AMMONIA
AMMONIA
U.S. Gulf/Tampa: The Tampa ammonia price has dropped $40/mt for June to $510/mt DEL, according to sources. Yara was reported to have agreed to this number with Mosaic.
In the meantime, there were reports of NOLA prompt business being done at $580/st FOB, down $30/st FOB from the long-standing benchmark. Sources have speculated for some weeks that that number has been under pressure and should see a drop.
Eastern Cornbelt: Sources continued to quote the spot ammonia market at $800-$820/st FOB regional terminals, with the low end out of spot Illinois River locations and the higher numbers reported in Indiana. Movement was described as spotty last week. Some suppliers continued to reference very bullish numbers for forward contract tons, with postings as high as $1,020-$1,030/st FOB in the region for June forward.
Western Cornbelt: The ammonia market remained at $760-$800/st FOB regional terminals for spot tons, with delivered ammonia quoted at the $810-$820/st range in central Missouri from southern production points. One source reported booking some fall prepay tons recently at the $885/st FOB level, and some suppliers were referencing forward contract ammonia for as high as $1,000-$1,020/st FOB in the region for June forward shipments.
Southern Plains: Ammonia prices were strengthening. Sources tagged the market at $700-$760/st FOB regional terminals, up from numbers in the mid- to high-$600s/st FOB one week earlier. Pricing out of regional production points was reported in the $700-$725/st FOB range, while pipeline terminals were said to be at the upper end of the range to the dealer. A Colorado source reported booking tons for immediate shipment at the $700-$710/st DEL level at mid-month, but speculated that delivered prices were higher last week.
Agrium reposted anhydrous ammonia on May 6 to $725/st FOB Clay Center, Kan.; $720/st FOB Conway, Kan.; $715/st FOB Mocane, Okla.; and $695/st FOB Borger, Texas. Agrium’s delivered postings from the Borger facility moved on May 6 to $720/st in Texas north of Interstate 40, and $725/st in Texas and Oklahoma south of Interstate 40. Those levels reflect a $50/st increase from the company’s April 28 ammonia postings in the region.
Sources said retail pricing has definitely not kept up with replacement costs on nitrogen products. “This doesn’t do any real favors for the end farmer customer,” said one source. “If the retailer is not willing to take the time to keep pace with the market and make incremental moves and they then have to take major steps to keep up, they had better keep a defibrillator handy to use on the customers that suffer from the price shock.”
South Central: The anhydrous ammonia market was pegged at $650-$700/st FOB regional terminals, with the low for spot tons FOB Memphis, Tenn.
Black Sea: Despite the official KIP of $420/mt FOB, sources report buyers are pushing for much less ?Çô and suppliers are ready to listen. The lack of demand from the U.S. is reportedly driving the softening of prices in Yuzhnyy.
One Asian source noted that eventually the government in Kiev will have to adjust the KIP downward. The representative of a producer in the Middle East said he figured the price would not drop below $400/mt FOB. Others said sub-$400/mt FOB is likely.
No matter what the market says, unless the government drops the KIP, any deals below $420/mt FOB will have to remain in limbo.
As far as the participants at the IFA conference are concerned, the price remains soft ?Çô but not anemic ?Çô at $420-$440/mt FOB.
Correction: Due to a typographical error in the Black Sea ammonia report, Green Markets last week reported the official lowest price
Glenn Stroud has been appointed to the new position of general manager of Agrium U.S. manufacturing, assuming overall responsibility for Agrium’s U.S. nitrogen and phosphate operations. Stroud will remain based at Borger, Texas, and continue to report directly to Stephen Dyer, Agrium’s vice president of manufacturing, who announced Stroud’s promotion May 21.
Dyer also announced that Erik Vettergren has accepted the position of plant manager of Agrium’s Conda Phosphate Operations near Soda Springs, Idaho, overseeing processing operations at that phosphate fertilizer plant. Lin Kramer will continue to manage Conda mining operations and, like Vettergren, will report directly to Stroud.
