Three regional cooperatives in Wisconsin – Cedar Country Cooperative in Elk Mound, Lakeland Cooperative in Ridgeland, and United Ag Cooperative in Almena – announced that they will merge on Oct. 1 following a successful member vote in April.
The new co-op, which has yet to be named, will have projected annual sales of $180 million and will cover a trade area stretching approximately 200 miles, from Ashland, Wisc., south to Eau Claire and Menomonie, Wisc. The consolidated company will also serve customers in Minnesota and Michigan’s Upper Peninsula.
“Economies of scale and the ability to purchase product at more competitive pricing was an important factor in the decision,” said General Managers Karl Varnes (Lakeland), Kyle Knutson (Cedar Country), and David Schoonover (United Ag) in a joint statement. “Each organization brings unique strengths to market. Improved asset utilization of trucks, equipment, and buildings will be a key objective. Operational efficiencies will be gained because of significant geographical overlap. A larger company will also offer improved employment opportunities for employees in an ever increasing and competitive workplace.”
The merger was approved by 64.5 percent of the voting members of each co-op, with a 50.1 percent majority required for the merger to proceed. Equity from each company will transfer dollar for dollar into the new company, and members will be eligible to have their equity paid out at age 68 wherever it was earned.
“A strong, local presence will be maintained in all communities we serve,” the businesses said. “Superior customer service has been a key to past success and will continue to be the focal point of the future. All three cooperatives are fortunate to have excellent employees which are important to future success.”
Each of the co-ops serves farmers in western Wisconsin with agronomy, grain, refined fuels, propane, and feed divisions. Convenience stores, tire and repair shops, and a farm equipment dealership will also be part of the combined co-op.
Cedar Country currently operates from locations at Menomonie, Boyceville, Elk Mound, Colfax, Strum, and Chippewa Falls. Lakeland has locations at Bonneville and Cold Lake, and United Ag operates at Almena, Ashland, Barron, Baldwin, Deer Park, Cameron, Cumberland, Frederic, Hertel, Turtle Lake, Shell Lake, and Trego.
Four directors from each company will be selected to sit on the board of directors. Board members will then determine the location of the main office and select a general manager/CEO for the combined business.
Wisconsin has been a hotbed of co-op merger activity in recent weeks. Greenville Cooperative in Greenville merged on April 1 with United Cooperative in Beaver Dam (GM March 31, p. 1). In addition, Country Visions Cooperative in Reedsville and Kettle Lakes Cooperative in Random Lake have announced plans to merge on Sept. 1 under the Country Visions name (GM April 21, p. 1), provided the merger proposal is approved by Kettle Lakes members in a June vote.
U.S. Gulf: High-water conditions slowed transits in the Gulf shipping region last week. The Baton Rouge, La., gauge was predicted to return to action stage on May 3-4, with forecasts calling for a 31.2-foot peak on May 7-8.
Shippers reported Industrial Lock delays in the 14-20 hour range, while Algiers Lock waits were called 6-7 hours. Port Allen Lock wait times ran up to five hours, and Bayou Sorrel Lock passage was quoted at four hours.
Extended delays continued at Brazos Lock, as fast flows limited lockings to one loaded barge or two empty barges per pass. Sources counted 18 vessels waiting to lock on April 25, although the queue fell to eight boats on April 26. Shippers estimated delays at 2-4 days.
Contractor activity underway through May 31 at Brazos Floodgates disallowed navigation between 7:00 a.m. and 5:00 p.m., Monday through Friday. Dredging at Miles 395-400 in the West Canal will slow transits until further notice, sources said. Vessels were required to contact the dredge to obtain passing instructions.
Harvey Lock will be closed Aug. 1 through Sept. 30 for maintenance and repairs, leaving Algiers Lock as an alternate route. Delays are expected.
Mississippi River: Rains forecast for the week ahead were predicted to swell already-elevated levels on the Upper Mississippi River, prompting both pickup and delivery delays. The Cape Girardeau, Mo., gauge continued to hover beneath the 29-foot action stage on April 26, showing 27.92-foot depths.
High-horsepower tows were capped at 25 barges last week, leading to 2-3 day delays. Lock 13 was scheduled to shut down on April 25-28, but the lock will reopen for 12 hours starting at 7:00 p.m. on April 26. The Lock 15 auxiliary chamber is closed through Aug. 3.
