Singapore-Noble Group Ltd. reported Jan. 17 that it has been rated investment grade by Fitch Ratings service. Fitch assigned a long-term issuer rating of BBB- and a similar rating to the Group’s $700 million senior unsecured notes. The rating cited “Noble’s robust revenue and profit generation,” whereby revenues and gross profits have risen “at cumulative growth rates of 51 percent and 47 percent over the past 5 3/4 years.” In addition, the ratings opinion noted Noble’s “execution of its ‘pipelines’ strategy, in which the company owns and/or operates businesses at various stages of the product supply chains as underpinning the growth of its business franchise.” The credit opinion also noted, “Noble’s diversity of products and markets/sectors, geographic diversity in terms of revenue generation, and leading market position in its key commodity products have helped to reduce its exposure to commodity price cyclicality.” Noble manages a diversified portfolio of raw materials from over 80 offices in more than 40 countries. A team of 10,000 people serves approximately 4,000 customers. With Q3 07 revenues reaching US$15.7 billion, Noble continues its transition to owning and managing more fixed assets, sourcing from low-cost producers such as Brazil, Indonesia, or Australia, and supplying to high growth demand markets, including China, India, and the Middle East. Noble recently appeared on the Forbes Global 2000, received The Asset’s coveted Best 60 in Corporate Governance Award, and was selected to the Forbes Fab 50 and S & P Global Challengers. Noble also received the Corporate Governance Recognition Award: Classes Of 2006 and 2007 by Corporate Governance Asia, was named as one of FinanceAsia’s Best Companies, and earned a spot on the new benchmark Straits Times Index (STI).
U.S. Gulf/Tampa: Mosaic was reported to have concluded new business for Tampa for late January and mid-February at the $505/mt DEL mark. The seller was reported to be Nitrochem. Later in the week there were unconfirmed reports that another buyer bought product at $515/mt DEL.
Sellers citing higher price ideas at Yuzhnyy and freight estimated to be almost $100/mt were skeptical of any more deals at Tampa in the low $500s/mt DEL.
Sources reported that new business was being negotiated for imports to Texas. However, there was no firm word of new business last week.
November ammonia imports into the U.S. were up 6 percent, to 761,777 st from the year-ago 716,521 st, according to the Department of Commerce. July-November imports were up 8 percent, to 3.6 million st from the year-ago 3.34 million st.
Eastern Cornbelt: Anhydrous ammonia was quoted at $660-$670/st FOB regional terminals last week, up again slightly from the previous week, with the low reported for spot market tons in Illinois. Some sources said spring prepay could still be booked at the $670/st FOB mark, but at least one supplier had firmed its asking price for prepay to the $700/st FOB level. No actual business was reported at that level yet, however.
Western Cornbelt: Anhydrous ammonia was quoted in a broad range at $610-$660/st FOB in the region, depending on location and time of delivery. The low was reported in Nebraska on a spot basis, with reports of prepay offers there at the $620/st FOB level. The upper end was quoted by Iowa sources for spring prepay offers.
Southern Plains: Anhydrous ammonia was pegged at $555-$565/st FOB regional production points on the low end, with terminal pricing reported at $590-$600/st FOB after discounts. Delivered ammonia in the Texas panhandle was quoted at the $600/st level as well.
Agrium’s anhydrous ammonia postings firmed $50/st on Dec. 21 to $630/st FOB Clay Center, Kan.; $625/st FOB Conway, Kan.; $620/st FOB Mocane, Okla.; and $600/st FOB Borger, Texas. The company’s delivered ammonia postings from the Borger facility to points in Texas firmed on that date to $625/st north of Interstate 40 and $630/st south.
South Central: The anhydrous ammonia market was tagged at $570-$580/st FOB Memphis, Tenn., to the dealer. Sources pegged the Blytheville, Ark., market roughly $15-$20/st higher than Memphis, with Henderson, Ky., ammonia pricing another $15-$20/st over that.
Black Sea: Buyers are getting no relief in the market. Sources in Asia report $420-$425/mt FOB was done recently and $430/mt FOB expected soon. One observer noted that $450/mt FOB is the current target price.
The latest indication that prices continue to rise is a report that Nitrochem sold a cargo to Tampa at $505/mt CFR.
The high prices are expected to remain through the first quarter, while demand remains strong in Europe and the U.S. Industry sources say by the middle of the next quarter, prices should come off.
Unfortunately for buyers, say sources, when the price comes down it will still probably be higher than last year at this time.
The run-up in prices is blamed on strong demand ?Çô a typical response this time of year – and higher natural gas prices from Russia.
It is the increase in gas prices to the Ukrainian producers that has pushed up the price.
The increased cost for inputs in Western Europe has led many producers to shut down and take imports.
The combination of more than normal demand from Europe, strong demand from the States, and higher natural gas costs is blamed for the ever steady higher prices from the region.
While buyers are waiting for $430/mt FOB to be breached, sources say it has not happened yet. Still, buyers are only allowed in the door if they indicate a willingness to begin talks at that level.
Middle East: If the shortages on the supply side did not provide enough grief to buyers, Sabic is now ready to take a routine turnaround for a little more than a month. The shutdown dries up a steady supplier of ammonia at a time when demand for the product has yet to wane.
One source noted that part of the tightness in the area market comes from the delay in getting the new Iranian facilities online and shipping. Cargoes that should have been loaded early in the last quarter are being covered with frantic searches for tons elsewhere in the region.
The shortage of material in relation to demand has producers maintaining that the $450/mt FOB paid by Mitsui and Mitsubishi earlier this month is the floor for any new talks.
