All Posts from January 26, 2015

Phosphates

Brazil, California, Central Florida, Eastern Cornbelt, India, Market Watch, Middle East, NPK 11-37-0, Pacific N.W., Phosphate Rock, Sri Lanka, Triple Superphosphate, U.S. Exports, U.S. Gulf, Western Canada, Western Cornbelt

Central Florida: Business remained slow in Central Florida last week, although a tightening supply climate in the region contributed to increased prices.

Sources roundly pinned the DAP ceiling at $440/st FOB for truck-loaded material. Most believed railcars couldn’t be had below $430/st FOB, and scattered rumors of leftover $425/st FOB offers went unconfirmed.

Complicating matters, a number of industry sources said the region’s largest supplier was “tight” through April, and was unlikely to offer phosphates until the second quarter. The economics were simple, sources said. “Considering a DAP price of $440/st FOB (in Central Florida), there are better netbacks for export business,” said one. The Tampa export price hovered in the mid-to-upper $480s/mt FOB last week.

No appreciable dry phosphate application was currently underway in the Northeast or Midwest, one contact said. Some late-season application was reported in Florida, however, and the Sunshine State’s “big season” for phosphate purchases was just around the corner, with business generally ramping up on or around Feb. 1.

The price of DAP in Central Florida firmed to a range of $430-$440/st FOB, compared with $425-$435/st the previous week, with truck sales comprising the top of the range. MAP was expected to maintain a $20/st FOB premium over DAP in the region.

U.S. Gulf: Sources reported another slow week on the river. Prices narrowed from the already slim $440-$445/st FOB spread of a week earlier, with traders reporting a number of transactions around $442-443/st FOB NOLA. Nearby $440/st FOB offers were mentioned as well, though it was unknown whether business actually concluded at that level.

Most sources expressed the belief that the DAP market was essentially resting on the bottom. It would take a “substantial, unforeseen event” to significantly derail DAP heading into spring, said one contact.

The supply landscape was largely credited for the market’s price stability. “Barges are available if you want them,” one trader said, “but they’re not plentiful enough to bring the market down.”

While DAP supply was diminished, MAP was “plentiful.” The lack of demand, coupled with ample supply, conspired to sink MAP pricing to near-parity with DAP. Most sources reported concluded MAP transactions at no higher than $450/st FOB.

Imports remained a wildcard in the market. A PhosAgro vessel was the most widely discussed foreign cargo expected in the near term, but sources last week added an OCP vessel, expected for discharge in early February, to the conversation.

The 54,000 mt cargo will carry both MAP and DAP, sources reported, but will predominantly consist of the former. The vessel was rumored to be earmarked for distribution to PotashCorp customers and thus unlikely to be offered at NOLA, but the cargo’s ownership could not be confirmed.

Some also believed Chinese producers would increase offers into the U.S. market in 2015, given a new, more forgiving export tax structure from the country, as well as the U.S. dollar’s current strength.

However, the NOLA barge price would have to firm before the NOLA market becomes an attractive target for Chinese sellers, sources maintained, probably to a minimum $450/st FOB.

The DAP barge price tightened to a range of $442-$443/st FOB for the week, compared with $440-$445/st FOB the previous week. MAP was called $445-$450/st FOB.

Eastern Cornbelt: DAP was steady at $470-$480/st FOB regional warehouses, with MAP quoted in the $490-$500/st FOB range in the Eastern Cornbelt.
10-34-0 was firm at $540-$550/st FOB for limited tons in the region.

Agrium’s phos acid postings will

Permitting for Idaho project suspended – Alert

Breaking Industry News

Stonegate Agricom Ltd. said Jan. 26 that it is temporarily suspended permitting activities at its Paris Hills Phosphate Project in Idaho due to financial constraints.

In order to finalize the groundwater model for permitting applications, the company engaged third-party consultants. Currently there is a wide range of estimates of expected groundwater flow rates into the planned underground mining area. As a consequence, the company will need to undertake further testing and analysis which may include additional engineering work. Given its current financial position, the company cannot undertake additional work at this time. The company no longer expects to submit the groundwater model and report in Q1 2015 as planned. The company is reviewing its options with respect to its next steps.