High flows continued to prompt reductions on southbound tows below Cairo, Ill. Tow lengths were slashed by 5-10 barges, leading to 2-3 day delays. Shippers expected rising river levels to trigger further navigation restrictions in the week ahead.
Mel Price Lock reported delays of up to six hours on April 24-25. Lock 27 waits were called 3-4 hours.
Illinois River: Beardstown, Ill., levels continued to linger above the 14-foot flood stage on April 26, with depths reported at 16.4 feet and falling. Sources expected pickup and drop-off delays as a result of the flooding.
Marseilles Lock waits were quoted at 5-8 hours last week, while Starved Rock Lock experienced scattered delays totaling nine hours or more.
A pair of 36-hour Peoria Lock closures are scheduled over the May 17-30 period, and Starved Rock Lock will shut down for 10 hours daily between June 1 and July 7. LaGrange Lock will be limited to nighttime-only navigation June 1 through Aug. 29.
Ohio River: Persistent high water and fast flows forced tow reductions on southbound vessels downstream from Cairo. The cuts swelled wait times at the Cairo interchange to 2-3 days. National Weather Service data put Cairo levels at 36.74 feet and rising on April 26, well above the 32-foot action stage.
The Markland Lock main chamber is slated to close May 1 through Sept. 29, with shippers predicting substantial delays as a result. Markland’s auxiliary chamber reopened April 26 following an extended closure.
Ironton-Russell Bridge demolition will necessitate daytime transit shutdowns on May 17, May 29, and June 15. Main chamber work at Emsworth Lock will induce daily closures between 8:00 a.m. and 11:59 p.m., June 26 through Sept. 25. Vessels will be able to pass during overnight hours, with transit subject to an 80-foot width limit. Substantial delays are anticipated. A Lock 52 auxiliary chamber repair project is scheduled to run intermittently between July 17 and Sept. 29, potentially slowing transits.
Major repairs scheduled for the Monongahela River’s Lock 4 are expected to cause headaches between May 14 and June 20. Plans call for a complete Monday-through-Friday transit shutdown at the site. The auxiliary chamber will be made available for weekend use, but transits will be limited to a single barge per turn, leading shippers to brace for massive delays. Braddock Lock and Dam is scheduled to resume main chamber operation on April 28. The chamber has been shuttered for repairs since March 30.
High flows closed the Tennessee River at Miles 446-454 last week. Wilson Lock is closed through June 8 for maintenance. Kentucky Lock, beset by sporadic service interruptions in recent weeks, is scheduled to resume normal operation on April 30.
The Allegheny River’s Lock 6 is offline due to mechanical failure, closing the river. Cheatham Lock on the Cumberland River was closed between 6:00 a.m. and 4:00 p.m. on April 25.
Arkansas River: Elevated river levels were forecast to slow Arkansas River transits for the next 1-2 weeks. The high-water conditions have prompted dams to open relief valves to maximum capacity, increasing river speeds. Sources quoted delays of 3-10 days.
Oslo—Yara International ASA reported first-quarter net income after non-controlling interests of NOK1,692 million (NOK6.19 per share) on revnues of NOK22,635 million, compared with the year-ago NOK2,800 million (NOK10.22 per share) and NOK25,053 million, respectively.
Excluding net foreign current translation gain/loss and special items, results were NOK1,369 million (NOK5.01 per share), compared with NOK2,510 million (NOK9.16 per share). EBITDA after special items was NOK3,335 million, down from NOK5,050 million.
“Yara reports a weaker result than a year earlier, reflecting lower fertilizer prices and margins. However, we delivered increased sales volumes, both for fertilizer and industrial products,” said Svein Tore Holsether, Yara president and CEO. The company also reported higher natural gas costs, which were up 28 percent during the quarter.
Yara said ammonia production was lower, underlining the need for ongoing improvement. Outages were cited at Pilbara in Australia and LeHavre in France. Yara reported that realized urea, nitrate, and NPK prices were down 5, 15, and 10 percent, respectively.
The urea market was pressured by weak demand in India, and while Chinese exports were down, increased capacities in several other countries kept pressure on prices. On the commodity markets, the company noted that while grain prices are stable, prices of sugar, coffee, oils, and dairy are up.
