Vancouver-Potash One Inc. said June 16 that it has exercised its right (as previously announced on May 13, 2008) to fully subscribe to the initial private placement financing of Potash North Resource Corp. (PON). The company has subscribed for 27 percent of the private placement, which equates to 6,583,850 units at $0.35 per unit, for total consideration of $2,304,347. Each unit consists of one common share and one common share purchase warrant, each warrant exercisable to acquire a further common share at a price of $0.50 per share for two years. As a result of this transaction Potash One holds approximately 13 percent of PON’s outstanding shares. In addition, Potash One holds warrants which, if exercised, could result in Potash One holding 13,167,000 shares of PON, increasing its ownership interest to up to 23 percent of the outstanding shares of PON, assuming no other dilutive securities of PON are exercised. Potash One President and CEO Paul Matysek said “This decision provides the company with a number of attractive options, such as 1) a non-dilutive source of funding for the company, through partial or full monetization of PON shares; and 2) a continued exposure to the conventional mining potash sector while allowing Potash One to focus on developing its large 336,343 acres of solution mining amenable potash lands with particular emphasis on the Legacy Project.” In other news, Potash One on June 17 announced that it has received final approval from the Toronto Stock Exchange to list its common shares on the TSX. Potash One’s shares will trade under the symbol “KCL,” and will began trading at the opening of business June 18.
U.S. Gulf/Tampa: The ammonia market initially appeared quiet last week; however, near press time came word that PCS had sold a cargo to Yara for $585/mt DEL for July delivery to Tampa. The 12,500 mt cargo was reportedly from Yuzhnyy to be delivered on the Sombeke. Sources had expected an increase to the import market, citing higher international price ideas.
Sources also said that higher gas prices and inland ammonia prices may give the NOLA ammonia barge prices some legs for the next round of business.
Natural Gas: NYMEX Henry Hub July gas prices closed Wednesday, June 18 at $13.21/mmBtu, the highest level for a prompt trading month for two and one-half years. This was the first time a prompt month had closed above $13.00/mmBtu since December 2005. Gas prices were high in late 2005 due to Hurricanes Katrina and Rita. At that time, ammonia plants were closing left and right and natural gas prices were a front page concern (GM Dec. 19, 2005, p. 1). NOLA and MidCornbelt ammonia prices were $360/st FOB and $475-$490/st, respectively.
NYMEX prices declined June 19 to close at $12.861/mmBtu.
Eastern Cornbelt: Dealers reported a significant amount of sidedress and post emergence work as weather and field conditions improved, and some even reported a little preplant activity as growers tackle the remaining acres. Warm, dry weather was reported in much of the region last week, but heavy rainfall earlier in the month continued to leave its mark on the region as floodwaters inundated farmland near the Mississippi River and crops continued to lag in development.
Ammonia pricing continued to cover a wide range, with dealer-to-dealer trades of spring prepay tons taking place for as low as $725-$760/st FOB and wholesalers offering spot tons in the $800-$810/st FOB range in Illinois. Several suppliers were posting significantly higher numbers, however, with one reportedly referencing prompt tons for as high as $1,010-$1,020/st FOB as the week advanced. Another was referencing forward contract ammonia for July through December at $1,040-$1,050/st FOB regional terminals.
Western Cornbelt: Dealers continued to report spot ammonia in the $700-$800/st FOB range, with the low for dealer-to-dealer trades of spring prepay tons. A Missouri source also confirmed spot ammonia tons trading in the $750-$800/st DEL range from southern production points. Agrium’s June 13 anhydrous ammonia postings ranged from $845-$850/st FOB in the region.
Fall prepay ammonia continued to be quoted in the $1,000-$1,020/st FOB range. One supplier was referencing forward contract ammonia for July through December at $1,030/st FOB in Nebraska, $1,035/st FOB in Iowa, and $1,040/st FOB in Missouri.
California: The ammonia market was quoted at $600-$700/st DEL in the state. Calamco lowered its anhydrous ammonia postings effective midnight June 5 to $600/st truck-DEL in California, with rail-DEL product referenced at $630/st in the state. Calamco’s aqua ammonia postings were lowered as well, to $160/st FOB in California.
Pacific Northwest: The anhydrous ammonia market was quoted at $1,025-$1,050/st DEL in the region for spot tons, although some sources said July tons were available for a time at $975-$980/st DEL on a spot basis. One supplier was referencing forward contract anhydrous ammonia for July through December at $1,055/st FOB Ritzville, Wash., with forward contract aqua ammonia for the same period posted at $262.50/st FOB Ritzville. Agrium’s most recent aqua ammonia postings included $288/st FOB Central Ferry and Finley, Wash.
Western Canada: The anhydrous ammonia market was tagged at $1,254-$1,299/mt DEL in the region, which was unchanged from last report.
Black Sea: The climb in prices continues. Turnarounds, limited sources, and strong demand continue to push ammonia prices up. By the middle of last week, $500/mt FOB was concluded. Sources say the end of the week should have settled in at $505-$510/mt FOB at the upper end.
With demand continuing, the price should continue to strengthen. By the end of last week sources put the market at $490-$510/mt FOB.