Even if a buyer is willing to step up and pay that level for a spot cargo, Asian sources say spot material is difficult to arrange. More than 90 percent of the ammonia shipped from the region is sent out under long-term deals, contracts, or some other formula method. Nailing down the exact price of each cargo leaving an Arab port is difficult because of the secrecy agreements between the buyer and seller.
For now, the market remains with the high end firmly at $450/mt FOB. With the Sabic turnaround coming, one Asian trader said that price could become the floor if major purchase requests come in during the next 30-40 days.
India: It looks as if Transammonia will take the FACT tender at $440/mt CFR. Sources say the ammonia will come from Indonesia. The cargo is reportedly the result of a December purchase by the trading house.
The deal is for 7,500 mt.
In the past, FACT has tendered for two cargoes of 7,500 mt each. This latest tender was for only 7,500 mt. Observers noted the call for just one cargo reflected the hope by the buyer that prices might come off by the time the next 7,500 mt is needed.
Some Asian observers did not hold out much hope for a dramatic drop.
Asia and Pacific: Australian production remains dedicated to the domestic market, with a few contracted tons shipping to Korea. Sources report all the tons that will be produced this year are essentially booked for definite buyers. Spot material from Australia is not expected to be seen this year.
Taiwanese and Korean buyers are beginning to get a slight pushback from their downstream customers.
A source noted that the pushback seems almost a proforma reaction rather than a serious effort to challenge the state of the market.
So far the income from the final product has more than covered the additional costs end users have had to endure for inputs such as ammonia.
MITCO/Malaysia remains sold out under contract terms. Sources say the company is in no position to offer any spot tons.
Buyers looking to Indonesia are also out of luck. Kaltim in Indonesia has nothing to offer, and the joint ventures KPI and KPA are fully booked with contracts. Sources say these two operations are actually over booked, leading Mitsui and Mitsubishi to keep their eyes open for spot tons whenever they appear.
Japanese producers are using the ever-rising international market as a tool to move up their own prices to Japanese buyers. Because most of the buyers in the country depend on domestic ammonia, sources say they have few options but to accept the increases.
One source noted, however, that the current Japanese domestic price is slightly lower than imported material.
An observer said to make comparisons between the domestic and international market price is more an exercise in math than an effort to play one against the other. With only a few exceptions, the buyers of domestic ammonia are not able to take imported ammonia because of limited port facilities.
UREA
U.S. Gulf: Sellers were doing their best to hold the line on prices despite a swelling inventory at NOLA. They say in just a few weeks, better weather will cause a run on product in what most everyone feels will be another banner year for the fertilizer industry. As a result, they say there is no need to sell barges now at a lower price just because imports have accumulated.
Buyers, in the meantime, point to regular milk runs of product coming in for major importers, saying that at some point things have to give. Sellers are quick to point out that these are regularly scheduled cargoes with nothing extra from the spot market. Sellers are hoping to hold out at least until they can go toe-to-toe with buyers at the TFI Orlando meeting in early February.
Last week, granular was reported to slip a dollar or two on the low end and prills were reported to be about the same.
Urea imports were up 58 percent in November, according to the DOC, which reported 600,554 st coming in during the month versus the year-ago 379,869 st. July-November imports were up 54 percent, to 2.56 million st from the year-ago 1.67 million st.
Eastern Cornbelt: Granular urea was $470-$480/st FOB in the region. Effective Jan. 18, Agrium’s granular urea postings moved to $470/st FOB Marseilles, Ill., and Mt. Vernon, Ind., $475/st FOB Cincinnati/Finney, Ohio, $485/st FOB E. Liverpool, Ohio, and $505/st FOB Saginaw, Mich.
Western Cornbelt: Granular urea was tagged at $460-$470/st FOB in the region, with most dealer quotes reported at the upper end of that range. Effective Jan. 18, Agrium’s granular urea postings moved to $470/st FOB St. Louis, Mo., $485/st FOB Hoag, Neb., and $495/st FOB Marion, S.D.
Southern Plains: Dealers were preparing for brisk wheat topdressing demand in the coming weeks, provided weather conditions are favorable. Granular urea was quoted at $450-$455/st FOB Enid and Inola, Okla. There were reports of spot pricing at the $445/st FOB level as the week advanced, but actual sales or offers at that number were not confirmed.
South Central: Granular urea was quoted at $450-$465/st FOB regional terminals last week, virtually unchanged from last report. In Vicksburg, Miss., the market was tagged at $455/st FOB to the dealer and roughly $5/st less to national accounts.
Southeast: Granular urea was pegged at $475-$485/st FOB port terminals to the dealer. Agrium’s urea posting FOB Bainbridge, Ga., firmed on Jan. 18 to $490/st.
Black Sea: Apparently the absence of buyers is having an effect on prices. Sources report after a bounce back to $400/mt FOB, producers are now offering at $380/mt FOB. Reports of $370/mt CFR were circulating by week’s end, but sources were hard pressed to point to business at that level.
Ordinarily, buyers would be happy with a $20-$30/mt drop in just one week. Some might even be tempted to jump back in to secure cargoes before someone else steps forward and runs up the price.
Oddly enough, no one is bidding. One observer noted that even at $370/mt FOB, finding a home for the product would be difficult.
Sources say the main buyers are currently comfortable enough they can sit on the sidelines for a while and let the producers get worried.
The main topic of discussion now, especially from traders and buyers, is how much further the price will drop.
Demand from Latin America is down, say sources, because the product stockpiles are at sufficient levels that immediate new purchases are not required.
The same is true for other buyers such as Turkey.
