AP Holding Corp., Denver, said Jan. 15 that its subsidiary, UAP Distribution Inc., has entered into a definitive agreement with Boettcher Enterprises, Beloit, Kan., to acquire certain assets of its retail distribution business, including real property, retail locations, equipment, and storage tanks. This agreement is subject to customary closing conditions.
Boettcher is a leading retailer of agricultural inputs, with multiple locations in Kansas and Nebraska. It has some 33 locations in the two states, with most being in Kansas (see www.boettcherenterprises.com). UAP said that in this two-state region, the acquisition will further its strategy to expand retail market share. UAP said Boettcher has had a long-standing wholesale relationship with UAP and has been one of its largest wholesale customers in the area. The acquisition is expected to close in UAP’s fiscal fourth quarter, which closes in February 2007.
“The acquisition of Boettcher Enterprises’ distribution business greatly enhances UAP’s presence in this key mid-western market,” said Kenny Cordell, UAP Holding Corp.’s chairman, president, and CEO. “The expansion of our retail distribution through a quality organization such as Boettcher Enterprises is truly a great opportunity.”
UAP had not returned calls at press time. The company has announced a spate of new acquisitions in the past few weeks (GM Jan. 15, p. 10; Jan. 8, p. 1), as well as other major ones in 2006 (GM Archives).
The U.S. Securities Exchange Commission on Jan. 17 filed a civil action charging James Charles Blue, the former president and chief operating officer of ConAgra Agri Products Companies; Randy Cook, the former president of North America Operations of United Agri Products (UAP); and Victor Campbell, UAP’s former controller, with participating in a fraudulent scheme to overstate UAP’s operating results in 1999 and 2000. The complaint alleges that the defendants’ conduct at UAP, a former subsidiary of ConAgra Foods Inc., caused ConAgra to file with the Commission, and release to the public, materially false and misleading financial statements, which were included in its annual reports for 1999 and 2000.
Blue and Campbell have agreed to settle this matter without admitting or denying the allegations in the complaint.
The SEC’s complaint includes the following allegations:
Blue, Cook, and Campbell participated in a series of fraudulent accounting practices that included: (1) the improper recognition of revenue from deferred delivery sales and associated rebates from its suppliers; (2) the failure to record bad debt expenses when realized; and (3) the improper recognition of revenue from advance vendor rebates.
The defendants’ misconduct caused ConAgra to materially overstate its income before income taxes by $46.7 million in fiscal 1999 and $48.5 million in fiscal 2000, an overstatement of approximately 7.35 percent and 7.85 percent, respectively. At ConAgra’s Agricultural Products’ segment level, the defendants’ misconduct caused that segment’s reported operating profit to be overstated by 16.36 percent in fiscal 1999, and 34.97 percent in fiscal 2000.
As a result of their misconduct, Blue, Cook, and Campbell benefited by obtaining inflated bonus compensation. Cook also received additional inflated compensation through his participation in a profit-based compensation plan.
The SEC’s complaint alleges that by engaging in this conduct, the defendants violated the antifraud, internal controls, and books and records provisions of the federal securities laws (Sections 10(b) and 13(b)(5) of the Securities Exchange Act of 1934, and Exchange Act Rules 10b-5 and 13b2-1), and aided and abetted violations of the reporting, books and records, and internal controls provisions of the Exchange Act (Sections 13(a), 13(b)(2)(A) and 13(b)(2)(B) of the Exchange Act, and Exchange Act Rules 12b-20 and 13a-1). Defendant Cook also aided and abetted violations of the antifraud provisions of the federal securities laws (Section 10(b) of the Exchange Act and Exchange Act Rule 10b-5).
Without admitting or denying the allegations in the complaint, Blue and Campbell have consented to the entry of final judgments that enjoin them from violating the federal securities laws described above. Blue also has agreed to pay a total of $622,087, which includes $336,362 in disgorgement, plus $175,725 of prejudgment interest thereon, and a $110,000 civil penalty. Campbell has agreed to pay $96,893 in disgorgement, plus $51,181 of prejudgment interest thereon, and a $50,000 civil penalty, for a total payment of $198,074. The settlement terms are subject to court approval.
As to Cook, the complaint seeks a permanent injunction against future violations, an officer-and-director bar, and civil penalties. The complaint also seeks to have Cook divest all unexercised stock options, and to disgorge all ill-gotten gains along with prejudgment interest.
The SEC’s investigation in this matter is continuing.
ConAgra said it fully cooperated in the investigation and said there was nothing new to report with respect to its own situation with the SEC in the case. Last summer, when the company again adjusted earnings for the 1999-2001 period (GM Aug. 14, p. 10), it said it was conducting discussions with the SEC regarding a possible settlement that could include the company consenting to a final judgment without admitting or denying the allegations, with respect to a complaint filed in federal court.
Louisville, Ky.-A barge lost a full load of liquid nitrogen in a mishap that occurred while being pushed up the Ohio River, according to the Coast Guard. It was one of four in a 14-barge fleet that broke loose after clearing the McAlpine Locks around 1 a.m. on Jan. 16, reported Lt. Tina Owen, spokeswoman for the Coast Guard’s Ohio Valley sector. There were no injuries, and there has been no disruption to river traffic. She said the fertilizer barge was carrying 1,451 short tons of liquid urea and that there were concerns about fish kill, but there have been no reports to that effect so far. "Apparently the high waters have either diluted or washed away the fertilizer," she told Green Markets. Two of the barges have been secured, but the fertilizer barge ended up pinned and partly submerged against Gate 2 of McAlpine Dam – but out of the commercial channel, where it would not interfere with river traffic. The fourth barge, which was carrying salt, is submerged and has been marked with lights and a buoy so as not to present any hazard. Owen didn’t know the owner of the fertilizer shipment or its destination.