Middle East: Yara has been working as many angles as possible to buy cargoes, say Asian sources. Reportedly, in the past couple of weeks Yara secured about 75,000 mt tons from Iran and Qatar. The most recent deal from Qafco was pegged at $430/mt FOB.
Sources in Asia say the quantity Yara bought matches the monthly output of the Burrup facility in Australia. This is the same facility in which Yara has a stake. It was closed earlier for repairs following an explosion in the natural gas pipeline.
Previous sales from the Middle East to the U.S. softened the FOB price. Now, with Asian demand remaining strong and the Burrup plant out of action, Yara is looking wherever it can to keep their customers happy.
The increased attention Middle East suppliers are getting from Yara does not please other trading houses. Reportedly, one house was hoping to snag a few cargoes as the price dropped. Now the price is rising once again and the large margins hoped for are narrowing.
Part of the boost in pricing comes from the extra costs in doing business with Iran. Sources say a premium has always been applied to deals coming from Iran. One factor is the extra steaming time vessels will have just to get to an Iranian port on the north end of the Gulf.
Another factor are reports that at least one buyer had to stop at three ports to get the tons promised. Sources now peg the market at $450-$460/mt FOB.
Australia: Burrup officials dismiss reports that an explosion occurred at their facility. Rumors circulated that an explosion at the ammonia producing facility occurred as maintenance efforts started up. The Burrup facility closed because an explosion in the natural gas facility cut off supplies to the ammonia plant. The Burrup management moved up the routine maintenance check as a result. There is still no word from the gas company as to when the line will be repaired.
UREA
U.S. Gulf: Most sources agreed that the week started off quiet and sleepy with prices in the low $660s/st FOB. By mid-week, however, demand from rice country hit and barge prices took off as the week finished. What had been a slumbering market was being traded in the $674-$678/st FOB range going into Friday morning. Like all the other crop commodities, rice prices are up too, and farmers need not be skimpy on fertilizer applications.
There were also reports of additional exports being done out of NOLA, with suppliers snapping up spare barges to meet both export and rice demand. Most sellers were looking to the international market, particularly India, to keep NOLA prices firm into the summer.
Eastern Cornbelt: The granular urea market was reported at $675-$700/st FOB in the region.
Western Cornbelt: Granular urea was $665-$680/st FOB to the dealer. One Missouri source tagged the common dealer price at the $675/st FOB mark last week out of spot river locations. Reference prices from producers remained as high as $700-$705/st FOB in the region.
California: The granular urea market in California remained at $725-$740/st FOB, with truck-delivered product reported in the $745-$750/st range. There were reports of some regional suppliers taking a sizable increase later in the month, but no numbers were confirmed.
Pacific Northwest: The granular urea market was quoted at $705-$710/st DEL in Montana and $715-$730/st DEL in the rest of the region.
Western Canada: Granular urea was steady at $800-$825/mt DEL in Western Canada.
Black Sea: Softening freight rates may make Black Sea urea look attractive to Indian buyers. Sources report that a prompt offer could get snapped up at $615-$620/mt FOB. At that level and with lower freight rates, the material might come in at the $700/mt CFR level the Indians are seeking.
Industry observers point out the $615-$620/mt FOB range only works for prompt orders.
Producers are looking at $630-$650/mt FOB for July tons.
When the Indian buyers finally do make their purchases, industry watchers are convinced $650/mt FOB will be hit and surpassed.
For now, sources say $620-$640/mt FOB is the range. At those levels, said one observer, even the low end of the register would be too high for the Indians unless freight costs come off even more.
Middle East: Prices and demand remain firm. Producers are under no pressure to lower their prices.
Tender offers into Bangladesh and Sri Lanka show producers with a bullish attitude. They also have no apparent reason to dump material on the market.
Sources report that the producers have been keeping their warehouse inventories low so they can fairly state they have no reserves. With no reserves, there is no pressure to sell out of fear of overloading the warehouses.
Buyers are talking about cargoes below $700/mt FOB, but many are dismissing such talk. Traders and producers say $700/mt FOB is the bottom of the price range for both prills and granular.
At that price, sales to India will still be out of the question.
Bangladesh, however, may take tons at the current level.
Helm, offering Fertil tons, may end up taking the BCIC tender from June 10. The estimated netback on the Helm offer is $700/mt FOB.
India: Talks are still taking place, but the gap between what the buyers are willing to accept and what the sellers want for their product remains large. Sources say the Indians are holding firm to $700/mt CFR. With the Middle East price at $700/mt FOB and up, there is little chance of buying from that part of the world.
The Yuzhnyy price, combined with softening freight rates, could lead to some panamax deals being made.
Throughout the industry, the conventional wisdom is that India will have to start buying urea soon.
Plans to restart and upgrade older plants provided a psychological boost to farmers, but no urea from these plants is expected to reach the fields for a couple of years.
Bangladesh: Sources are sure BCIC will make awards of 50,000 mt from the June 10 tender. Whether they will follow through with the remaining paperwork is still a toss-up, said one source.