To counter the bearish perspective, rumors that India will return to the market as early as the first week of February are circulating. Promoters also say that as prices soften in Yuzhnyy and the Middle East, the Chinese urea will become less attractive. And the increase in the Chinese export duty for the second and third quarters will move product from that country just beyond the reach of serious bargain hunters.
Others dismiss these reports and counter that March is a much more likely time for Indian buyers to return. When that happens, the price will increase – hopefully, they say, not to recent levels – and Chinese urea will remain competitive. For now, the market is pegged at $370-$380/mt FOB, with the upper level done for sure and the lower level rumored.
Middle East: One deal was concluded last week for NPK producers in India. Sources say the deal, from Fertil to IPL, was done at $389/mt FOB. For the producers, who have been arguing for more than a month that the price should be $410/mt FOB, this was a step in the wrong direction.
One observer noted, however, that in the past a producer has accepted a lower-than-expected level for a medium-sized cargo. Once concluded, the other producers all respond to anyone looking for a similar deal with a chorus of how everyone is now sold out. In this case, the chorus may be right.
Sources report that most of the producers’ order books are in good shape.
Saudi Arabia is being pressured by Pakistan to increase the urea shipments under their government-to-government deal that took TCP out of the open tender business.
Qatar reportedly sold cargoes to Iran.
Buyers from the States are also reportedly taking as many tons as the granular producers can send.
This is all on top of the remnants of the Indian shipments that got delayed.
With the Indian NPK business as the only bit of public business on hand, sources now peg the market at $389-$400/mt FOB for prills and granular.
India: IPL picked up a cargo for NPK producers at an estimated netback of $389/mt FOB.
The industry is still waiting for an announcement from MMTC or IPL that a new tender is forthcoming.
Buyer representatives continue to quietly talk to traders and producers about prices, but for many this appears to be more tire-kicking than real interest.
Sources talking up the market say Indian buyers will be back in force next month. Others say the tender calls will not be made until March.
NITROGEN SOLUTIONS
U.S. Gulf: The barge market has remained quiet at $340-$350/st FOB ($10.63-$10.94/unit FOB).
November imports were up 35 percent according to the DOC, to 321,261 st, compared to the year-ago 238,682 st. July-November imports were up a whopping 102 percent, to 1.43 million st versus the year-ago 708,519 st.
Eastern Cornbelt: UAN-32 was quoted at $365-$380/st ($11.41-$11.88/unit) FOB regional terminals for spot or prepay tons. Agrium’s Jan. 18 UAN postings in the region include $11.45/unit FOB Mt. Vernon and Cincinnati/Finney; $11.55/unit FOB Marseilles and Meredosia, Ill.; $11.65/unit FOB Newton, Ill.; and $11.75/unit FOB Danville, Ill.
Western Cornbelt: The UAN market was pegged at $11.25-$11.64/unit FOB regional terminals for spot or prepay, with the low in Nebraska and the high in Iowa. A Missouri source quoted the common dealer price at the $11.40/unit FOB mark last week, either for spot or prepay.
Southern Plains: UAN-32 out of regional production points was tagged at $355-$360/st ($11.09-$11.25/unit) FOB on the low end, with the upper end quoted by Kansas sources at $11.40-$11.61/unit FOB terminals to the dealer. Solutions inventories remained in tight supply in the region.
South Central: The UAN-32 market was reported at $350-$360/st ($10.94-$11.25/unit) FOB regional terminals to the dealer, which was up from last report. Agrium’s Jan. 18 postings for UAN included $11.40/unit FOB Paducah, Ky.
Southeast: The UAN-30 market was quoted at $325-$330/st ($10.83-$11.00/unit) FOB port terminals, with the low end for confirmed cash sales and the upper number reportedly offered for spring shipments. Sources said the market should firm based on replacement costs, with indications for the vessel market reported in the high $370s/mt C&F for the next round of business.
Effective Jan. 18, Agrium’s UAN postings moved to $10.85/unit FOB Chesapeake, Va., $10.90/unit FOB Bainbridge and Wilmington, N.C., and $11.00/unit FOB Baltimore, Md. The company’s UAN S 28 solution postings for Jan. 18 include 28 percent at $283.80/st FOB Chesapeake and $284.93/st FOB Bainbridge and Wilmington; 24 percent at $294.65/st FOB Chesapeake; and 25 percent at $328.53/st FOB Bainbridge.
AMMONIUM NITRATE
U.S. Gulf: No change has been reported to the barge market in recent weeks, leaving it within the $355-$365/st FOB range.
November imports were up 36 percent, to 120,044 st from the year-ago 87,994 st. July-November imports were up 31 percent, to 431,169 st from the year-ago 329,345 st.
Western Cornbelt: Ammonium nitrate remained at $385-$390/st FOB in the region, with confirmed spot sales at the low end of that range. One Nebraska source quoted a $375/st DEL price from Catoosa, Okla., during the prior week, but higher numbers were in effect at the port last week.
Southern Plains: Ammonium nitrate pricing was up slightly from last report at $365-$375/st FOB Catoosa.
South Central: Ammonium nitrate was pegged at $355-$375/st FOB in the region, up from last report. Effective Jan. 25, Terra’s posting for ammonium nitrate will move to $375/st FOB Yazoo city, Miss., up $20/st from the company’s Dec. 17 list price at that location.
Southeast: Ammonium nitrate pricing remained firm at $335/st FOB Tampa.
AMMONIUM SULFATE
Eastern Cornbelt: Granular ammonium sulfate was tagged at $275-$285/st FOB in the region.