North Sydney, Australia-Dyno Nobel said Jan. 16 that it has acquired 29.9 percent of the ordinary shares in Fabchem China Ltd., an explosives company on the Singapore stock exchange. Dyno Nobel paid US$31.8 million for its stake, which includes an up-front payment of S$0.52 per share, an additional $0.13 per share payable upon achieving profit hurdles in 2008, and S$.05 per share payable upon Fabchem obtaining an export license. Dyno will nominate two members of the Fabchem board of directors and have a senior manager seconded to Fabchem, reporting to Fabchem Managing Director Sun Bowen.
Baltimore-A.J. Sackett & Sons has announced the opening of a joint venture company in Brazil called Sackett do Brasil. It will be located in Araxa, Minas Gerais States, and will offer complete engineering, equipment, and installation for a full range of fertilizer systems and technologies. Capabilities include blending, bagging, SSP production, granulation systems, compaction/ granulation plants, conveying systems, and terminals, as well as a full-range of Sackett products. Oscar Ordonez, the managing director, has over 30 years of fertilizer experience.
Regina-Saskatchewan Wheat Pool Inc. says its bid for Agricore United Ltd. remains on track. While the official bid expires Jan. 24, SaskPool does expect to extend it, though no new timeline has been announced. The Canadian Competition Bureau has advised that it would not be able to rule on the deal until after Jan. 24. AU’s board of directors has unanimously recommended that security holders reject SaskPool’s offer. Simplot says 2006 was a good year Boise, Idaho-J.R. Simplot Co. recently reported that it had a good year in 2006. "We performed better than planned during the past year, and we’re in a very strong financial position," said President and CEO Larry Hlobik. "Generally speaking, the income from our current portfolio of businesses should be able to finance our future organic growth." Simplot reduced debt, posted solid revenues of $3.3 billion, and improved operating income for the fourth consecutive year during fiscal 2006. Earnings exceeded budget and were higher than 2005.
Boise, Idaho-J.R. Simplot Co. recently reported that it had a good year in 2006. "We performed better than planned during the past year, and we’re in a very strong financial position," said President and CEO Larry Hlobik. "Generally speaking, the income from our current portfolio of businesses should be able to finance our future organic growth." Simplot reduced debt, posted solid revenues of $3.3 billion, and improved operating income for the fourth consecutive year during fiscal 2006. Earnings exceeded budget and were higher than 2005.
Agriliance LLC has announced a closer alignment between its Heartland and Crop Nutrient divisions in order to forge a more market-focused organization. As a result, Rod Schroeder, former vice president, Heartland, was promoted to executive vice president. In his new role, his duties will be expanded to include the Crop Nutrients division as well as Heartland. Reporting to Schroeder from Crop Nutrients will be Doug Wonnacott, Brian Thoma, and Bruce Vernon.
Jim Blome, former vice president, Coastal division, was named executive vice president, Coastal division. In addition to that division, he will assume a greater role in mergers and acquisitions. Keith Peterson, former vice president, chief financial officer, is the new vice president of mergers and acquisitions, and will assume responsibility for credit functions. Steve Miller, Joel Ott, and Gary Gavin will report to Peterson. Dan Oberstadt of corporate credit will have daily accountability to Peterson.
Cheryl Schmura, vice president and chief financial officer, will assume responsibility for the full corporate accounting function. Mark Ogletree and his staff, along with Tom Mitzel, will continue to have functional accountability to Jim Blome and Rod Schroeder, respectively.
William D. Barton Jr., 59, lost his battle with leukemia Jan. 9, 2007. Services were held Jan. 12 in Bay City, Texas. Bill was CEO of Bonus Crop Fertilizer Inc. and very active in The Fertilizer Institute and the Southwestern Fertilizer Conference. He will be missed by family and friends.
Eddie S. Barton, 86, wife of the late W.D. (Billy) Barton Sr., passed away Jan. 16, 2007. Services were to be held in Bay City on Jan. 19. Mrs. Barton helped start the Barton family business (Bay City Fertilizer) in 1974 and dedicated her life to the business and her family.
J. R. Simplot, 98, is on the mend, with the company saying he is making steady progress in his recovery from the head injury he sustained Jan. 1 in Phoenix after the Fiesta Bowl (GM Jan. 8, p. 10). He is participating in daily physical therapy sessions at the Idaho Elks Rehabilitation Hospital in Boise, and will undergo treatment there for an indeterminate period of time. After the accident, Simplot had surgery at the University of Phoenix hospital to relieve fluid build-up inside his skull. After nine days of consistent improvement while in Phoenix, he was transported by air ambulance to Boise Jan. 10.
U.S. Gulf/Tampa: Of the nitrogen markets, ammonia appeared to be the slowest last week in the domestic U.S. Second-half Tampa rolled over as if in a long winter’s nap at $350/mt DEL, and nothing new was reported to test NOLA and other Gulf ports.