U.S. Gulf: Prompt NOLA granular barge prices continued to sag, with the market for the week put in the $169-$179/st FOB range, down from the prior week’s $173-$185/st FOB. Even though the wet weather has put a damper on inland ammonia use, sources said it has not caused a huge surge in interest or prices for NOLA urea.
Prills continued to be called $176-$190/st FOB.
Eastern Cornbelt: Sources continued to report a soft urea market in the Eastern Cornbelt. The low end of the regional market was quoted at $215-$220/st FOB at Cincinnati, Ohio, and spot river locations in Indiana and Illinois, with the upper end at $230-$240/st FOB out of inland locations.
Western Cornbelt: Sources said urea pricing remained under pressure in late April. The terminal market was tagged at $215-$235/st FOB in the Western Cornbelt, with the St. Louis, Mo., market quoted in the $215-$220/st FOB range for the week.
Pricing in the Twin Cities market in Minnesota was also quoted at roughly $215-$220/st FOB for new business, although some argued that deals could be had at lower levels.
Southern Plains: Granular urea pricing had reportedly slipped to $210-$215/st FOB Catoosa, Okla., down a full $20/st from early April levels, although most sources touted the upper end of the range as the more “common” dealer level in late April.
South Central: The granular urea market was quoted at $215-$230/st FOB in the South Central region, depending on location. The low was confirmed by Kentucky sources out of river locations, where sources said the “truckload market is under a little pressure.” Other spot prices included $220/st FOB Memphis, $225/st FOB Convent, La., and $230/st FOB Little Rock, Ark.
“We have seen urea prices all over the board and volatility of as much as $10/st per day,” said one regional contact. “There is not much urea movement to rice yet, but we should begin next week, weather permitting.”
Southeast: The granular urea market was pegged at $260-$265/st FOB port terminals in the Southeast, down a full $20/st from last report, with the low reported at Savannah, Ga., and the upper end at Wilmington, N.C.
China: Sources reported that NPK producers have stepped up their buying of prilled urea to build reserves for a major push for July and August exports. The additional buying has helped firm the floor of prills due to continued strong domestic demand right around the $215/mt FOB level.
Granular urea remains softer in prices and not so much in demand. Sources said the better grades of granular are at parity with prills, and regular grade or less accessible product is about $10/mt less.
China will be shutting down next week to celebrate the May 1 International Labor Day. The period is known as a Golden Week. Sources said workers will start the celebrations early by leaving for their vacations on Friday and not returning to their shops and offices until May 9. The break will mean minor delays for loadings of urea for the most recent Indian tender and for other buyers. Sources said the ports will be operating with skeleton crews to ensure product goes out and vital imports are unloaded.
Some producers – especially those turning out granular urea – will be shutting down for the Golden Week. The shutdowns are officially for routine maintenance turnarounds. One trader noted, however, that the maintenance work will be limited because the holiday period will mean a lot of people who would normally be working on the plants will be traveling.
The shutdowns are expected to last about two weeks. There is still demand for granular product in Mexico, South Korea, and Thailand, said sources. This demand, along with the shutdowns, could help stabilize prices, said one trader.
Indonesia: Kaltim closed formula-based deals with a handful of international traders. Sources reported that the companies will be allowed to lift 70,000-150,000 mt each this year.
The initial deal for the price of each cargo was without a premium and was to be based on averages of published prices from several locations, including the U.S. Gulf. After the traders received their allotments from Kaltim, the producer tacked on another limitation: the price floor was set at $225/mt FOB for any May liftings.
Kaltim’s action called into question just how pricing will now work for May. Sources pointed out that the average price of urea for May cargoes from the Arab Gulf to the U.S. Gulf is well below $225/mt FOB. Traders were puzzling over which will take precedent, the floor or the agreement to set prices by averaging published rates.
The trading houses are said to be slated to meet with Kaltim officials on April 28 to work out the details of how pricing will work under the new regime.
The trading houses that won allotments for this year include Ameropa, Koch, Liven Brio, FertComm, and Bai Feng. A couple other trading houses also earned allotments, but their awards could not be confirmed at press time by sources.
Middle East: Sales to Thailand at $222-$225/mt CFR put the netback of contracted tons at $200/mt FOB for Arab Gulf product. The paper market for the region has been trading at $195/mt FOB for May and early June material.