Western Cornbelt: Granular ammonium sulfate was reported at $265-$285/st FOB in the region, with the upper end for confirmed sales in Iowa. One source said dealer reference prices had firmed to the $290/st FOB mark at some locations, but no sales had taken place at that level. Effective Jan. 17, Agrium reposted granular ammonium sulfate to $292/st DEL in North Dakota, Minnesota, and Wisconsin.
Southern Plains: Granular ammonium sulfate remained at $220-$250/st FOB in Texas, with the low at Freeport and the upper end FOB Plainview. Coarse product was pegged at $205/st FOB Freeport and $240/st FOB Plainview, with standard grade sulfate at $195/st FOB Freeport and $225/st FOB Plainview.
South Central: Granular ammonium sulfate was quoted at $255-$265/st FOB, up roughly $10/st from last report. Sources continued to describe sulfate inventories as tight in the region.
Southeast: Granular ammonium sulfate remained at $250/st FOB Hopewell, Va., and Augusta, Ga. DSM Chemicals announced a $25/st increase for all ammonium sulfate grades, effective Jan. 28. Postings for granular sulfate will move on that date to $275/st FOB Augusta and $300/st DEL in Florida. DSM’s standard grade sulfate postings will move on Jan. 28 to $237/st rail-DEL into Florida and $220/st FOB Augusta for customers outside Florida.
Pacific Northwest: Simplot raised its ammonium sulfate postings on Jan. 8 to $300/st DEL in Idaho. On Jan. 17, another increase brought the company’s ammonium sulfate postings to $302/st DEL in Montana, Wyoming, Idaho, Washington, and Oregon, and $297/st FOB in Idaho, Washington, and Oregon.
U.S. Imports: November imports were up 49 percent, to 31,785 st from the year-ago 21,380 st. July-November imports were up 44 percent, to 153,168 st from the year-ago 106,625 st.
PHOSPHATES
Central Florida: Something unusual in this unusual market was hardly surprising, but the price of DAP in the Central Florida market matched the top of last week’s range for the NOLA DAP barge market. It’s not supposed to be that way. Normally, Central Florida DAP runs about $10-$15/st FOB less than the river. Just to make it even stranger, producers were reporting an uptick in prompt sales out of Central Florida, while business was a little slower on the river last week.
Dealers have been topping off their bins in the belief phosphate prices will only go higher during the next several months, but there were indications of resistance. A source noted that a large dealer in Texas had been pointing out to farmers that with the current high price of corn, they could not afford not to use as much fertilizer as possible on their crops. However, the farmers were throwing up an “emotional barrier” to paying twice as much or more for the same product as they did last year. Still, most in the industry believe farmers will pay the price, but that will not become clear until the spring season starts.
The cost of raw materials to produce DAP has also risen. Most of the sulfur supply contracts for the first quarter jumped $140/lt, and the cost of ammonia for February moved up another $100/mt. However, the profit margins for phosphate producers will continue in the historically high range.
U. S. phosphate producers reported a 1 percent decline in product disappearance in the period of July-December 2007, while phosphate production increased 4 percent, with an increase in phosphoric acid and MAP production and a decline in super phosphoric acid and DAP during that period.
The export market and the growing worldwide demand for phosphates has been the primary driving force in the domestic market, and the world’s hunger shows no signs of abating. One of the motivating factors for the export market has been the decline of the value of the U. S. dollar, which makes phosphates cheaper in other countries, but not here.
The effect of higher prices at the agricultural level has been to inflate prices the consumer pays at the grocery store, which has only recently been recognized by the national media. Most of those products were grown with fertilizers purchased earlier and at a much lower cost. A year from now, prices at the grocery store could be far higher, so watch for howls of protest from the public when that does happen.
The Central Florida DAP price range remained at $615/st FOB last week. Mosaic was posting an asking price for phosphates, $615/st FOB for DAP, and $611/st FOB for MAP. PotashCorp’s Central Florida reference price increased from $600/st FOB to $615/st FOB on Jan. 14, and CF’s asking price was $615/st FOB for DAP and $612/st FOB for MAP. MAP supplies were said to be scarce. In Texas, Agrifos’ truck price jumped to $680/st FOB, and its rail price was upped to $675/st FOB for DAP last week.
U.S. Gulf: Last week the secondary, resale market dominated NOLA DAP barge trades. Many barges that were ordered a month or more ago were coming on the market, and traders were selling them at prices that provided them with a healthy profit and were still below what producers were asking. Near the end of the week, most of those excess barges on the secondary market had been swept up and producers were getting their asking prices again. Prices rose throughout the week and the best deals were made very early – a difference of nearly $40/st FOB by week’s end.
However, MAP was a different story. MAP has been in short supply and has begun to sell for more than DAP, if it can be found – and there were no great deals to be found. MAP was at a premium.
Early in the week, a large operator began making buys for its own warehouse system. Its first buy was at $596/st FOB, but the price continued to rise with each successive purchase, and the last was made at $605/st FOB. Most other sales by traders were done around $615/st FOB. Mosaic, which had made several MAP barge sales at $631/st FOB, made DAP barge sales at $635/st FOB late in the week. That was a strong indication cheaper barges on the secondary market were quickly being depleted. Still, a source and a customer noted that producers were still loading barges ordered earlier for as little as $430/st FOB, but those coming from Mosaic will not be available for resale on the wholesale level and must be delivered directly to the customer’s warehouse.
Meanwhile, warehouse prices were headed north. In the St. Louis area, DAP was selling at $640-$650/st FOB, but activity was said to be slow. On the Arkansas River, DAP could be found for as little as $625/st FOB, but that price was about to be adjusted upward at the end of the week. Warehouses were no longer basing their price on what they paid for the product in stock, but on the replacement cost.