Eastern Cornbelt: The anhydrous ammonia market was quoted in the $390-$405/st FOB range in the region at mid-month, with the low for spot cash tons and the upper end for spring prepay. An Indiana source quoted prepay at the $402/st FOB mark, with reference levels as high as $410/st FOB last week.
Western Cornbelt: Ammonia remained at $375-$395/st FOB in the region, with the upper end for prepay and the low for cash market tons. Several sources said they expected the low end to firm $10/st after some mid-month pricing hikes. Some suppliers were reportedly tabling their prepay offers as of Jan. 15, while others were extending the programs under different prices. Retail ammonia prices were reported in a range of $425-$445/st in the region last week.
California: Anhydrous ammonia pricing was quoted at $425-$435/st DEL, with the upper end reflecting reference pricing for truck-DEL product. Agrium’s truck-DEL anhydrous ammonia postings firmed on Jan. 15 to $435/st in Central California and $440/st in northern California. Those prices represent a $25/st increase from the company’s Dec. 20 ammonia postings in the state.
Pacific Northwest: Anhydrous ammonia was tagged in a broad range at $390-$435/st DEL, with the low for railed tons in Montana and Idaho that were forward purchased earlier. Postings were as high as $435-$445/st DEL in the region. Forward contract ammonia for February was reportedly available at the $405/st mark FOB Washington terminals.
Western Canada: Anhydrous ammonia was quoted at $676-$720/mt DEL in the region, up from last report. Another pending increase was expected to raise the price to $693-$720/mt DEL after Jan. 19.
Black Sea:Producers in the area have sharpened their knives, say buyers. It seems shortages due to plant shutdowns have forced Arab Gulf producers to look elsewhere to cover their contracts, and the Black Sea guys are more than happy to take advantage of the situation, said one trader.
Reportedly, one cargo out of Yuzhnyy went to an Arab Gulf producer for about $290/mt FOB. With that deal done, sources say producers are now claiming anyone looking for spot tons will have to pay $300/mt FOB.
The problem in taking these numbers as the basis for the market, said one source, is that the deal was a one-off arrangement necessitated by the temporary plant closings in the Middle East. Buyers are quick to point out the word “temporary,” while some Middle East producers, although being stung in the short run, seem more than happy to promote the higher price in the knowledge that they can raise their prices as well.
Asian sources say the market has remained in the upper $270s/mt FOB despite the recent sale. They say the price demand from the producers does not work in the United States or Europe. One trader noted buyers in Asia have a strong reason to make this argument, because the Middle East suppliers will move up their prices if Yuzhnyy moves.
For now, Asian sources maintain the price is holding in the upper $270s/mt FOB. Asian traders dismiss as wisps of rumors reports of material lower than $275/mt FOB. One trader was adamant there was no material available in the lower price range.
Middle East: Having had to shell out a reported $290/mt FOB to a trader for Yuzhnyy material to cover its contracts, sources say Sabic is more than happy to claim the whole ammonia market has moved up.
Sabic looked outside the Middle East to cover a contract because of the temporary shutdown of their numbers 2 and 3 facilities and the continued production problems at Safco 4. In addition, the other producers in the region have full order books from existing contracts.
Between the United States and India, sources say producers are overbooked for the rest of this month and well into February.
Late last week Sabic said all the plants were back online. Sources say that even if production hits full capacity, whatever comes out of the plants for the next 45-60 days will be used to make up for swapped tons.
The Safco 2 and 3 plants came back online last week after unscheduled closures. Reportedly, Safco 4 came up late Thursday. Sources say the company is getting frustrated with this complex. One observer noted that Murphy’s Law has been working overtime at the plant. First, the plant opening was delayed. Then shutdowns for technical adjustments came so often, one Asian source noted it has been down more than up in the past year or so.
The tightness in the regional market has buyers convinced prices are pushing $300/mt FOB.
Indonesia: Gresik continues to be cut off from its natural gas supply. As a result, production is stopped.
Kaltim also told regional buyers not to expect to see any export tons for at least the first half of the year.
While the lack of ammonia from state-owned companies is not a blow to the international market, sources say, in the past excess Kaltim ammonia helped ease some of the upward price pressure to the area.
The Gresik problems and Kaltim announcement have no impact on KPI and KPA, the two ammonia joint ventures in the country. Both plants are now working at full capacity, with full order books all based on long-term deals.
UREA
U.S. Gulf: The urea barge market started to wake up last week after a one-week slumber where prices appeared to top out and sink back toward the $300/st FOB mark. This past week they are on the move up as more buyers returned to the market. Chilly weather across much of the heartland was thawed by continually bullish assessments of the coming corn and wheat crops. Sources said some buyers feared they missed out on the weak lull in the market and were back in the market last week before prices went too much higher. Most last week said granular prompt barges began the week within the $308-$310/st FOB range and were roaring into the high teens on Thursday when $315-$318/st FOB was being reported. Sources were calling price ideas for February at $318-$320/st FOB and March at $325/st FOB.
Prill barges remained back in the pack, but still up a tad at $290-$295/st FOB.
Eastern Cornbelt: Granular urea was quoted at $340-$350/st FOB in the region.