Stroud has held numerous leadership positions within Agrium the past eight years, including general manager, U.S. Nitrogen; production manager, Conda Phosphate; and production manager, Kennewick, Wash., Nitrogen Operations. A Montana State University graduate with a Bachelor of Science degree in chemical engineering, Stroud has more than 20 years of experience in the fertilizer and chemicals industry, including a wide spectrum of engineering, operations and maintenance responsibilities. Prior to joining Agrium in 2000, he held a number of leadership positions with the Unocal Corp.
It also was announced that Charles Ross, who managed Conda Phosphate Operations for a number of years, has been named start-up manager of Agrium’s $1.2 billion nitrogen complex in Damietta, Egypt, which will have a combined capacity of 1.3 million mt of urea and 100,000 mt of net ammonia after it is completed in 2010.
Agrium will have a 60 percent interest in the EAgrium venture and be the exclusive marketer of its exported nitrogen products. EChem and EGas, which are owned by the Egyptian government, will hold a 24 percent interest. GASCO, the national operator of a gas distribution grid, will hold a 9 percent interest, and the Arab Petroleum Investment Corporation will hold a 7 percent interest.
The 2008 IFA International Crop Nutrition Award last week was presented to Dr. Achim Dobermann, Deputy Director General for Research of the International Rice Research Institute (IRRI), for promoting the ecological intensification of rice, maize, and soybean production systems in many countries. IFA noted that given the current food situation, Dr. Dobermann’s work on rice, a staple food for about two-thirds of the global population, is particularly relevant.
The International Plant Nutrition Institute (IPNI) said May 17 that Incitec Pivot of Australia is joining the group as a full member. IPNI, which was launched in January 2007, has as its mission to develop and promote scientific information about the responsible management of plant nutrients. Julian Segal, Incitec Pivot managing director and CEO, and James Whiteside, general manager, supply chain and trading, will join the IPNI board of directors.
Washington-The Fertilizer Institute (TFI) on May 16 discussed the impact of the natural gas crisis on the U.S. fertilizer industry before the U.S. Senate Republican Conference at a hearing titled More American Energy: Lowering the Cost of Energy and Balancing the Family Budget. Terra Industries Inc. President and TFI Chairman Michael Bennett testified on behalf of TFI. Bennett told the group that “in seven of the last eight years since 2000, global consumption of grain and oilseeds has exceeded production. If the world’s farmers stopped growing food today, we would only have enough grains in the world’s storage bins to feed the world’s population for 55 days.” He told the senators that fertilizer use currently represents 40 percent of the world’s food production and will have to continue to be a part of the solution toward resolving the food crisis. He emphasized that escalating domestic natural gas prices had caused 26 U.S. nitrogen plants to shut down since 2000. “Currently, only 30 nitrogen plants are operating in the U.S. and 55 percent of the U.S. farmer’s nitrogen fertilizer is imported. In less than 10 years, we went from being basically self-sufficient in nitrogen fertilizer supply to importing more than half of our needs.” He said America’s food security ?Çô and by extension, its national security ?Çô will be jeopardized if action is not taken to address the country’s natural gas crisis. He said TFI supports the newly introduced “Domestic Energy Production Act (S.2958),” which the Senate Republican leadership recently introduced. He added that the fertilizer industry particularly supports provisions that would allow states to petition to lift federal moratoriums on drilling off their shores and the bill’s efforts to promote important coal-to-liquids technologies and energy production initiatives.