Unlike most years, dealers were already close to topping off their bins in preparation for the spring season, so once that has been accomplished, watch for a slowdown in activity. That has not happened yet.
The NOLA DAP barge price range last week changed from $532-$590/st FOB the previous week to $596-$635/st FOB. Mosaic’s barge price last week was set at $635/st FOB and CF was at $640/st FOB.
Eastern Cornbelt: Dealers reported some dry spreading activity on frozen ground early in the week. One southern Ohio source said wheat topdressing activity should be underway there in February, while a southern Indiana source said topdressing activity there could begin as early as next week, if weather conditions allow it.
Sources quoted the DAP and MAP markets at $640-$655/st FOB in the region, up significantly from the previous week. 10-34-0 was quoted at $525-$545/st FOB for very limited tons. Agrium’s 16-20-0 postings moved on Jan. 18 to $620/st FOB Mt. Vernon, $627/st FOB Washington Courthouse, Ohio, and $629/st FOB E. Liverpool.
10-34-0 was quoted at $525-$545/st FOB for very limited tons.
Western Cornbelt: Sources reported some dry spreading activity in the region earlier in the week. Dealers reported a good turnout at the Nebraska Agri-Business Exposition in Omaha Jan. 15-17. Those in attendance said talk centered on the rapidly firming fertilizer markets, with one commenting that any sales or price quotes discussed at the meeting were “good for one day only.”
The market volatility was especially true of phosphates. One source said MAP priced to him at $600/st FOB on Jan. 11 had firmed to $650/st by Jan. 14. Another quoted the dealer market FOB St. Joseph, Mo., firmly at $650/st for DAP and $655/st for MAP at midweek, and an Iowa source reported the $655/st FOB level for both products. One source even reported discussions at the Nebraska Ag Expo of MAP moving to the $700/st FOB level at some locations in the near term, although no new business was confirmed at that level last week.
10-34-0 remained in extremely tight supply in the region. Where available, sources quoted spot tons in the $525-$535/st FOB range for very limited quantities, with reports of some locations referencing a $550/st FOB number. One Nebraska source reported a new reference of $535/st FOB in his location, which he said was up from $470/st FOB for the last business.
Effective Feb. 1, Agrium’s phosphoric acid postings will increase significantly to $940/st rail-DEL for both super phosphoric acid (SPA) and merchant grade acid (MGA) in Iowa, Nebraska, Missouri, Minnesota, and the Dakotas. Additional per month increases of $10/st are slated for both products in March, April, and May.
Southern Plains: Phosphate pricing covered a wide range in the region due to the presence of some lower-priced tonnage on a spot basis early in the week, but the market was firming rapidly in response to the prior week’s rapid uptick at the Gulf. Sources quoted DAP at $615-$650/st FOB Catoosa, with MAP at $625-$665/st FOB. The low end of both ranges was for small quantities early in the week. The upper end of both ranges reflected reference pricing from at least one regional supplier at midweek, who confirmed new sales for both products at those levels.
The wide disparity between new and old replacement costs and their effect on warehouse pricing was illustrated by one Kansas source, who said he was quoted spot DAP during the prior week for as low as $575/st FOB before reference pricing bumped to $650/st FOB on Jan. 11. He also spoke of retail DAP offers to the farm for as low as $580/st during the prior week.
10-34-0 was virtually impossible to find in the region. Spot values that were reported covered a tremendous range, moving from $435/st FOB in Kansas during the prior week to as high as $525/st FOB last week, provided any material could be had on the open market.
Phosphoric acid postings from Agrium for January include SPA at $805/st rail-DEL and MGA at $795/st rail-DEL in Colorado, Kansas, New Mexico, Oklahoma, and Texas. The company on Jan. 17 announced a new round of phosphoric acid increases, effective Feb. 1. SPA and MGA postings will jump dramatically on that date to $940/st rail-DEL in Colorado, Kansas, New Mexico, and Texas, with $10/st per month increases slated for March, April, and May.
South Central: Some sources described the DAP and MAP markets as “all over the board” last week as warehouse pricing adjusted to the reality of drastically higher replacement costs. While some maintained DAP spot tons could be had for as low as $620/st FOB, others tagged the warehouse market firmly at $640-$655/st FOB for any new business to the dealer.
MAP was also quoted in the $640-$655/st FOB range as the week advanced. TSP was reported at $560-$600/st FOB the warehouse, with the market expected to firm to the upper end of that range quickly to reflect new replacement costs on incoming vessel tons.
Several sources commented that spring phosphate usage will undoubtedly be down as growers face the sticker shock of new retail values. Others, however, said much will depend on the strength of the corn markets and how much acreage in the region gets planted to corn in 2008. As one source noted, corn growers can easily pencil out the results of fertilizing for per acre yields of 200-plus bushels with corn at $5/bushel.
Western U.S.: Agrium announced that it was raising its MAP postings on Jan. 10 to $650/st DEL in Montana and Wyoming; $655/st DEL in southern Idaho, Utah, Nevada, and Oregon’s Malheur County; and $655/st FOB and $660/st DEL in Washington, northern Idaho, and Oregon excluding Malheur County. On Jan. 17, those postings vaulted to $690/st DEL in Montana and Wyoming, $695/st DEL in southern Idaho, Utah, Nevada, and Oregon’s Malheur County, and $700/st DEL and $695/st FOB in Washington, northern Idaho, and Oregon excluding Malheur County.