Western Cornbelt: Granular urea was pegged in a broad range at $335-$350/st FOB regional terminals, with several sources quoting the dealer market pretty firmly at the $345/st FOB level at mid-month. An Iowa source reported delivered urea in the $340-$350/st range last week. Dealer pricing out of Catoosa, Okla., was quoted firmly at the $335/st FOB level last week, with some sources speculating that a near-term increase is likely.
California: Granular urea was reported at $330-$340/st FOB and $350-$360/st DEL in the state, up from last report. Granular urea postings from Agrium firmed on Jan. 17 to $340/st FOB West Sacramento, Calif., $360/st truck-DEL in Central California, and $365/st truck-DEL in northern California. Those prices were up $15/st from the company’s December urea postings in the state.
Pacific Northwest: Sources tagged the urea market at $340-$360/st DEL in the region, with the low in Montana. Forward contract offers for February from one regional supplier were reported at $350-$355/st in Montana and Wyoming, and $370/st DEL in the rest of the region.
On Jan. 2, Agrium released another round of granular urea postings. With an effective date of Dec. 22, the new prices reflect a $25/st increase from the company’s Dec. 18 reference levels. New postings include $360/st FOB Glade, Wash., Kennewick, Wash., Warden, Wash., and Wilson, Wash.; $347-$352/st DEL in Montana and Wyoming, depending on location; $365/st DEL in southern Idaho and Oregon’s Malheur County, and from the company’s warehouse and plant locations in Alberta and Oregon to points in Washington, northern Nevada, northern Idaho, and Oregon excluding Malheur County; $370/st DEL in northern and central Utah; and $375/st DEL in southern Utah.
Western Canada: Granular urea pricing was on the rise at $455-$480/mt DEL in the region last week, with a $10/mt increase scheduled from some suppliers for Jan. 19.
Black Sea: Depending on who is talking, the market is either ready to move up or has moved up. In addition, a lot depends on how one interprets the situations in India and Latin America.
Sources report business done into Latin America earlier this month shows a range of $255-$268/mt FOB. Others report that $269-$275/mt FOB was done. Both agree, however, the price will move up once India decides to enter the market.
It is the entry of India that is the major cause of debate – and, said one observer, heartburn. Reportedly, Indian buyers are telling traders and anyone who will listen that they do not intend to return to the market until March.
According to the bulls, India will need about 5 million mt between now and December. At the same time, IPL and MMTC are in no mood to call tenders that spike the market. As a result, sources say they are planning to spread out their 2007 purchases.
Aggressive bulls say purchases will start this month. For the cautious, buying will not begin until March.
While everyone is waiting for a decision from India, the aggressive bulls point to a rising market in Latin America during the past two weeks as proof the market is moving up.
Estimated netbacks moved from $255/mt FOB to $268/mt FOB in three or four deals to Latin America, say sources. By adding India to the mix, said one trader, there is nothing to stop the price from moving even higher.
The problem, said another trader, is that the Latin American buyers got scared into moving quickly because of reports that India’s entry to the market was imminent. With the Indian buyers now saying they plan to hold off until March, sources say the price should be stabilizing.
Asian sources are firm in their belief that $270/mt FOB is the top of the market, while traders in other continents say $270/mt FOB is a distant dot in the rearview mirror. The Asians argue that even $255/mt FOB is too expensive for a deal in their region – yet in the past couple of weeks, the market saw a deal at $257/mt FOB for 15,000 mt prompt. This was quickly followed by another reported deal at $272/mt FOB.
Producers now argue $275/mt FOB is the starting price for talks, but that buyers who wait will soon see $280/mt FOB and higher before long.
Pushing back are traders who adhere to the March date for Indian buying and a growing reluctance by Latin American buyers. The Baltic price is also pushing against dramatic price increases.
Sources say with freight rates to the Americas about equal between the Baltic and Black Sea ports, buyers such as Mexico and Brazil can get better delivered prices out of the Baltic than Yuzhnyy. One source puts the price difference at $10/mt.
Lastly, say supporters of the March Indian tender, by April all major buyers except India will be done. The Middle East will no longer have cargoes loading for the States, and Latin America will go quiet for a few months. That leaves a large amount of production to cover demand from India. And, said one trader, demand does not match supply.
The bottom line, say sources, is that for now, because of some long purchases in the $270s/mt FOB, the market is firmly in the upper $260s/mt FOB – with just a whisper of the mid-$270s/mt FOB. The aggressive bulls call the high point at $275/mt FOB, while the skeptics say $265/mt FOB is too high.
India: Producers and traders are all looking to India. When a purchase was done at $285/mt FOB for prills from the Arab Gulf, the market began to sniff out a possible run on the market. It later became clear the purchase was for only 20-25,000 mt for NPK production, rather than the big purchase everyone is looking for.
Sources say a couple more purchases in the next few weeks could take care of the NPK producers and leave the field open to the direct application buyers.
Despite reports that subsidies for the current fiscal year came in at twice the budgeted amount, aggressive bulls say MMTC and IPL will be back in the market this month. More cautious types say nothing will happen until March.
India reportedly is still short of tons for the current season, which is rapidly ending. At the same time, political leaders are not willing to be accused of not ensuring enough material for the application season to begin in April.
