected ending stocks for wheat were raised 4 million bushels, while the 2013/14 season-average wheat farm price was estimated at $6.70-$7.30 per bushel, slightly narrower than the September price estimate, but unchanged from that month’s average price.

U.S. cotton growers are expected to produce 13.1 million 480-pound bales this year, up 2 percent from the September forecast, but down 24 percent from last year. Cotton yields are expected to average 808 pounds/harvested acre, up 79 pounds from last year. Upland cotton production was forecast at 12.5 million bales, down 25 percent from 2012, while pima cotton production was estimated at 625,500 bales.

The WASDE report projected the marketing-year average price received by cotton producers at 69-79 cents per pound, down 3 cents/pound from the September average.

U.S. total rice production in 2013/14 was forecast at 188.7 million cwt, up 3.7 mill

Junior player seeks major potash role as Mosaic exits stage in Michigan

Featured, Market Watch

While The Mosaic Co. closed its small Hersey, Mich., potash mine Nov. 5 (GM Nov. 11, p. 1), a small junior company stands ready to take the surrounding reserves and build them into a significant mine to serve the Cornbelt. Just as major nitrogen producers and would-be nitrogen producers see the value of having a nitrogen plant in the heart of the Cornbelt, Michigan Potash Co. LLC (GM Sept. 2, p. 11) sees the same value for that commodity.

Unlike many junior companies, the reserves are already there – found, developed, and dubbed the “U.S. Potash Project” in the 1980s by Pittsburg Plate and Glass (PPG), a former potash producer. PPG’s Kalium subsidiary had the goal of developing them into a 1million st/y operation, according to MPC General Manager Theodore Pagano; however, initial production levels of 140,000 st/y were stalled due to hard times for the potash industry. Essentially, a “volumes over price” strategy kept more production offline, and Mosaic, which later wound up with the mine through a sequence of mergers, favored its large production Saskatchewan mines, which could serve both the domestic and world markets.

“Mosaic owns the Hersey facility, but they don’t own the U.S. Potash project … we do,” says Pagano, a potash geologist and engineer, who assembled former PPG/Kalium personnel to assist him with the development. “MPC worked quietly over the past three years to confirm the reserve could be commercially put into production as it was originally intended by PPG, and has secured nearly 400 20-year exclusive leases of mineral rights.”

Mosaic reiterated last week with analysts its decision to close the Hersey mine, saying it would have cost some $80 million to develop new caverns at the site and that expenditure was not justified when it could provide those 100,000 mt just as easily from Belle Plaine, Sask.

Pagano says MPC has engineered and designed a new potash facility, identified ore sweet spots, secured a surface location, and identified port and rail transloading options capable of handling 600,000 st/y of potash and 600,000 st/y of high grade salt. It anticipates construction to begin shortly at a location about 1.5 miles from Mosaic’s Hersey facility.

MPC says that due to its large Saskatchewan capacity, Mosaic does not want potash coming from Michigan. MPC says that within a 500 mile radius of Hersey, U.S. farmers consume some 4 million st/y of potash. MPC says that Michigan alone consumes 300,000 st/y of potash, with easy access to Indiana, Illinois, Ohio, Missouri, and Tennessee, and with a short boat ride to Wisconsin, Minnesota, and upstate New York. As for Michigan, MPC said PPG Kalium at one time had 80 percent of the Michigan market when it produced up to 140,000 st/y.

MPC says its reserves negate the need for imported potash, not just from Canada, but also from Russia and other offshore providers. It also says the location is well positioned to distribute potash into the Atlantic.

“We are not pulling off something new here,” said Pagano. “This was done once before by the world’s largest potash producer (PPG). We are doing it again with the same people, except now they have 30 more years of experience.

Pagano says the quality of the reserves is well-established and tested by independent laboratories. He maintains that there is enough potash sitting under Hersey to double U.S. output for over 150 years.

MPC has been approaching regional buyers and distributors about the project. And while the reserves are some 7,500 feet underground, Pagano says that technology has advanced to the point that that is no problem.

While MPC’s location may give it a leg up on competing junior potash companies, like the others, it still faces the hurdles of finding financing and backers, lower potash price

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