Agrium also hiked its MAP postings in California and Arizona on Jan. 17 to $705/st FOB or rail-DEL from the Jan. 10 level of $665/st FOB or rail-DEL.
Effective Feb. 1, Agrium’s phosphoric acid prices will jump dramatically to $950/st rail-DEL for both SPA and MGA in Washington, Oregon, Idaho, Montana, Wyoming, Utah, Nevada, California, and Arizona. In addition, $10/st per month increases are slated for both products in March, April, and May.
Simplot also announced additional increases on its dry fertilizer postings, effective Jan. 18, with DAP and MAP moving up $50/st, TSP moving up $35/st, and 16-20-0 increasing $20/st. As a result, the Western Montana market as of Jan. 18 was posted at $690/st DEL for MAP, $705/st DEL for DAP, $525/st DEL for TSP, and $425/st DEL for 16-20-0. Eastern Montana prices as of that date include MAP at $705/st DEL and DAP at $720/st DEL. The Idaho market moved on Jan. 18 to $695/st DEL for MAP, $710/st DEL for DAP, $525/st DEL for TSP, and $425/st DEL for 16-20-0. In the rest of the Pacific Northwest, pricing moved on Jan. 18 to $700/st DEL for MAP, $715/st DEL for DAP, $525/st DEL for TSP, and $430/st DEL for 16-20-0.
Simplot’s California postings moved up on Jan. 18 to $705/st DEL or FOB warehouse for MAP and $720/st DEL or FOB for DAP. The company’s TSP postings moved on that date to $570/st FOB French Camp, Calif., and 16-20-0 moved up to $428/st FOB Lathrop.
Simplot also announced new phosphoric acid postings. Effective Feb. 1, Simplot’s SPA and MGA postings will increase $1.25/unit across the board, in addition to the already scheduled dime/unit increase at that time. As a result, SPA and MGA postings from the company as of Feb. 1 will be at $9.50/unit rail-DEL in the Pacific Northwest and California, with warehouse postings moving on that date to $9.70/unit FOB Lathrop or El Centro, Calif.
U.S. Export: The onward and upward march of phosphate prices on the export market continued last week with new sales made at prices $25-$35/mt higher than the previous week’s high in the range. PhosChem made a sale into Central America of 7,000 mt of DAP at $710/mt FOB, then a second sale of the same amount into Mexico at $720/mt FOB.
Most other producers in the world were facing higher costs for raw materials than producers in this country, which generally have their own rock mines, and were paying about half as much for sulfur as their worldwide competitors. That puts U.S. producers in the cat bird seat in terms of profitability.
The export DAP price range last week moved up from $675-$685/mt FOB to $710-$720/mt FOB, and future sales will undoubtedly be at even higher prices.
Bangladesh: BCIC has issued a tender to import 15,000 mt (72 percent BPL Min.) rock phosphate on a C&F Chittagong basis. Offers will be received up to Feb. 7. The offers should be valid up to 30 days from the date of closing bids.
POTASH
Eastern Cornbelt: Potash was in very tight supply, with the market generally quoted at $425-$460/st FOB regional warehouses on a spot basis. One Indiana dealer reported sourcing some spot tons at the $435/st FOB mark earlier in the month. Agrium’s 60 percent coarse potash postings firmed on Jan. 18 to $422/st FOB Mt. Vernon, E. Liverpool, and Washington Courthouse.
Western Cornbelt: Potash was quoted at $420-$450/st FOB regional warehouses for very limited spot tons, with the upper end reflecting dealer reference levels at some locations. One Missouri source quoted the market FOB St. Joseph firmly at the $440/st level last week, and an Iowa source reported recent spot business at the $425/st FOB mark. A Nebraska dealer reported a $410/st DEL price for allocated January tons from Carlsbad, N.M.
Southern Plains: Potash was in extremely tight supply, with several sources saying they were unable to source spot tons at mid-month. The market FOB Carlsbad, N.M., for those with January allocations was $357-$365/st FOB, depending on grade. Out of regional warehouses, sources pegged the spot market last week at a firm $440-$450/st FOB, provided any tons could be found. That level was up from $425-$435/st FOB earlier in January.
Potash postings from Intrepid Potash FOB Carlsbad, N.M., firmed on Jan. 2 to $357/st for 60 percent granular and 62 percent standard, $360/st for 62 percent fine standard, and $365/st for 62 percent granular. Those levels represent a $40/st increase from the company’s Dec. 1 postings, and another $40/st increase is scheduled for Feb. 1.
South Central: Potash out of the regional warehouse system was pegged at $420-$430/st FOB, provided any spot tons could be found. That range was once again up dramatically from last report. Intrepid Potash’s postings for 60 percent red granular potash FOB McComb, Miss., firmed on Jan. 2 to $406/st, up $40/st from the company’s Nov. 18 list price at that location. Another $40/st increase will bring the price to $446/st FOB McComb on Feb. 1
Southeast: Potash was up significantly from last report. Sources tagged the market at $440-$450/st DEL in the region, provided tons could be had. Several sources said they expect growers to cut potash and phosphate applications rates significantly this spring because of the much higher input costs.
Agrium on Jan. 18 bumped its 60 percent coarse potash postings to $442/st FOB Wilmington, Bainbridge, and Tifton, Ga. Granular KMAG postings from the company moved on that date to $250/st FOB Wilmington, Norfolk, Bainbridge, and Tifton, with premium KMAG posted at $257/st FOB Bainbridge.
U.S. Imports: November imports were up 23 percent, to 972,319 st from the year-ago 793,104 st. July-November imports were up 19 percent, to 4.4 million st from the year-ago 3.7 million st.