As of Dec. 31, 2014, cash and cash equivalents totaled approximately $1.4 million and working capital totaled $1.0 million. The company is exploring alternatives to raise additional funds by the beginning of Q2 2015 to cover working capital and fund further work on the project.

Ammonium Nitrate

Ammonium Nitrate, Market Watch

U.S. Gulf: Barges were put in the $300-$305/st FOB range, with little interest. Sources said many have already stocked up and there is little demand.

Western Cornbelt: Ammonium nitrate was reported at a firm $360/st FOB for limited tons in the region. Sources continued to talk of retailers and wholesalers exiting the ammonium nitrate market due to ever-increasing insurance costs in the wake of the West Fertilizer tragedy.

California: The CAN-17 market was quoted in a broad range at $322-$352/st FOB in California, depending on location and supplier, with the low out of coastal terminals and the upper end out of inland desert locations. Some sources speculated that an increase might be in the works for second-quarter purchases. AN-20 remained at $315/st DEL in California.

Pacific Northwest: Agrium reposted CAN-17 on Jan. 19, moving to $300/st FOB Kennewick, Wash., and $325/st rail-DEL in Idaho, Oregon, Utah, Washington, and northeastern Nevada. Those levels reflected a drop from last report. AN-20 was unchanged at $260/st FOB Kennewick and $270/st rail-DEL in the Pacific Northwest.

Agrium announces higher dividend, buy-back

News, News Briefs

Calgary — Agrium Inc. said Jan. 22 that it has increased its target dividend payout ratio to 40 percent to 50 percent of free cash flow (net of sustaining capital), which is an increase from the previous target of 25 percent to 35 percent. Agrium also noted the acceptance by the Toronto Stock Exchange of Agrium’s Notice of Intention to Make a Normal Course Issuer Bid. Agrium proposes to purchase through the facilities of the TSX, the New York Stock Exchange, and/or alternative Canadian trading platforms, from time to time over the next 12 months, if considered advisable, up to 7,185,866 common shares, being 5 percent of Agrium’s 143,717,326 issued and outstanding shares as of Jan. 19, 2015. "Increasing our dividend target payout ratio and putting the Bid in place are in alignment with our company strategy and the strength and diversity of our earnings base," said Chuck Magro, Agrium’s president and CEO. "We expect our free cash flow generation to increase significantly as we complete our major production capacity expansion projects for nitrogen and potash this year. We believe that the higher payout ratio strikes a balance between returning significant capital to shareholders, while maintaining our core assets and flexibility for growth. The Bid provides an additional avenue to return capital to shareholders, while we also intend to increase our dividend in step with the growth in free cash flow."

The Week in Fertilizer Stocks

Fertilizer Stocks

The Week in Fertilizer Stocks

Producer Symbol Price Week Ago Year Ago
Agrium AGU 107.20 97.86 92.60
CF Industries CF 307.25 288.74 242.44
CVR Partners UAN 11.58 10.68 18.02
Intrepid Potash IPI 14.19 13.30 16.34
Mosaic MOS 48.66 45.43 47.77
PotashCorp POT 36.25 35.00 33.26
Rentech Nitrogen RNF 11.20 11.05 20.82
Terra Nitrogen TNH 129.43 119.85 165.71
Distribution/Retail
Andersons Inc. ANDE 46.66 46.55 84.82
Deere & Co. DE 89.51 87.20 88.66
Scotts SMG 63.87 61.04 61.81