Washington-The Fertilizer Institute (TFI) joined representatives from the Soil Science Society of America (SSSA), the Soil and Water Conservation Society, and the World Bank in May in conducting a United Nations (UN) learning center course titled A Global Toolbox to Manage Water and Nutrients for Agri-Communities. TFI Vice President of Scientific Programs Bill Herz presented at the UN sanctioned course, which was held as a part of the sixteenth session of the Commission on Sustainable Development (CSD-16) at UN headquarters in New York City. The objective of the learning center course was to teach delegates about technologies and tools, including best management practices (BMPs), available to achieve sustainable agricultural production goals and improve water quality and availability. Through the center, delegates learned how to identify the best management practices or land practices within the toolbox that protect and enhance water quality. TFI’s presentation centered on its stewardship system of using the right fertilizer product at the right rate, time, and place. “Using the tools that are available to them, farmers can properly manage fertilizers and on-farm sources of nutrients to meet food production needs while protecting the environment,” said Herz. “With today’s food supply crisis as a backdrop, it is important to remember that adequate soil fertility is often a limiting factor in enhanced food production.” The Commission on Sustainable Development – also known as CSD – was created in December 1992 to ensure effective follow-up of the 1992 United Nations Conference on Environment and Development (UNCED, also known as the Earth Summit), in Rio de Janeiro, Brazil, where world leaders signed the Framework Convention on Climate Change and the Convention on Biological Diversity; endorsed the Rio Declaration and the Forest Principles; and adopted Agenda 21, a 300-page plan for achieving sustainable development in the 21st century. A copy of TFI’s learning center presentation can be found on TFI’s Web site at www.tfi.org.
Perth-Aurox Resources Ltd., an Australian iron ore development company, says it also has phosphate assets for development at its Balla Balla iron ore location in northern Western Australia, not far from Port Hedland. Currently, the phosphate was slated to be removed as a waste product from magnetite mining. However, with phosphate rock moving from $50/mt to $400/mt on world markets within the past year, Aurox is now giving phosphate another look. It is moving ahead with studies into the beneficiation and sales of phosphate from the project. It currently estimates that its deposit could have well over 100 million mt. Aurox says it is already well advanced in the development of Balla Balla, having completed a bankable feasibility study for 6 million mt/y of magnetite iron ore production. It says it has in place two 15-year sales contracts for total of 6 million mt/y, increasing to 10 million mt/y in year five with major Chinese steel companies. The facility is near major ports, gas, and power grids with main highway access. Iron ore shipments to China could begin as early as 2010.
Saskatoon-Potash Corp. of Saskatchewan Inc. said May 16 that it made a donation of US$1 million to assist relief efforts in China following an earthquake that struck Sichuan Province on May 12. The donation will be directed to the China Charity Federation for use by the Sichuan Charity Federation. “We extend our thoughts, prayers and support to the thousands of people whose lives have been affected by this tragedy,” said PotashCorp President and CEO Bill Doyle. “Our friends and business partners in China say it is a traditional value in their country that when disaster strikes, help comes from all sides. We share this value and are responding quickly in their time of need.” This donation follows a commitment to the relief efforts in Myanmar through CARE USA, which was announced at PotashCorp’s annual meeting of shareholders on May 8.
Arden Hills, Minn.-Land O’Lakes Inc. reported net income of $61.3 million on sales of $3.26 billion for the first quarter ending March 31, 2008, compared to the year-ago $52.6 million and $2.2 billion. The recent quarter sales included $487 million in crop protection products (CPP) sales that would not have been included in LOL’s financials before the repositioning of Agriliance LLC assets in 2007. With the CPP sales factored out, net sales for the quarter were still up 27 percent. LOL did report a $10.9 million pretax loss in its agronomy business, compared to a year-ago $1.6 million pretax loss. LOL said CPP sales are up 52 percent over first quarter 2007 numbers, and the company expects a solid year for this business. This reflected sales of $487.2 million in first quarter 2008, versus the CPP unit of Agriliance posting $256.4 million in sales in first quarter 2007. The increase was primarily related to sales from the CPP business to the current Agriliance retail business, which were previously recorded as intercompany transfers rather than sales. An estimated $15 million in vendor rebates that would have appeared on the company’s books in the first quarter under previous accounting methods will be booked later in the year.
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