Helm was the low offerer and is expected to get the award with Fertil tons. The estimated netback on the Helm offer is $700/mt FOB.
Bangladesh Finance Adviser A.B. Mirza Azizul Islam on June 17 approved the Industries Ministry’s proposal to import 12,000 mt of urea through BCIC from Qatar. It will be imported in the next fiscal year (July-June 2008-09) at a rate of $666/mt from Qafco under a state-to-state-deal.
The government estimates the country will need about 2.85 million mt of urea in the coming fiscal year, of which 1.7 million mt is expected from local state-owned factories. The rest, 1.15 million mt, will be imported through private and public sector initiatives. The government earlier decided to import 400,000 mt from Qatar, Kuwait, UAE, and Saudi Arabia under state-to-state deals.
NITROGEN SOLUTIONS
U.S. Gulf: New prompt barge business was called in the $410-$425/st FOB ($12.81-$13.28/unit) range. Higher price ideas appeared to be under pressure as some players said their perception was that tanks may end the season with inventories intact. After all, a lot of the corn that was supposed to be sidedressed is under water. In the meantime, one major retailer told Green Markets their focus is now on selling soybean seeds.
Eastern Cornbelt: UAN remained at $13.68-$14.18/unit FOB regional terminals to the dealer, with the low out of spot river locations in Illinois and Ohio. One supplier was posting forward contract UAN for July through December at $15.50-$15.80/unit FOB in the region.
Western Cornbelt: Dealers said sidedress applications of UAN were going down on corn in the region, and a Missouri source reported lots of spraying activity on “wooly” looking fields. UAN-32 was quoted at $435-$448/st ($13.59-$14.00/unit) FOB regional terminals, with the low reported in Missouri to the dealer and the upper end in Iowa.
California: The UAN-32 market was tagged at $460-$470/st ($14.38-$14.69/unit) FOB California terminals, but one regional supplier was planning a $50/st increase June 23 to $520/st ($16.25/unit) FOB. On a delivered basis, the UAN market was quoted at $480-$485/st ($15.00-$15.16/unit) in the state last week.
Pacific Northwest: UAN-32 was tagged in a broad range at $435-$475/st ($13.59-$14.84/unit) DEL in the Pacific Northwest, with producer postings ranging from $475-$505/st ($14.84-$15.78/unit) DEL, depending on location.
Western Canada: The UAN-28 market was quoted at $499-$515/mt ($17.82-$18.39/unit) DEL, unchanged from last report.
AMMONIUM NITRATE
U.S. Gulf: Prices continued to be reported within the $370-$380/st FOB range.
Western Cornbelt: Ammonium nitrate was reported at $395-$410/st FOB in the region last week.
California: No market was reported for ammonium nitrate in the state. CAN-17 was quoted in the $310-$350/st FOB range in the region last week.
Pacific Northwest: Ammonium nitrate pricing was steady at $455-$470/st rail-DEL, with the low end in Montana. CAN-17 pricing was up as well to $315-$330/st DEL in the region, with May 28 reference levels at $325/st FOB Kennewick, Wash.
AMMONIUM SULFATE
Eastern Cornbelt: Granular ammonium sulfate was unchanged at $365-$375/st FOB in the region.
Western Cornbelt: Granular ammonium sulfate was steady at $350-$375/st FOB regional terminals.
California: The ammonium sulfate market remained in a broad range at $310-$350/st FOB California terminals. Sources said ammonium sulfate movement for rice topdressing will begin later in the summer.
Pacific Northwest: The ammonium sulfate market had reportedly firmed to $395-$400/st DEL in the region, up roughly $55/st from last report. Agrium’s ammonium sulfate postings firmed on June 2 to $400/st DEL in Montana, Wyoming, Idaho, Washington, Oregon, Utah, and Nevada, and $395/st FOB warehouses in Idaho, Washington, Oregon, Utah, and Nevada.
A Washington source quoted the Tiger-90 posted price as of June 16 at $845/st DEL.
Western Canada: Granular ammonium sulfate was steady at $480-$485/mt DEL in the region.
PHOSPHATE
Central Florida: With new phosphate sales a thing of the past in Central Florida, phosphate producers were still loading railcars based on previous orders. Mosaic was said to have enough business on the books to continue into September, while other producers have enough to keep going for some time.
Although producers have made no changes to their asking prices, a trader said phosphates were available from terminals at a lower cost, around $1,025/st FOB Central Florida-based. The reason was because “no one wants to carry it over the summer” due to the high cost of capital.
The lack of activity has forced prompt prices to stabilize, and it appeared last week that situation will continue until the beginning of the next season.
Last week Mosaic sold MAP railcars for delivery in October and November at $1,120/st FOB, which would amount to a DAP price of $1,095/st FOB.
The Central Florida DAP price range last week continued unchanged from the previous week’s range of $1,025-$1,070/st FOB. PCS Sales’s Central Florida reference price remained at $1,050/st FOB for DAP. Mosaic’s asking price was still $1,070/st FOB for DAP and $1,095/st FOB for MAP. CF’s price was $1,050/st FOB for DAP and $1,125/st FOB for MAP, which continued to be scarce. In Texas, Agrifos’s price remained at $1,050/st FOB for trucks and $1,045/st FOB for rail shipments.