Sources said the Thai deals are indicative of how the market is moving, but should not be used to set spot prices. The public price remains at $221/mt FOB because of the lack of any public business since the Indian tender last month. This last public price is out of sync with the global market, said sources. Arab Gulf product has been running in parity with Chinese granular. Sources put the Chinese granular market at $210-$215/mt FOB. This rate is still seen as high for the Arab product.
Kuwait is expected to shut down its urea production next week for a routine maintenance turnaround.
Egyptian producer MOPCO got hit with the lack of demand for urea in its traditional markets. Sources reported a sale this week of 60,000 mt at $295/mt FOB. Reportedly, Turkish buyers are now bidding closer to $190/mt FOB for other May cargoes. Sources said the main buyer of Egyptian product is now Turkey. Demand for material in Europe – the other major Egyptian market – has dried up, said sources.
Algeria reportedly has some production problems with its urea units. Sources speculated that the lines will be taken down soon to set things straight.
Black Sea: Sources reported that urea production at OPZ stopped late this week. The company maintained operation of one of its two lines to provide tons for export, but now with prices sliding, sources said OPZ management pulled the plug on that line.
Prices are now reported in the mid-$180s/mt FOB, with little hope of recovery any time soon, said sources. The drop in Yuzhnyy prices match those in China and in the paper market in the Arab Gulf.
The shutdown by OPZ leaves Azot as the only operating Ukrainian producer. Sources said this move means there will be little, if any, urea available for export. Azot primarily sells its product within the country. One trader said a cargo or two might become available for export as domestic demand wanes, but only if the global price improves.
Turkey remains an active buyer. Sources said the country needs to keep buying urea and other N-based product to make up for a ban the government imposed on ammonium nitrate.
India: Sources expect to see another Indian tender by late May. The call could come as early as the opening of the IFA annual meeting in Morocco. Several observers, however, are expecting the call to come after the industry delegates get home, and even as late as the first week of June.
The country is now receiving the tonnage from the March tenders. Sources said official reports of a normal monsoon season have bolstered buying ideas in the country.
Latin America: Demand for granular product in Mexico and Central America is helping maintain steady sales out of North Africa and the Arab Gulf.
Incofe in Central America will close two tenders on May 3 for 30,000 mt of prilled urea for delivery to Guatemala and Nicaragua. The second lot is for 25,000 mt of granular for Colombia and Costa Rica. Both cargoes are to be delivered by June 10.
Miami—The U.S. Trustee in BioNitrogen Holding Corp.’s Chapter 11 bankruptcy case (GM Nov. 9, 2015) has filed to convert the case to Chapter 7 liquidation and has objected to a motion by BioNitrogen to dismiss the Chapter 11 case.
The trustee argues that after nearly 18 months in Chapter 11 the company has been unsuccessful in finding financing or a strategic partner necessary for a reorganization. The trustee also objects to BioNitrogen’s motion to dismiss the case, arguing that the company’s plan to transfer its most valuable assets – its patents and trademarks – to Annon Consulting Inc., Boca Raton, Fla., is in violation of the priority scheme of the Bankruptcy Code, and also noted that there are other creditors in line for BioNitrogen assets.
BioNitrogen had hoped to use clean technology to produce urea from biomass. Two sites had already been selected in Florida.
Ottawa—An unnamed third party is looking to file a formal complaint against the proposed merger of Agrium Inc. and Potash Corp. of Saskatchewan Inc., according to Bloomberg, citing a report in DealReporter. According to the report, the party is still mulling the complaint after having talked with the Canadian Competition Committee. PotashCorp told Green Markets that it does not comment on pending regulatory issues, and Agrium did not respond to a request for comments.
Brussels—While the Tessenderlo Group reported an uptick in overall REBITDA and revenues for the first quarter, to €54.8 million on revenues of €431.3 million versus the year-ago €47.9 million and €401.8 million, respectively, the company said the Agro unit revenues were off 1.6 percent and REBITDA was off slightly. Agro includes Tessenderlo’s fertilizer and crop protection businesses.
Revenues were up in both the Bio-valorization and Industrial segments, with REBITDA up for Bio-valorization and off for Industrial. The company reported that the construction of its two new Thio-Sul ® plants in East Dubuque, Iowa, and Rouen, France, and its new electrolysis plant in Loos, France, are on schedule to be completed in second-half 2017.