Accusations of insufficient quantities of urea are stinging the ruling party, say sources. The problem was not the purchasing, but the distribution, say international traders. Ships arrived at Indian ports throughout November and December and had to sit at anchorage for up to two weeks. Sources say a week-long delay is still in store for handimax vessels scheduled to arrive late last week. Because of the delays and demurrage costs, IPL had asked suppliers to delay their loadings. Sources say MMTC did not make a similar request because the government treasury would pick up the tab for the delay in unloading its tonnage.
The problem of emptying the vessels was aggravated by infrastructure problems moving the tons from port to field.
All told, India will need about 5 million mt this year. Sources say IPL and MMTC representatives are firm in their belief that they do not need to call for tons until after the new fiscal year begins March 1. One Asian source added that it makes sense to wait to see how much money the importers will have before they start committing to purchases.
A trader on another continent dismissed that argument by pointing to the 100 percent cost overrun on subsidies during the current fiscal year. He pointed out the government is deeply in debt – for subsidies – to the urea manufacturers and importers already. Adding more to that debt does not seem to be a problem for them, he said.
It makes more sense for India to wait until mid-March to call its tender, said one trader. With a March tender comes April loadings. He noted that by April the Middle East suppliers will no longer be shipping large quantities to the United States. The Latin American buyers will be taking time off as well. And Asian buyers will be done with their applications until the third quarter.
All told, sources say there will be a lot of production, but not much demand. The Indian buyers can be aggressive in their negotiations if they hold off, said one observer. If MMTC and IPL do indeed wait, one trader noted they should be able to satisfy all their needs from the Middle East. And, added another, if they are smart, they will accept slightly higher freight rates to secure smaller vessels so that cargoes can be shipped directly to smaller ports around the country and avoid the port congestion that has plagued the delivery process for the past six months.
The issue for the Indian buyers is to be willing to accept a small increase in the delivered price now to avoid larger demurrage charges later.
Middle East: The sale to India at $285/mt FOB for a prilled cargo sent producers on wild expectations of $300/mt sales. The cargo was for 20-25,000 mt for NPK producers. It was not the harbinger of larger sales to come. Sources say to expect a couple more purchases along these lines within the next few weeks. Once the NPK producers are covered, say observers, IPL and MMTC will get serious about the 2007 demands.
If the Indian buyers hold off until March, as many in the industry believe, they will be the sole large-quantity buyers in the market.
By April, shipments to the United States and Asia will be done. Latin America will also be resting. The result will be lots of production in the Middle East and Yuzhnyy and no large-scale buyers – except India.
Adding to the production side are reports that all the Sabic facilities are back online.
With the Middle East at full production and only India around, sources say there is little to argue for higher prices once the tenders are announced.
That is, if they are announced in March.
A March announcement will put loadings at a point when the producers will be lacking other buyers. If the Middle East suppliers are smart, said one trader, they will not be greedy and will offer reasonable prices to the Indians. If they do this, he continued, the producers could fill their order books for the rest of the year – or at least until major buying picks up from the United States.
Aiding the Middle East suppliers is the current imbalance in pricing between this region and the Black Sea. Right now the benefit is to the Middle East suppliers. Prices will have to come down drastically in Yuzhnyy, while the Middle East price holds for the two to be competitive.
Based on the sale to India, sources now peg the Middle East prilled market at $275-$285/mt FOB. Granular loadings and sales are contracted tons. Sources say that would put the granular market in the low $270s/mt FOB.
China: Tons are being offered, but at $290-$300/mt FOB bagged. At those prices, sources say, there are no buyers. One source did note that he was offered a cargo at $280-$285/mt FOB bagged, but that getting a vessel to the right port at the right time was too difficult. At the same time, he added, finding a home for the material was just as difficult. Buyers in other countries are looking for bargains in the region, even though none are to be found.
Vietnam: The price keeps moving around. Sources report offers of $300-$310/mt CFR bagged are being roundly rejected, even though sources say this is the low-end equivalent of the international market.
Producer Phu My keeps altering the price to ensure imported urea remains much more expensive than the domestic product.
Talks with potential buyers are expected to continue for another week or so. Then all will break for the lunar New Year and resume sometime around Feb. 25.
South Asia: In Sri Lanka, CFC and CCF are calling tenders to close Jan. 25. The two buyers are looking for a total of 96,000 mt.
The season in Thailand is ending. Sources say offers of $300/mt CFR material are roundly rejected. Sources say the current granular price of $280-$285/mt FOB puts the price into Thailand closer to $310-$315/mt CFR before bagging.
The Gresik plant in Indonesia remains down because of damage to the natural gas feeder pipe. No one is sure when the facility will come back online. In the meantime, PIM and KALTIM are said to be covering the markets once handled by Gresik.
Bangladesh: Apparently, BCIC issued a letter of intent to buy based on the second December 2006 tender. So far, however, no letters of credit have been awarded.
Sources say another tender will close March 5 for 50,000 mt each of granular and prilled urea. Unfortunately, said one Asian trader, even if BCIC moves quickly after the tender closes, the commissioned tons would arrive just as the main application season ends. Because of the timing of the tender, Asian observers see the tender as a political move by the new head of BCIC to show the political masters that the company is serious about dealing with the acute urea shortage facing the country.
Pakistan: Still nothing from TCP about its buying intentions. Sources say the company is biding its time to see what happens after India makes its first round of purchases. Observers say the country has the time and reserves to hold off on making their intentions known.