SULFUR
Tampa: Far more quickly than normal, first quarter sulfur contract prices were all settled late last week, when both Mosaic and PotashCorp finalized all of their supply agreements at $140/lt up from the previous quarter. That was dramatic – and a record. The price range before the hike was $110.50-$113/50/lt, so the $140/lt increase was more than double the previous price. And, just as the dust was beginning to settle, indications from the sulfur industry were that another boost
in prices of between $100/lt and $200/lt will be sought for the second quarter. A sulfur industry source noted that even with the higher price phosphate producers were having to pay for ammonia, U. S. producers could still be profitable if they had to pay as much as $1,000/lt for sulfur. The exception would be companies such as Mississippi Phosphates, which has higher raw materials costs because it must import its phosphate rock from North Africa.
Meanwhile, sulfur production along the Gulf Coast was running close to normal, but supplies were tight. Offshore supplies from Mexico and Venezuela were said to be down. However, one source said he had noticed the increased prices seemed to be more demand rather than supply driven. Virtually all sulfur customers, including industrials, were seeking greater supplies than they have in past years, which has simply put more stress on an already stressed supply. Customers no longer question or complain about price – they simply want and need the product.
A rumor, which could not be confirmed, held that a purchase of dry sulfur from the Black Sea had been made and was destined for remelting at Beaumont, then to be shipped to Tampa. If so, the cost was estimated to be in excess of $600/t.
Projections about this time last year held sulfur prices would begin to decline in the third quarter of this year, but those have proved overly optimistic. Several projects that were planned to come online this year will not until next year or later, so the upward price spiral was expected to continue for at least another year. Ultimately, virtually everyone agreed that when prices do come down, they will fall – and fall far. “All bets for 2009 and 2010 are off, with no new supply sources coming on line,” a source said.
At Aruba, where a suicide iguana shut down one of Valero’s plants two weeks ago, the crude units were just restarting operations late last week, but it was uncertain when the facility would return to normal production levels. Valero’s Corpus Christi refinery was in the process of restarting production after a turnaround in December, which resulted in lost sulfur production of about 1,000 tons.
West Coast: Contracts talks between refineries and prill operators on the West Coast for first quarter contract prices should begin sometime soon, and prices for prill operators will skyrocket – probably even more than prices for Tampa did, somewhere around $200/mt.
Vancouver: While sulfur producers at Vancouver have settled many of their new contracts at $300/mt FOB, prices for spot sales were said to have gone north of $400/mt FOB. The price for delivered sulfur to China was said to be about $500/mt.
U.S. Imports: November imports were up 201 percent, to 178,595 st from the year-ago 59,426 st. July-November imports were up 42 percent, to 854,953 st from the year-ago 601,985 st.
MARKET NOTES
India: The Department of Fertilizers has decided to set up a joint venture company with equity participation by NFL, Kribhco, and RCF. The following objectives have been identified for the JV:
Exploring the possibility of investments in the nitrogenous, phosphatic, and potassic sectors in resource-rich countries.
Setting up of JVs in India and abroad for either manufacturing or mining, or long-term tie-ups for nitrogenous, phosphatic, and potassic fertilizers and fertilizer raw materials.
Rendering consultancy services for setting up project in India and abroad.
Earlier plans to set up a JV for the import of fertilizers were rejected.
India: The DOF has sought Rs 500 billion from the Finance Ministry when it finalizes the budget estimates for the 2008-09 fiscal year for paying out fertilizer subsidies. The DOF has recently written to the Finance Ministry stating that the total subsidy for the 2008-09 fiscal year is likely to touch Rs 600 billion. As per the revised estimates, the total fertilizer subsidy for the currently financial year has been estimated to be Rs 450 billion.
“As per our understanding the Finance Ministry has allocated around Rs 310 billion for fertilizer subsidies in the original budget estimates. But we have sought the amount to be increased to around Rs 500 billion as the cost of importing raw materials and fertilizers has seen a sharp increase in the last couple of months,” the source said. According to estimates, the cost of sulfur has gone up from $80 per mt to $529 per mt in the last six to eight months, while the international price of phosphoric acid is currently around $1,400 mt and the cost of DAP in the international market is around $600 per mt. The official also said that even if the Finance Ministry sanctions another Rs 40 billion in the last supplementary, it would still leave an additional requirement of Rs 40 billion to even out the carryover from the fiscal year.
“If we go by the estimates of the Finance Ministry then the net availability for the industry will be only around 270 billion. This would leave a huge shortfall in subsidies and concessions. It is also very difficult for the Finance Ministry to allocate huge sums when the supplementary demand for grants is placed in Parliament, so that is why we have requested them to give a bigger allocation in the budget itself,” he said. The Finance Minister, Mr. P. Chidambaram, had allocated Rs 224.50 billion in the 2007-08 budget for the payment of the subsidies. Subsequently, Rs 140.50 billion was sanctioned in the first supplementary demand for grants. There was, however, no provision in the second supplement.
Mark Auchampach has joined Simplot AgriBusiness as director, central region agricultural sales, based out of Boise, Idaho. He previously worked as an executive in the technology industry, overseeing a sales organization comprising over eighty sales professionals. He is charged with growing Simplot’s business with wholesale customers in the central region from Western Canada down through Texas.
Chris Simoni will continue as Simplot’s director, coastal region agricultural sales, leading the sales organization in B.C., Washington, Oregon, Calif., and Mexico.
Also, effective Jan. 7, Brad Baltzer is promoted to senior director, specialty products, responsible for the industrial, feed, professional products, and silica sand business units within Simplot AgriBusiness.
