U.S. Gulf:
NOLA granular urea barges were reported at $570-$585/st FOB in fairly limited trading, down from the week-ago $615-$635/st FOB.
Eastern Cornbelt:
Urea prices remained under pressure in the Eastern Cornbelt, fueled by further weakening in NOLA barge pricing. The urea market was quoted at $665-$695/st FOB in the region, down another $10-$20/st from the previous week, with the low end of the range confirmed in Cincinnati, Ohio.
In the Great Lakes region, new urea offers FOB Toledo, Ohio, were reported at the $730/st level in late May, reflecting a drop of $30/st from the prior week.
Western Cornbelt:
Urea pricing slipped to $665-$695/st FOB in the Western Cornbelt, down $10-$15/st, with the low confirmed at St. Louis, Mo., and the high in Iowa on a spot basis. Delivered urea pricing in the North Dakota market was quoted at $700-$725/st in late May, down considerably from the $760-$780/st DEL level reported at mid-month.
California:
Urea prices were falling in California. While bulk postings remained as high as $950/st FOB at some locations, recent offers FOB Stockton, Calif., had reportedly slipped to $770-$860/st FOB, down significantly from a high of $975/st FOB back in early May. No current rail-DEL urea prices were confirmed in the state.
Pacific Northwest:
Urea pricing in the Pacific Northwest was pegged at the $745-$750/st FOB level, down from $900-$970/st in early May. The low was confirmed at Rivergate, Ore., at midweek, and sources said another pricing drop might occur by the end of the week.
Delivered urea fell in the $728-$750/st range in the region, down from $770-$820/st in early May, with the high confirmed in Montana.
“Supply out of the Midwest is still a problem, logistics of our railroads are still delayed today,” said one regional contact. “The lower-cost products are being offered to us today off the river system, but you still have a risk of taking 30 days to get supply from that region. With markets declining, buyers usually won’t take that long of a gamble, so we are still seeing a steady pull down from unlimited (higher cost) local supplies.”
Western Canada:
Several sources said a delayed application season has pressured some fertilizer prices in Western Canada. “Prices are all over, with many retailers trying to offload product, trying to minimize carryover,” reported one contact. “Suppliers appear to have product availability for all products. With NOLA turbulence, urea and MAP have seen some lower offers.”
Urea was pegged at C$1,105-$1,150/mt DEL in Western Canada in late May, down from C$1,160-$1,250/mt DEL at last report. Sources talked of FOB urea offers in the low-C$1,100s/st during the week.
India:
Another urea tender is not expected until all of the tons awarded in the May 11 RCF tender have assigned vessels. Traders said they expect to see some discussion taking place during the IFA meeting in Vienna May 30-June 1.
Sources said India has traditionally used the Spring IFA meeting to announce a tender. This time, however, the IFA meeting is soon after the closing of the last tender. Preparing and finalizing the paperwork for another tender usually takes much longer. The next tender will most likely not be called until the second week of June, at the earliest.
India still needs at least another 2 million mt of urea to get back on track for its application season. Some of the slack might be taken up before a tender is called if government plans to secure Russian urea work out.
Local media are reporting that the Indian government approached Russia to accept a barter deal of Indian wheat for Russian fertilizers. The plan faced several immediate setbacks after another branch of the Indian government said it would withhold exports of its grains. At the same time, the Russian government dismissed a similar plan with other countries.
India is also said to be moving ahead with strengthening its rupee/ruble exchange program. This system has been in place for more than half a century, but has been used in smaller deals. Sources were not sure if the program can handle the volume necessary to fulfill India’s urea needs.
The high price of fertilizers has forced the Indian government to increase its budget for subsidies. The new budget will hit US$27.7 billion. Just under US$800,000 of that amount is designated for phosphates and potash. The remainder is largely designed to cover the subsidy cost for urea.
While the P and K fertilizers attached to the Nutrient Based Subsidy system are allowed to adjust prices based on market levels, urea is locked in at Rs242/45-kg bag (US$69/mt). The balance between the current price of $716-$721/mt CFR and the $69/mt is taken up with higher subsidies.