NITROGEN SOLUTIONS
U.S. Gulf: Players were reporting last week that UAN barges were starting to follow urea upward. Most were putting new barge business within the $190-$195/st FOB range. Even at these numbers, said sources, current domestic prices are behind the world market and not good enough to attract new cargoes to NOLA. Sources speculated this should paint a pretty picture for large domestic producers such as CF and Terra.
Eastern Cornbelt: UAN was pegged at $6.72-$7.03/unit FOB regional terminals. An Indiana source quoted reference pricing for UAN-28 at the $200/st ($7.14/unit) FOB level out of inland locations.
Western Cornbelt: UAN was quoted at $6.60-$6.90/unit FOB regional terminals for cash or prepay. The dealer market for UAN-32 FOB Sioux City, Iowa, and Beatrice, Neb., was tagged in the $215-$217/st ($6.72-$6.78/unit) FOB range last week. Reference pricing from some regional suppliers was as high as $7.08-$7.15/unit FOB terminals at mid-month.
California: UAN-32 pricing had firmed to $225-$235/st ($7.03-$7.34/unit) FOB, with delivered solutions tons quoted at $240-$250/st ($7.50-$7.81/unit) in the state. Agrium’s UAN-32 postings firmed on Jan. 19 to $233/st ($7.28/unit) FOB Sacramento, Calif., $250/st ($7.81/unit) truck-DEL in Central California, and $255/st ($7.97/unit) truck-DEL in northern California. Those postings were slated to firm again on Jan. 22 to $243/st FOB Sacramento, $260/st truck-DEL in Central California, and $265/st truck-DEL in northern California.
Pacific Northwest: Sources said they were able to lock in UAN prepay during the first two weeks of January at the $218/st DEL level, but those programs were off the table last week and the market had reportedly firmed to $235-$255/st ($7.34-$7.97/unit) DEL in the region.
Western Canada: The UAN-28 market was tagged at $289-$305/mt ($10.32-$10.89/unit) DEL. One supplier was slated to move to $295-$311/mt ($10.54-$11.11/unit) in the near term.
AMMONIUM NITRATE
U.S. Gulf: As with urea, nitrate barges were also moving up. While many last week were touting a price range of $240-$245/st FOB, some cautioned that these were for imports to arrive in February or later. Some said actual prompt barges on the water could still be had for sub-$240/st FOB.
Western Cornbelt: Ammonium nitrate remained firm at $260-$270/st FOB in the region.
California: No market was reported for ammonium nitrate in the region. CAN-17 remained at $210/st FOB to dealers, but sources said they anticipate a pricing increase before spring due to the firming ammonia market.
Pacific Northwest: Ammonium nitrate pricing was up from last report. The nitrate market was tagged at $296-$310/st rail-DEL in the region, with the low end in Montana. CAN-17 was steady at $215-$220/st DEL in the region.
AMMONIUM SULFATE
Eastern Cornbelt: Granular ammonium sulfate was commonly quoted at the $170/st FOB mark last week. Some suppliers were reportedly talking of $200/st sulfate by the time the spring season opens.
Western Cornbelt: Granular ammonium sulfate remained at $165-$170/st FOB, with most dealer quotes at the upper end of that range.
California: Ammonium sulfate was steady at $165-$170/st FOB, while delivered pricing covered a broad range of $165-$180/st, depending on grade and location. One source said sulfate volumes for the rice topdressing season were down from normal, resulting in some product carryover that is contributing to the flat market.
Pacific Northwest: Ammonium sulfate was unchanged at $160-$170/st FOB and $165-$175/st DEL in the region, with “plenty of product” available, according to one source. Some sources said they were gearing up for heavy broadcast demand for sulfate this spring as a urea replacement.
Western Canada: Granular ammonium sulfate was $275-$280/mt DEL in the region.
India: RCF has floated a tender inviting vendors to bid for the supply of ammonium sulfate. Bids are being taken through Feb. 17.
PHOSPHATE
Central Florida: A couple of railcar sales were made in Central Florida last week, but they were rare. Mosaic is sold out of everything until March, PotashCorp is out of DAP through the end of this month and MAP through February, and CF doesn’t have much to begin with. Still, CF is probably the best bet this week, although they sell to only a few select buyers, other than co-op members. Although supplies were tight, it will get worse. In a few weeks Florida farmers will begin buying in mass, and will likely clean out any small reserves producers can sweep from the floor. And as the domestic market is soaring, the export market appeared to be getting into gear, even though it is earlier than normal. Truck loads can usually be found, but that will do little good to anyone outside of Florida or nearby Georgia.
With the price of corn and other crops far above normal prices, farmers don’t really care as much about how much fertilizers cost – they just want to increase their yields. Who can blame them? Early last week the price of corn grew to $4.15/bushel, so few, if any, will be mining their soil this spring, unless they just can’t buy the fertilizer they need. One source said farmers were seeking to lock in prices for fertilizer as much as three years into the future, which would be wise as long as the market for their products remains robust.