Ameropa North America announces that Allison Beeler has joined its Tampa-based trading organization as manager, sulfuric acid trading. Allison had previously been employed in a similar capacity by Transammonia Inc. She can be reached at the Ameropa office at 813-282-8228, Mobile 813-486-1562, or by e-mail at a.beeler@ameropa.com.
Haifa Chemicals announces the sudden death of Benny Fetter, vice president of operations (1953-2008). He began his career with Haifa in 1997.
Rio de Janeiro-Mining company Companhia Vale do Rio Doce told Green Markets last week that it continues to carry out feasibility studies regarding the development of a potash mine in Argentina. However, it says it has not had anything new to report to the press on the prospects since 2004. Reports circulated last week about the company eyeing a $500 million project in the Neuquen province of Argentina.
Des Moines-The state’s new watershed quality planning task force didn’t pay much attention to fertilizer in its waterway cleanup plan, which involves making a detailed assessment of the needs and creating a state water resources council, according to agriculture interests. “They didn’t focus that much on fertilizer,” reported Rick Robinson, Iowa Farm Bureau environmental policy adviser. “It didn’t turn out to be an anti-fertilizer thing, which I consider as positive.” The task force delivered its recommendations to the legislature six months early so lawmakers can focus on the $13.5 million the task force says is needed to establish the council and prioritize the watershed projects. One of the reasons agriculture didn’t get major mention could have been a new study by Iowa State University researchers showing that Iowa farmers already have made good progress cleaning up the state’s 13 watersheds. ISU’s Center for Agricultural and Rural Development reported that $435 million was spent on conservation practices, reducing total nitrogen by up to 38 percent, nitrates by up to 28 percent, and phosphorus by up to 58 percent. The study, “Conservation Practices in Iowa: Historical Investments, Water Quality and Gaps,” was conducted with funding by the Leopold Center for Sustainable Agriculture, Iowa Farm Bureau, Iowa Soybean Assn., and Iowa Corn Growers Assn. It examined the effectiveness of conservation practices, including terraces and grassy waterways, contour, and no-till farming. Robinson explained, “The Iowa Farm Bureau wanted documentation on the water quality effects of farmers’ conservation efforts. We also wanted to know the cost of reaching the EPA’s ‘aquatic life’ targets. We found out that farmers are making a difference in improving Iowa’s water. It also showed achieving the EPA’s aquatic life standards is unattainable with current practices at current funding levels.”
Saskatoon–Fortune Magazine has picked Potash Corp. of Saskatchewan Inc. as one of the top five foreign stocks of 2008. Others named included Bank of Ireland, Mobile Telesystems, iShares MSCI Brazil Index, and GlaxoSmithKline. “We are a global corporation proud to be headquartered in Saskatchewan,” PotashCorp President and CEO Bill Doyle was quoted in The Star Phoenix. “This recognition by Fortune Magazine is evidence of the following we have from investors around the world.”
Superior, Wisc.-AGGRAND, a division of AMSOIL Inc., says its 4-3-3 all-natural crop, lawn, and garden fertilizer has been registered with the Washington State Department of Agriculture organic food program and is listed on the WSDA website brand name materials list as an approved product for use in organic food production. “This is so good for our customers and for AGGRAND,” said Greg Sawyer, AGGRAND manager. Washington state’s organic food program created the list of brand name materials to be used in organic food production and handling. The list is posted on the WSDA website and mailed to all certified organic producers, processors, and handlers. Updates are published every quarter. According to Sawyer, “We’ve been working toward getting this approval for a number of years. It means our ingredients pass the USDA-National Organic Program standards. And we are approved by the Washington State Dept. of Agriculture, which has some of the highest standards in the industry. Being approved for use in organic food production opens many doors to the sustainable agriculture market. As Americans learn more about nutrition and the dangers of chemical processes, they are seeking ‘natural’ foods – foods that are free of chemicals, grown in nutrient-rich soil.” AGGRAND markets include organic crop production, green retailers, high end nurseries, specialized nurseries, health food co-ops, home gardeners, organic cattle and beef production, organic dairy production, field and pasture production, horse and grazing production such as horse racing and jumping, hay production, and organic flower production. AGGRAND is also pursuing organic approval for its kelp and sulfate of potash 0-0-8.
Walnut Grove, Calif.-The Lyman Group Inc., a full service agricultural consulting and products company in Northern California, has reached a deal with Ag Unlimited LLC whereby Lyman will acquire the assets of Ag Unlimited, followed by the merger of the operations and staffing. The operations of the combined businesses will operate under the Ag Unlimited name in California’s north coast markets, where they currently operate. The agreement is expected to close in March with operations fully merged. “I am excited about the opportunity to better service our growers in this premium district of California,” said Group President Les Lyman. Both Ag Unlimited, based in Ukiah, and Lyman, based in Walnut Grove, provide professional consultation, services, and products to wine grape growers and pear growers throughout California’s north coast. Lyman said that Devin Gordon of Ag Unlimited will oversee the expanded Ag Unlimited operation in Lakeport and Ukiah, while the operations of an affiliated company, Agro Tec, will be located in Geyserville and Sonoma. The Lyman Group has been in business for more than 40 years, and currently operates two divisions (Harvey Lyman Company and Harvey Lyman Agservice) from three different locations in Northern California.
Disclaimer of Warranty
All information has been obtained by Green Markets from sources believed to be reliable. However, because of the possibility of human or mechanical error by our sources, Green Markets or others, Green Markets does not guarantee the accuracy, adequacy, or completeness of any information and is not responsible for any errors or omissions or for the results obtained from the use of such information.