U.S. Gulf: Because of flooding, high water, and a fast current, barge traffic on the upper Mississippi River came to a stop and the problem was moving south. On the Arkansas, barge traffic also came to a halt due to high water and a fast current, but flooding was not a problem there late last week.
In parts of Iowa, Nebraska, and Illinois, the flooding has swamped a significant portion of the corn crop – prices had already gone up last week and will continue to rise. In Iowa, losses were estimated at $1 billion.
What was a disaster for some will be a boon to others. Farmers whose crops were spared will earn far more this year and will have plenty of money for fertilizer when they replant. Some of those corn crops may be replaced with soybeans, but that will not likely affect fertilizer sales significantly.
At this time of year phosphate sales normally come to a halt; last week only one DAP and one MAP barge sale could be found, and those were done late by a producer. The DAP barge sold at $1,030/st FOB and the MAP traded for $1,055/st FOB. Sources pointed out that the lowest priced supplies available were coming from terminals, which were stocked at prices lower than producers’ current asking prices. Indications were that cheaper phosphate barges may finally be disappearing from the market.
Several sources said Mississippi Phosphates was dedicating more of its production to the export market, which also saves the company the additional $10/st to move the product to New Orleans.
After two frustrating years, the wheat crop in Oklahoma was in excellent condition and harvesting had begun. As a result, farmers there will have additional money to buy fertilizers. However, pastureland has gone unfertilized and ranchers were beginning to sell off cattle, which will be thinner and less profitable. Ultimately, the resulting beef shortage will force prices up and pastures will again be fertilized – just not this season.
With no new sales, the price range last week moved to $1,005-$1,030/st FOB. MAP barges were available at prices $25-$75/st FOB more than DAP. Mosaic’s asking price for forward sales through August was $1,090/st FOB for DAP and $1,105/st FOB for MAP. CF was seeking $1,070/st FOB for DAP and $1,145/st FOB for MAP for prompt deliveries.
Eastern Cornbelt: DAP remained at $1,050-$1,107/st FOB regional warehouses to the dealer, with MAP quoted at $1,075-$1,113/st FOB. The upper end of both ranges was reported out of inland warehouses in Ohio, with the lower numbers out of spot river locations. No current prices were reported for 10-34-0.
Western Cornbelt: The DAP market remained at $1,025-$1,055/st FOB regional warehouses to the dealer, with MAP quoted at $1,050-$1,095/st FOB. There continued to be no current pricing quotes for 10-34-0 in the region, but most speculated that new pricing would be up dramatically due to much higher phosphoric acid numbers.
California: Both the DAP and MAP markets were tagged at $1,155-$1,160/st FOB or DEL in the state. Fueled by much higher phosphoric acid prices, the 10-34-0 market had reportedly strengthened to $888-$898/st FOB in California, up significantly from last report. The 16-20-0 market remained at $615-$622/st FOB.
Simplot’s June price levels for super phosphoric acid (SPA) and merchant grade acid (MGA) were $23/unit rail-DEL in the company’s western sales area, up dramatically from May pricing at the $13.20/unit DEL level. A $0.50/unit increase is scheduled for July and again in August. Agrium also announced new SPA and MGA postings on June 1. Prices for both products moved to $2,300/st rail-DEL in the continental U.S. for the month of June, $2,350/st rail-DEL in July, and $2,400/st rail-DEL in August.
Pacific Northwest: DAP and MAP were pegged at $1,145-$1,155/st DEL or FOB in the region last week. Simplot earlier this month changed its dry phosphate postings, bringing DAP and MAP to the same level instead of posting DAP at a $15/st premium. As a result, the company’s reference levels for both products are now at $1,145/st DEL in central Montana, $1,150/st DEL in parts of Idaho and Utah, and $1,155/st DEL in Washington, Oregon, parts of Idaho, and Nevada.
16-20-0 remained at a firm $615/st DEL in the region. Simplot’s 0-45-0 TSP postings included $1,000/st FOB Pocatello, Idaho. 10-34-0 was up significantly to $925-$935/st FOB in the region, with sources talking of another increase July 1 as phosphoric acid prices continue to climb.
Simplot’s June prices for both SPA and MGA were up dramatically to $23/unit rail-DEL in the company’s western sales area. In addition, the company reposted MGA at $22.50/unit FOB Pocatello for truckloads only. A $0.50/unit increase is scheduled for July and again in August. Agrium’s new SPA and MGA postings include both products at $2,300/st railDEL in the continental U.S. for the month of June, $2,350/st rail-DEL in July, and $2,400/st rail-DEL in August.
Western Canada: The MAP market remained at $1,335- $1,370/mt DEL in the region.
U.S. Export: As export phosphate prices slumped during the past month, PhosChem has taken a wait-and-see attitude on new sales. Product from CF and Miss Phos was said to be offered at lower prices than those at which PhosChem was willing to sell.