Railcar sales of DAP and MAP were made at $240/st FOB at the top, and $237/st FOB on the bottom, which established the Central Florida price range. That’s a hefty increase considering the range the previous week was $233-$236/st FOB, so the bottom last week was higher than the top the previous week. The range last week also established a new Green Markets record for Central Florida. Previously, the highest price was set in the week of Oct. 31, 2005, at $237/st FOB, which equaled the low price last week. The previous record had stood for more than 25 years. Prices were likely to go even higher this week, because Mosaic was planning another – although still unknown – price hike, which could be $245/st FOB. PotashCorp’s Central Florida reference price remained at $250/st FOB. In Texas, Agrifos’ truck prices for DAP or MAP were $250/st FOB to $265/st FOB. That company also matches the rail prices of other producers, but rail supplies were sold out into February.
U.S. Gulf: It’s official – the record was broken. In trading last week, a new high price of $255/st FOB was paid by buyers for NOLA DAP barges, breaking the record of $250/st FOB set Sept. 19 and Sept. 26, 2005. Even the low price for the range, which was based on deals last Monday, broke the previous record by $2/st FOB. The new records were expected to fall this week. Those who sold for $255/st FOB last week were already upping their price to $256/st FOB or higher, and in some cases don’t plan on setting a new price until their barges are loaded. That makes sense. There’s no reason to lose a few dollars jumping the gun.
Demand at this time of year is far below what it will be in the spring, but supply still lags light years behind. Dealers seeking to prepay and lock in prices were up sharply last week, and that might be a real good idea. Supplies will continue to be tight into April, and prices are not likely to fall under those conditions. Any fears that farmers will reach a point they will reject any fertilizers they need due to the high cost can be alleviated by looking at the prices farmers are getting for their products – early last week the price of corn hit $4.15/bushel, and other products, such as soy beans and wheat, were following suit.
DAP and other fertilizer sales along the Arkansas River continued to run ahead of projections, even though some of the facilities have been out of product for nearly half of the last month. Last week, ice remained frozen on the ground across much of the country, from Texas (actually Mexico) well into the Midwest, but fertilizer sales did not have time to take a deep breath.
The supply situation remained critical last week, as CF was said to be sold out, Mosaic was virtually sold out and had no barges available, and Miss Phos had only enough to load barges under its existing contracts. Sources said Transammonia was unable to secure tons from Miss Phos to sell on the export market, which was also moving up quickly. CF was out of both DAP and MAP on the river. Mosaic was searching inventories at its facilities to find where, if at all, it might have additional supplies, and may do more across-the-Gulf shipments. Availability could begin to increase sometime in March or April, but don’t look for prices to decrease anytime soon.
The new record price range for DAP established last week was $252-$255/st FOB, compared to $248-$250/st FOB the previous week. Expect prices to be higher this week.
Eastern Cornbelt: Tight supplies and the expectations for brisk spring demand were starting to rapidly push up phosphate prices. One Indiana source said his supplier had told him DAP shipments were scheduled out through March, with reference pricing for spring now at the $295/st DEL mark for forward sales. Spot pricing out of the regional warehouse system was quoted at $275-$285/st FOB last week, up a full $10/st from last report, and some sources were skeptical of the low end of that range.
No sales were reported to confirm TSP pricing in the region. 10-34-0, however, was quoted at $275-$280/st FOB, also up from last report.
Western Cornbelt: The warehouse market for phosphates was reportedly firming in the wake of higher Central Florida pricing and a strengthening barge market at the Gulf. Delivered DAP and MAP were quoted at $285-$290/st in Nebraska, and as high as $305-$308/st rail-DEL in northern Iowa last week. Out of regional warehouses, the market had reportedly firmed to $275-$280/st FOB for DAP or MAP.
TSP was a nominal $245-$250/st FOB, with no new business to test the market. 10-34-0 was quoted at a firm $265-$275/st FOB in the region, and in tight supply. One supplier was offering forward contract 10-34-0 for February at the $285/st FOB level in the region.
California: Phosphate prices were on the upswing. MAP was quoted in a broad range, with the low reported at $315/st rail-DEL and the high at $330/st DEL or FOB warehouse. DAP was $320-$330/st FOB or DEL in the state. 10-34-0 was quoted at $255-$265/st FOB, and 16-20-0 was pegged at $245-$250/st FOB last week. Agrium’s ammonium phosphate postings in California and Arizona, effective Jan. 12, included MAP at $335/st FOB warehouse or rail-DEL, and 16-20-0 at $255/st FOB warehouse or rail-DEL.
Super-phosphoric acid was tagged at $5.60-$5.70/unit DEL or FOB in the state, with ortho-phosphoric acid quoted at $5.60/unit with no discounts. Agrium’s January postings for phosphoric acid include rail-DEL superphosphoric acid at $570/st and merchant grade at $560/st in California, Arizona, Nevada, and Utah. Those postings were slated to firm $5/st in February before topping at $580/st for superphosphoric acid, and $570/st for merchant grade from March through May.
Pacific Northwest: Phosphate pricing was up $10/st from last report. MAP was quoted at $315-$325/st DEL in Montana, and $320-$325/st DEL in the rest of the region. DAP was $5-$7/st higher than MAP. 10-34-0 was quoted at $260-$270/st FOB or DEL, with one supplier anticipating an increase to $280/st FOB before the spring season opens. 16-20-0 was quoted at $240-$245/st FOB or DEL in the region.
Delivered phosphoric acid was $5.60-$5.70/unit for super and $5.60/unit for ortho grade. Agrium’s January pricing for rail-DEL phosphoric acid pricing included superphosphoric at $570/st and merchant grade at $560/st in Washington, Oregon, Idaho, Montana, and Wyoming. Those postings were slated to firm $5/st in February before topping at $580/st for superphosphoric acid and $570/st for merchant grade from March through May.