Wilbur-Ellis opens Colorado Agribusiness location

News, News Briefs

Los Angeles — Wilbur-Ellis Co. announced on Jan. 19 that it has opened a new Agribusiness Division location in the Denver, Colo., area. The company said the opening is part of its Alignment for Growth plan announced last summer, which included the decision to shift the base of its Agribusiness operations from California to Colorado. “The move to Colorado puts the Agribusiness Division in the middle of our entire operating area, closer to our branch locations and to our customers,” said Dan Vradenburg, president of the Agribusiness Division. “The new facility will make it easier for employees to connect with one another and with our customers, all of whom are critical to our success.” The Agribusiness Division is a $2.1 billion business, with more than 2,800 employees serving customers from more than 175 branch locations in more than 250 crop segments across the U.S. Wilbur-Ellis said the new facility will host key personnel and provide access to multiple meeting and training spaces. As part of Alignment for Growth, Wilbur-Ellis said it has realigned a number of positions around its functional support areas, as well as within its five regions, in order to “combat the changing industry conditions while also meeting customer demands, and accelerating professional and organization growth within the company.” Wilbur-Ellis said these changing conditions include volatile markets, unpredictable weather, more retirements, global influences, and new innovations and technologies. The Wilbur-Ellis corporate headquarters will remain in California.

H.J. Baker launches new sulfur bentonite fertilizer

News, News Briefs

Westport, Conn. — H.J. Baker on Jan. 22 announced the release of its new sulfur bentonite product, Tiger XP®. The company said the new fertilizer has a propriety activator that “sets a new industry standard for release rates and overall product performance…ensuring farmers have a well-balanced nutrient replacement program.” Tiger XP addresses early season soil sulfate deficiencies with more plant available sulfate during critical early growth stages, the company said. Trial results also showed higher sulfate release rates throughout the growing season compared to traditional sulfur bentonite products, while also improving the availability of other nutrients to optimize plant potential and increase overall crop productivity. In addition, H.J. Baker said Tiger XP’s dark gray color and coating help suppress dust, going beyond industry standards in both safe handling and ease of use. “Tiger XP’s composition and performance capabilities are unique – an industry breakthrough that will improve crop performance all over the world,” said Steve Azzarello, executive vice president of Sales and Marketing. “As important, this product is safer to handle. With a new dust suppressant coating, Tiger XP exemplifies H.J. Baker’s commitment to R&D, our industry partners, and our customers.”

Jansen 39 percent complete; BHP reacts to oil drop

News, News Briefs

Melbourne — BHP Billiton on Jan. 21 announced that its Jansen Potash Project in Saskatchewan is now 39 percent complete and within budget. Shaft excavation continues. To date, BHP has invested some US$2.6 billion in the project, with the goal to finish the excavation and lining of the production and service shafts, and to continue the installation of essential surface infrastructure and utilities. BHP has yet to decide whether to actually bring the mine to production. In other news last week, BHP said its Petroleum division, reacting to lower oil prices, has opted to reduce the number of rigs it operates in its Onshore U.S. business by 40 percent by the end of the financial year in June. It will also cut Petroleum exploration expenditures this year by 20 percent from prior guidance, down to $600 million. Exploration will remain focused on Gulf of Mexico, Western Australia, and Trinidad and Tobago. In other news, BHP says despite lower commodity prices, it continues with plans to demerge its South32 assets with a shareholder vote on the measure planned for May.

Massive fish kill costs Tyson half million

News, News Briefs

Jefferson City, Mo. — Tyson Foods has agreed with the state of Missouri to a half-million dollar settlement over a massive fish kill Tyson caused last May by releasing ammonia-contaminated wastewater in Clear Creek in Barry County. Missouri brought suit against Tyson last June. The state says the Tyson Foods facility at Monett discharged wastewater containing a highly acidic animal feed supplement into the city of Monett’s sewer system, causing the city’s biological wastewater treatment system to fail and water containing a high level of ammonia to flow into Clear Creek and killing at least 100,000 fish. Tyson will pay the state of Missouri $162,898 for natural resource damages and $110,000 in civil penalties, and will reimburse costs and expenses to the Missouri Department of Natural Resources of more than $11,000 and the Missouri Department of Conservation more than $36,000. The agreement also outlines additional obligations of Tyson, including preparation of a hazardous waste manifest before transporting any hazardous waste in Missouri, and allows the state the right to inspect the Monett and Aurora facilities at any time to check for compliance with the law and to monitor the progress of all activities required in the agreement.

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