India was said to have purchased around 100,000 mt from various sources, including Russia. India will continue to be a major player in the export market. A tender by India’s MMTC was said to have resulted in the following offers: PhosChem 45,000 mt at $1,230/mt FOB Tampa; Transammonia 120,000 mt at prices between $1,320/mt and $1,360/mt CFR; 40,000 mt from ConAgra and 45,000 mt from KeyTrade with no price available; and 40,000-45,000 mt with no price available from Australia’s Incitec-Pivot.
High phosphate prices were said to be aggravating a food shortage in Pakistan.
A three-month-long farmers strike in Argentina has put a damper on phosphate sales there, and farmers were being joined in the strike by truckers. Food supplies were becoming scarce in that country, but crops such as soybeans and wheat will bring higher prices in other producing countries.
The Fertilizer Institute released exports for May, which showed India – no surprise – took 270,745 mt of DAP, while Japan was the second biggest importer at 66,009 mt, and Argentina third at 34,300 mt. Overall, 445,727 mt of DAP were exported in May, which represented a 46 percent increase over the same month in 2007. For the calendar-year-to-date, 1,709,916 mt of DAP had been exported, which was a 10.7 percent increase over the same period a year earlier.
TFI said MAP exports were down 23 percent in May at 218,595 mt compared to May 2007. Brazil was the biggest buyer at 88,602 mt, followed by Canada at 58,632 mt and Japan at 20,692 mt. For the calendar-year-to-date, Canada was the biggest customer at 212,769 mt, ahead of Australia at 193,434 mt and Brazil at 160,150 mt. A total of 763,471 mt of MAP, a decrease of 25.2 percent since last year at that time, had been exported.
The export DAP price range last week was unchanged at $1,160-$1,205 mt.
Pakistan: The country does not need to import DAP in the near term due to high inventory levels, according to local reports; however, consumption will pick up in coming months. Pakistan is currently sitting with an all-time high inventory level of 480,000 mt, sufficient to meet 30 percent of FY09’s estimated demand of 1.6 million mt. The government plans to give farmers better incentives, including a better support price for wheat, taking it from PKR510 to PKR625 per 40 kg. The subsidy for the fertilizer sector has been enhanced to PKR32bn against PKR25bn in Budget FY08, attributable primarily to the phenomenal rise in global fertilizer prices, especially phosphates. The government has raised the DAP subsidy from the previous level of PKR470/bag to PKR1,000/bag.
Australia: Incitec Pivot Ltd. on June 19 announced that its plant at Phosphate Hill in North West Queensland will close the same day for repairs to the final phosphoric acid reaction tank. The tank is essential for operation. The tank’s monitoring system detected a problem with one of the four baffles in the tank.
Depending on the assessment of the problem, the repairs could take up to a month, according to Incitec. If offline for a month, the company said the financial implication of loss of production and cost of repairs is estimated to be in the range of $58 million NPAT.
The company notes that within Australia during this time of year, domestic demand for ammonium phosphate products is low.
POTASH
Eastern Cornbelt: The potash market remained at $775-$830/st FOB regional warehouses, depending on grade and supplier.
Western Cornbelt: Potash was generally quoted in the $775-$800/st FOB range out of regional warehouses last week. Some sources said they continue to pick up stories of tons trading at slightly lower levels out of some river locations, but nothing was confirmed last week.
California: Potash pricing remained at $614/st FOB for strictly allocated tons of 62 percent white product and fine grade potash, with delivered potash reported at $700-$770/st, depending on grade and supplier.
Granular sulfate of potash (SOP) was steady at $815/st FOB in the state, with water soluble SOP at $955/st FOB for bulk and $1,015/st FOB for bags. Yara said its granular SOP price would move up to $895/st FOB on June 23. K+S North America said on June 12 that effective June 23, prices on shipments of SOP will be raised by $80/st on all grades due to the continued unprecedented global potash market supply and demand pressures.
Sources tagged the California potassium nitrate market at $1,160/st FOB for bulk and $1,230/st FOB for bags.
Pacific Northwest: The potash market was tagged at $615-$651/st FOB in the region for strictly allocated tons for June and July, with one source reporting that most have been allocated 75 percent or less of their normal quarterly volumes. Delivered prices for allocated potash were in the range of $636-$646/st in the region. Sources talked of a possible $170-$200/st increase in September for the next quarterly allotment.
Great Salt Lake Minerals Corp., a subsidiary of Compass Minerals, increased its SOP postings by $75/st on June 16, with list prices at the company’s Ogden, Utah, solar evaporation plant moving to $733/st for standard, non-granulated SOP and $745/st for granular SOP.
Western Canada: No current pricing was reported for potash in the region last week.
SULFUR
Tampa: Although the third quarter begins in just over a week on July 1, negotiations for new contract prices had not begun as of late last week. However, one source said posturing had. Sulfur producers were said to be planning to seek an increase of about $250/lt, which would put the Tampa price near that of the world market. The extraordinary effort made by some phosphate producers to secure additional tons was cited as one of the reasons for another sharp increase.
No new serious refinery problems were found last week, and sulfur supplies were relatively stable for a change.