Western Canada: MAP pricing moved on Jan. 12 to $415-$450/mt DEL in the region, up from $405-$440/mt DEL at last report.
U.S. Export: PhosChem said Central America jumped into the game last week, snatching 50,000 mt of phosphates at prices that began at $263/mt FOB and climbed to $267/mt FOB by the end of the week. It may be early for the people down south to go on a buying binge, but it would be hard for them not to notice what has been happening in the domestic market, which set new records in both the Gulf and Central Florida markets last week ($255/st FOB for a NOLA DAP barge and $240/st FOB for Central Florida). PhosChem plans to continue raising prices by several dollars after each sale. However, a source who also deals in the export market said the price should have been $275/mt FOB, saying Mosaic is the price leader. Perhaps, but $275/mt FOB would be $3/mt higher than the highest price ever paid for DAP on the export market in the Green Markets price index. The record price of $272/mt FOB was set on May 15, 2006, and ran through June 19 that year. A new record was likely to be established within the next couple of weeks.
The export DAP price range last week was $263-$267/mt FOB and will undoubtedly increase this week, say sources. The previous week the range was $260/mt FOB.
India: RCF has floated a tender inviting vendors to bid for the supply of phosphate rock, MAP, and DAP. Bids are being taken through Feb. 17.
POTASH
Eastern Cornbelt: Potash was quoted by some sources at the $204/st FOB mark for the last sales, but new postings indicated a range closer to $208-$215/st FOB in the region.
Western Cornbelt: Most dealers who intended to lock in potash fill did so before higher postings went into effect this month, so new warehouse levels were generally untested at $208-$215/st FOB, depending on grade and location. Sources said Mosaic took an increase on Jan. 15, although that was not confirmed directly by the company. Rail-DEL potash was quoted as high as $216-$218/st in Iowa.
Agrium’s Jan. 11 postings for 60 percent muriate of potash included $214/st FOB Dubuque, Iowa, and Kansas City, Mo., and $224/st rail-DEL in Iowa, Missouri, and Nebraska.
California: Potash was quoted at $239-$245/st FOB depending on grade, which was up from last report based on January postings from producers. Potassium nitrate pricing remained at $485/st FOB for bulk and $540/st FOB for 50-pound bags. Sulfate of potash (SOP) was $343-$348/st FOB for granular and $331-$336/st FOB on standard/soluble
Pacific Northwest: Based on new postings, potash was quoted at $235-$247/st FOB and $240-$252/st DEL in the region, up from last report. Effective Jan. 11, Agrium’s postings for 60 percent red premium potash firmed to $235/st FOB and $240/st rail-DEL in southern Idaho, Utah, and Oregon’s Malheur County; $240/st FOB and $245/st rail-DEL in Washington, the Idaho panhandle, and Oregon excluding Malheur and Willamette counties; and $247/st FOB and $252/st rail-DEL in Oregon’s Willamette Valley.
Fuel surcharge rates from Agrium, effective Jan. 10, included 21.5 percent in the Pacific Northwest region, Utah, and Alaska.
Western Canada: The potash market was firming. Sources quoted dealer pricing last week at $250-$265/mt FOB plant sites or warehouses for red premium potash, up $7-$8/mt from last report.
SULFUR
Tampa: The negotiations for new first quarter sulfur contracts got more interesting last week. Initially, PotashCorp had sought a rollback of $6/lt, and the sulfur industry appeared ready to settle close to that. Then, Mosaic demanded a $8/lt price drop, and everyone on the sulfur side excused themselves and backed away from the table. Then, last week, Mosaic agreed to settle for $5/lt down, according to sources. At first that looked fine, and the sulfur folks started signing on the bottom line. But then one seller supposedly decided that wasn’t good enough after initially agreeing to the deal – at least verbally. Meanwhile, other sellers were said to have signed the new contracts, but will those deals hold up if someone else gets a better deal? PotashCorp was still in the negotiating stage, and it looks like Mosaic may have to return to the table.
Vancouver: First quarter contracts have been settled in the past few weeks in the new range of $29-$42/mt.
MARKET NOTES
India: The demand for fertilizers in India is growing at a fast pace. The sale of urea in 2006-07 so far has increased to 24.074 million mt from 22.191 million mt in 2005-06. The Union ministry for fertilizers and chemicals had projected urea demand for 2006-07 at 24.945 million mt, while the estimated production of urea in the country is only 20.037 million mt in the current year. To bridge the gap in production and demand, urea imports recorded an increase this year to around 5 million mt, against 2 million mt (including OMIFCO imports) in the previous year.
DAP production in the country is not sufficient to meet the demand. This is due to the non-availability of adequate raw materials. The country imports MOP to meet its total demand.
Egypt: Ali Moselhi, Egypt’s minister of social security, recently visited India and encouraged the country to look at Egypt for future fertilizer investment. “Indian fertilizer companies can consider investing in Egypt where raw materials are available,” he said. “The cost of production in Egypt is lower due to easy availability of the important feedstock – natural gas. IFFCO has planned a venture. Other Indian fertilizer companies should follow suit. A suitable buyback arrangement can be easily worked out so that Indian farmers get fertilizers at cheaper prices.”
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.