The Modi government had hoped to reduce subsidy payments in the current fiscal year. The budget that took effect in April was set at US$13.5 billion, which was a dramatic drop from the 2021/22 subsidy budget of US$21 billion. The rise in fertilizer prices due to higher energy costs, the withdrawal of China from the global market as a supplier, and the imposition of sanctions against Russia have all combined to move prices into record territory.
Black Sea:
Sources said Russian urea is appearing on the market at dramatically low prices. Netbacks to Russia are reported at $550/mt FOB.
Earlier estimates of what the Black Sea price would be if tons were allowed to exit Yuzhnyy put the price in the upper-$660s/mt FOB. This estimate was based on normal freight and handling costs for a delivery to the West Coast of India.
As the new and lower prices were being discussed among traders, there were reports that talks were underway to secure a safe naval passage for the export of food stuffs out of ports from Russian-occupied Ukraine and from the remaining ports under Ukrainian control. Sources said fertilizer shipments would most likely be considered part of the deal.
Talks stalled late in the week, however, as Western European and Ukrainian negotiators doubted the willingness of the Russian government to honor a non-aggression pact for this corridor. At the same time, Russia said it would only agree to the free corridor if the West removed its sanctions on Russia.
Indonesia:
Sources said no new deals were reported from Indonesia, leaving the price at $628/mt FOB for granular urea. A new selling tender is expected soon.
Middle East:
Talks simmered down this week as buyers and sellers prepared for the IFA meeting in Vienna. Traders said the IFA event will provide everyone a better opportunity to judge the temperament of the market and to possibly come to some new pricing arrangements.
The lack of any new business kept the Arab Gulf price in the upper-$680s/mt FOB.
Egyptian producers were able to hold onto the $720/mt FOB achieved last week. Sources said Kima did a small deal at that level at midweek. However, producers had been pushing for $730/mt FOB. Sources said the market seems to be less willing to allow prices to move much higher. Deals out of the IFA conference might help set some new guideposts for pricing.
Freight inquiries this week showed Egypt as the most commonly sought loading location, with requests looking to secure vessels for 782,000 mt. A total of 4 million mt were in play.
The absence of Chinese and Russian urea in the market has led to an opening for Iran. January-April exports were reported at 1.3 million mt by Trade Data Monitor. This is up 33% from the 954,000 mt exported during the same period in 2021.
Turkey dominated the buying, taking 487,000 mt. Nigeria took 132,000 mt, although sources speculated that the tonnage may be designated for re-export. Mozambique and Brazil took 126,000 mt and 114,000 mt, respectively.
April 2022 exports were up dramatically, to 424,000 mt from the 170,000 mt exported during April 2021. Turkey took 43% of the exports with 182,000 mt. The United Arab Emirates accounted for another 18% with 76,000 mt, and Nigeria took 16% of exports at 66,000 mt.
Pakistan:
Sources said the Pakistan government is continuing its efforts to secure a government-to-government deal for 200,000 mt of urea. Traders said the government has no choice, because its foreign reserves are considered too low to handle a public tender, especially with urea prices at their current levels.
The Pakistan government had earlier authorized the importation of 200,000 mt. Trade Pakistan Corp. was authorized to look into ways to secure the tonnage. Initial plans discussed the possibility of a tender and a G-2-G deal. In the end, sources said the government settled on only seeking deals directly with urea-producing countries.
Brazil:
Prices have come off to $680-$700/mt FOB, with buyers pushing for $650/mt FOB. A reported deal involving Nigerian tons is said to be ready to close at $660/mt FOB. International traders said they do not see anything in Brazil topping $700/mt CFR.
The inland market has tightened, with sources quoting the Rondonopolis market at $840-$890/mt FOB ex-warehouse. Sources said 30% of farmers have secured their urea needs. The rest are waiting to see if rumors of a downward trend in prices prove true.