West Coast: Spot sales on the West Coast were made between $700/mt FOB and $725/mt FOB. Some of those new deals were said to have included buys by Mexico’s Fertinal.
Vancouver: Sulfur producers were getting ready to begin third quarter negotiations and prices were expected to increase. The big question was China and when it will return to the market, which could be sometime after the Summer Olympics.
MARKET NOTES
India: Farmers may see prices of complex fertilizers coming down by an average of 17.5 percent. This follows the approval given for a “nutrient-based” subsidy pricing policy by the Cabinet Committee on Economic Affairs (CCEA). Currently, subsidies on fertilizers are entirely ”product-based,” and are available only for specific products such as urea, DAP, MOP, and SSP. Other fertilizers receive no subsidy or have prices that are fixed, with no regard to their nutrient content. This will, however, now change. For example, the farm-gate price of urea (which contains 46 percent nitrogen) is currently Rs 4,830 a mt, which works out to Rs 10.5a kg of nitrogen. “We will now use the Rs 10.5 a kg rate of nitrogen as the benchmark for determining the prices and subsidies payable on all other fertilizers containing nitrogen. This will induce farmers to use complexes that may have lower nitrogen, but are priced out by urea despite being more suitable for particular crops and soils,” said Dr. J.S. Sarma, Secretary, Department of Fertilizers.
Likewise, the phosphate content of 46 percent in DAP, 60 percent potassium in MOP, and 11 percent sulfur in SSP will be used as the benchmarks for arriving at the equivalent nutrient linked prices for all other fertilizers. “We expect average retail prices of complex fertilizers to come down from the present Rs 8,058 to Rs 6,643 a mt,” Dr. Sarma told the local press. The additional subsidy burden on this count – the difference between the lower farm-gate price and the higher cost of production or imports borne by the industry – will be around Rs 10.59bn. The new pricing scheme and the rates applicable on various complexes are expected to be available soon.
Poland: Agriculture Minister Marek Sawicki has again criticized fertilizers plants for “unjustified prices hikes” that may boost food prices. According to the ministry, phosphate fertilizer prices have risen by 151 percent, ammonia by 40 percent, and other nitrogen by 18 percent. Sawicki once more repeated that such raises may be the result of a conspiracy of fertilizers plants – including the Ketrzyn, Police, and Tarnow plants – and insisted on checking the price by the Office of Consumers Protection. However, Aldon Zalewski from the Institute of Rural Economy cited higher gas and electricity costs as a factor.
Indeed, the Polish Oil and Gas Co., which is at the present the only supplier of gas to fertilizers plants, wants to raise gas prices in the summer of this year. The company managed to obtain a 16 percent hike of gas prices in April this year, arguing that it pays more for imported gas.
Saudi Arabia: Ma’aden Phosphate Co. (MPC) of Saudi Arabia signed major financial agreements worth a total of SR15.46 billion (about US$4.09 billion) to develop its fully integrated phosphate fertilizer production facility. Dr. Abdullah Dabbagh, president and CEO of the Saudi Arabian Mining Co. and chairman of Ma’aden Phosphate, a joint venture between Ma’aden and Saudi Basic Industries Corp. (SABIC), signed the documents of agreements with representatives of various banks and financial institutions on June 15. It included the syndicated facilities, comprising $2.06 billion in 16-year conventional and Islamic facilities; a $200 million, 16 year Korean Export Insurance Corporation covered facility, a $400 million 16-year facility provided by the Export-Import Bank of Korea; and a $100 million revolving working capital facility. Direct funding will also be provided by the Public Investment Fund (PIF) for $1.067 billion, and the Saudi Industrial Development Fund for $135 million.
The signing of financial agreements is considered as a milestone of achievements for significant funding of the MPC, estimated to cost SR20.70 billion ($5.52 billion). The estimated cost was calculated taking into account projected annual inflation and estimated financing costs, including engineering, procurements, and construction costs of SR17.03 billion ($4.54 billion). Over 75 percent of total capital costs have been contracted at a fixed rate under signed Lump Sum Turn-Key (LSTK) contracts for the engineering, procurement and construction (EPC) of a beneficiation plant, DAP, ammonia, sulfuric acid, and phosphoric acid processing plants, and certain supporting infrastructure, while 30 percent of the total project costs will be funded by equity contributions from Ma’aden and SABIC in proportion to their interests in the project – 70 percent Ma’aden and 30 percent SABIC.
The project involves the development, design, construction, and subsequent operation of two primary sites. The first, at the Al-Jalamid mine site in the north of Saudi Arabia, will comprise a phosphate mine and a beneficiation plant. The second is the Ras Az-Zawr site on the eastern coast of the Arabian Gulf around 90 km north of Jubail, with a fertilizer production facility comprising DAP, ammonia, sulfuric acid, and phosphoric acid processing plants, each supported by appropriate industrial and social infrastructure.
MPC will produce an estimated 2.92 million mt/y DAP, plus approximately 440,000 mt/y of excess ammonia for export. It is also anticipated that the project will generate around 160,000 mt/y of excess phosphoric acid for sales in the domestic market.