U.S. Gulf: Sources quoted the Gulf sulfuric acid market at $45-$50/mt CFR for the week, unchanged from the previous report. Many expected new business to land toward the upper end of the range.
Brazil-delivered cargoes were called $50-$55/mt CFR, flat from the prior week, with Northwest European smelter tons said to run $10-$15/mt FOB.
Domestic players put the Midwest market at $80-$90/t DEL, with West Coast tons quoted at $100-$110/t DEL, both unmoved from the week before. Material delivered to the U.S. Gulf region was called $85-$95/t DEL.
Australia: Frequent power failures and unpredictable electricity pricing will lead Korea Zinc Co.-owned Sun Metals to build its own solar power farm in the Australian outback, sources reported.
Primarily reliant on coal-fueled electricity production, Australian smelters have been negatively impacted by a government-mandated shift toward renewable energy production. A 20 percent renewable energy goal targeted by the government has made business difficult for Australian smelters, sources said, an industry that often cites dependable power as its single most important production factor.
An October 2016 blackout cost two South Australia smelters a combined $35 million in repairs and lost production, and Alcoa’s Portland smelter is limited to approximately 30 percent production capacity through mid-2017 after a January power outage caused extensive damage to the facility.
Queensland electricity futures averaged approximately $180 per megawatt hour (MWh) in 2016, according to a recent Reuters report, considerably higher than $32.02/MWh in Germany and $25-$35/MWh in the U.S.
Tampa: Molten sulfur delivered to Tampa was contract-priced at $70/lt DEL for the second quarter, a decrease from $75/lt in Q1.
Refinery utilization rose again last week, the industry’s sixth consecutive weekly increase, according to the U.S. Energy Information Administration (EIA). The EIA noted capacity at 94.1 percent for the week ending April 21, a 1.2 percentage point jump from the prior week’s 92.9 percent, and also considerably higher than the year-ago 88.1 percent and the five-year average of 89.6 percent.
Average daily crude inputs posted a record 17.285 million barrels/d, cracking the 17-million-barrel mark for the first time since Jan. 6. Refiners processed an average 16.938 million barrels/d in the prior week, a 347,000 barrel/d difference.
U.S. Gulf: Sources described softening spot prices out of the Gulf, calling last-done cargoes in the mid-$70s/mt FOB.
Vancouver: Observers described fresh Vancouver spot tons in the $73-$77/mt FOB range, down from $83-$87/mt FOB quoted previously.
Chevron Corp. will sell its Burnaby, B.C., refinery, located near Vancouver, to Alberta’s Parkland Fuel Corp, numerous sources reported. Parkland immediately announced a $100 million upgrade to the 55,000 barrel/d facility. The eight-week turnaround, scheduled for first-quarter 2018, will curtail production capacity to unspecified levels.
Alberta producer netbacks were unchanged at (-)$55-$20/mt FOB.
Last-done business on the Chinese spot import market was quoted in the $90-$95/mt CFR range, flat from the previous report.
West Coast: Trailing Vancouver lower, observers put West Coast prills at $70-$73/mt FOB, down from $80-$83/mt FOB at last report. Second-quarter molten contracts fell in a $55-$77/lt FOB range, unchanged from the first quarter.
Oman: Oman will partner with Kuwait to build a “state-of-the-art” refinery at the Omani port of Duqm, the Times of Oman reported. Kuwait will retain 50 percent ownership of the facility while supplying 65 percent of the refinery’s crude feedstock. Construction is set to begin in late 2017, with production scheduled to ramp up in 2021.
Some observers viewed the refinery, in part, as an early bid to capitalize on the Middle East’s rapidly-blooming sulfur export industry.
Scarborough, England—Sirius Minerals plc on April 28 moved up from the London Stock Exchange plc’s AIM market to the exchange’s main market. The last trading day on AIM for the potash developer’s shares was April 27, with the switch following April 28.
The company announced the move was to take place in a prospectus issued at the start of this week. Sirius confirmed its intention to move up in late March. The company said the move will support its long-term strategy by providing it with “a more appropriate platform for its growth and is in keeping with the nationally significant nature of its North Yorkshire polyhalite project and its market capitalization.”
As of April 28, Sirius put its market capitalisation as “in excess of £700 million” ($898 million).
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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.