Southern States Cooperative has announced several promotions and changes to its management team. Greg Adlich has been promoted to senior vice president, commodities, and will have responsibilities for the crops division, feed division, wholesale petroleum division, and the aquaculture operation. Danny Dillon will be promoted to vice president, crops division, to replace Adlich and will be responsible for the wholesale seed, fertilizer, and crop protectant sales of Southern States.
Other management changes and promotions include Jobie Miller, who has been promoted to senior vice president, retail operations, with responsibility for the retail ag store division, retail petroleum stores, and managed local cooperatives. He will also have responsibility for distribution and logistics, customer service, and loss prevention. Donny Dunbar will be promoted to vice president retail ag store division to replace Jobie Miller, and will be responsible for the retail ag stores and the retail petroleum stores.
Todd Fleer has been promoted to senior vice president, general merchandise manager and will be responsible for Southern State’s northern Agway division, farm and home division, store planning, modular planning, and real estate and construction.
Jeffersonville River Terminal (JFT) reports it has made organizational changes to facilitate further business growth and provide additional support to administrative functions. Ken Cruce and Steve Powell have been promoted to regional sales managers. Ken will have sales and marketing responsibility for the Naples, Clayton, and Arkansas River market areas. Steve will have sales and marketing responsibility for JRT’s Ohio River locations, which includes the Jeffersonville and North Bend warehouses and several leased locations.
Kay White and Shirley Jenks are being promoted to administrative managers and will be responsible for all administrative functions supporting the JRT business structure.
Mike Routh has joined JRT as business development manager. Mike’s area of concentration will center on commercial growth and improvement initiatives within the JRT marketing framework. He can be reached at his office at 319-752-2688, or cell phone at 319-850-8221.
Ben Gavica has accepted the position of area manager, Western Canada, for Simplot AgriBusiness. Gavica currently resides in Boise, Idaho, and will work out of the company’s Idaho office until he relocates to Canada in the coming months. “I am thrilled to have Ben on board, and am confident he will bring the next level of outstanding service and support to each of you within the Western Canadian territory,” said Mark Auchampach, director, Central Region Sales. “The Western Canadian marketplace is one of long-term importance to the J.R. Simplot Company.” Until his relocation, Gavica can be reached at 208-672-2702 (office); 208-850-4808 (cell); 208-672-2760 (fax); and by email at ben.gavica@simplot.com.
COMPO GmbH & Co. KG has announced that Ingo Müller has been appointed director of the COMPO division’s K+S North America. He is charged with analyzing the value chain of the North American specialty fertilizer market, setting up the COMPO business in the U.S. In his eight years with COMPO, Müller gained extensive experience in product and regional management and developed expertise in the marketing of specific fertilizer technologies. Müller holds a Ph.D in Agricultural Sciences from Justus Liebig University Giessen.
COMPO, a 100 percent subsidiary of K+S AG, is a European manufacturer and marketer of specialty fertilizers with $ 1 billion in sales, headquartered in Münster, Germany.
Dan Hutson II, 54, of Murray, Ky., was killed in a plane crash June 18 while making an emergency landing near the Lebanon-Springfield airport in Washington County. He was alone in the plane, having just dropped his wife off in Lexington, so that she could be with their daughter during the birth of a grandchild, according to the Lexington Herald-Leader. He was in route back to Murray when he reported engine trouble.
The Hutson family sold off their Midwest fertilizer retail and storage assets in 1997 to IMC AgriBusiness (GM Archives). IMC AgriBusiness was later sold to Royster-Clark Inc., which in turn was sold to Agrium Inc. John Hutson Sr. passed away this past February at the age of 84.
The younger Hutson went on to develop his own equipment business, now known as Hutson Inc. It has five locations in Kentucky and Tennessee, and is one of the premier John Deere dealerships in the nation.
London, Ohio-With fertilizer prices continuing to soar and crop producers looking for alternatives, a large turnout – if not the largest – is expected at the 2008 Great Lakes Manure Handling Expo July 9 at Molly Carem Agricultural Center here, according to the organizers. Tami Combs, extension program coordinator at Ohio State University, told Green Markets there aren’t any definite figures on attendance because the expo is free and registration isn’t required. “Our goal is 1,500, but we are hoping to have close to 2,000 attend,” Combs reported. The year-ago head count was 1,300 when it was held in Michigan.
Carthage, Mo.-Tens of thousands of gallons of liquid fertilizer are being produced as a co-product every week at the Renewable Environmental Solutions plant here that uses thermal conversion to turn waste from a nearby turkey processing plant into oil for diesel fuel. Jim Freiss, fertilizer manager for Changing World Technologies Inc., which owns the Carthage plant, told Green Markets that marketing for the 7-0-1 product is being focused for starters in poultry producing areas where “we’ve been having no problems with acceptance by the farmers.” Freiss said the liquid concentrate is registered in Missouri, Kansas, and Oklahoma, where it complements the high phosphorus available in the poultry litter. “Farmers can get the nitrogen without having to put on more phosphorus,” he noted. “We’ve been offering discounts to farmers and it doesn’t look like it’s going to be hard to sell.” At the same time, Freiss said plans are being made for bringing to market a companion fertilizer produced in paste form from the bones remaining from processing the turkey offal. “We’re ramping up the same kind of program for the next growing season for the paste and have already demonstrated that it works well,” Freiss reported. He said the Carthage plant is presently producing 35,000 to 40,000 gallons of the liquid fert and expects production of the 0-14-0 paste will range between 100 and 150 tons per week. According to Changing World Technologies spokeswoman Julie Gelfand, the plant can convert approximately 250 tons per day of turkey offal and fats into approximately 20,000 gallons of a renewable diesel fuel oil, which is sold to local industrial customers as a hedge against rising energy prices and as a way to reduce their fossil fuel consumption and carbon emissions. Operating the plant, however, hasn’t been without problems. Due to pending litigation, Gelfand declined to discuss complaints that have been lodged by Carthage residents because of the odors. She did say that she hoped these residents would keep an open mind about the environmentally friendly technology and the plant’s potential to the community. Later this year, Gelfand reported, the History Channel will report about how the plant produces the diesel oil and specialty fertilizers on its Modern Marvels segment. “Obviously there’s been of controversy about this company in Carthage over the years,” Gelfand commented. “But for what it’s worth, the scientific community really is celebrating what this company is doing. It’s been a major feature on the Discovery Channel several times, and Modern Marvels is a highly respected and highly rated forum in which to communicate the potential of waste-to-oil technology.”
Washington, D.C.-The Fertilizer Institute on June 19 testified before the House of Representatives Subcommittee on Energy and Air Quality regarding the potential impact of climate change legislation on the fertilizer industry and its farmer customers. TFI President Ford B. West outlined what the association believes are the serious threats posed by the Safe Climate Act of 2007 (H.R. 1590) and the Investing in Climate Action and Protection Act (H.R. 6186). West told the committee that nitrogen fertilizer manufacturing is dependent on a reliable supply of natural gas, and that the U.S. has already lost almost one-half of its nitrogen fertilizer production capacity. He warned that the projected fuel switching brought about by climate change legislation would “cause the price of natural gas to skyrocket, even causing additional U.S. production to shut or move offshore.” West noted that only 30 nitrogen plants are currently operating in the U.S., and more than half of the imported fertilizer is from countries with weaker environmental standards and no climate change policies. “The majority of these countries are those from whom we are striving for energy independence,” he said. West urged legislators to exercise caution when considering policy that would have such a broad impact on the economy. “The current record demand for food and fuel has resulted in record demand for fertilizer,” he said. “This surge in world demand has meant that U.S. farmers and farmers around the world are paying the highest prices for their fertilizer inputs in history. With food demand levels predicted to stay high, Congress must tread cautiously and consider all ramifications and unintended consequences of such sweeping policies as climate change. Any climate change policy must take into account essential industries, such as fertilizer, that could be severely challenged if this policy does not address our unique situation.” On June 18, West participated in a House Natural Resources Committee roundtable chaired by Rep. Steve Pearce (R-N.M.) on U.S. energy policy. “Congress must recognize that the current U.S. natural gas supply/demand balance is an artificial one, created by public policy,” West told roundtable members. “The demand for natural gas to produce electricity increased dramatically after the passage of the Clean Air Act Amendments in 1990 and is growing with new efforts to reduce green house gas emissions. On the supply side, Congress has limited the ability to drill for natural gas in areas where there are significant known supplies.” West urged members to expand the area in the Outer Continental Shelf, where drilling could occur. “Any increase in the U.S. supply of natural gas will help to keep the remaining nitrogen plants in the United States operating and help to ensure a domestic source of nitrogen remains available to our nation’s farmers,” he said.
Washington, D.C.-The Fertilizer Institute on June 17 released its new policy briefing paper, Fertilizer’s Role in World Food Production, which has been developed as a tool for use in ongoing policy discussions regarding the food price crisis and long-term solutions. The color brochure emphasizes diversifying diets and increased global food demand as the driving factors behind the food crisis, stating that if we are to keep up with food demand, the world will need record global crop production every year. “Fertilizer is a precious resource, which is an integral part of any nation’s food security strategy,” said TFI President Ford B. West. “As people around the world demand more nutritious diets, the public and policymakers cannot overlook the fertilizer industry’s important contributions to world food production.” TFI is making this briefing paper available to its members for use at state and regional meetings with legislatures, local councils, and others. Members can order complimentary co-branded brochures for use in their own lobbying and education efforts.The policy briefing paper is available at www.tfi.org.
Regina-Viterra Inc. plans to reopen its elevator in Grimshaw, Alberta, in July 2008 to enhance grain handling and marketing services to customers in the northern part of the Peace River area. The facility, which was closed in 2001, will provide a local delivery alternative for Viterra farm customers. It said the decision to reopen the facility is supported by a strong business case given the recent redistribution of Viterra grain handling assets across Western Canada and the absence of a Viterra elevator in the area. Viterra said the elevator will complement Viterra’s Ag Retail Farm Service Centre in Grimshaw and other surrounding communities, which offer premium products including fertilizer, seed, equipment and crop protection products.
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