U.S. Gulf: The old saying, “high prices cure high prices,” proved true again last week, as the granular urea market took a major drop and prices plummeted by roughly $100/st FOB.
A price of $500/st FOB was done as late as the previous Friday, but by Monday it was down again significantly. The range last week was quoted at $400-$420/st FOB.
Although there were claims that it might have sunken even farther below, no actual transactions of under $400/st FOB could be found.
A major reason for the decline in price was the dwindling market for prompt barges. Even the demand for rice applications will soon fade. As a result, a portion of the trading done last week was for future deliveries, primarily July through September.
Prill urea was in very short supply, and virtually no NOLA barges were available to trade. If it was being traded more heavily, the price would probably have dropped, as it did for granular urea and UAN. However, at terminals on the Arkansas, prill was reportedly bringing a premium of about $15/st over granular urea.
U.S. Import: April saw a surge in urea imports from the year-ago month. They were up 57 percent, to 909,321 st from the year-ago 579,971 st. However, July-April imports were off 2 percent, to 5.8 million st from 5.94 million st.
Eastern Cornbelt: Granular urea was pegged at $580-$610/st FOB regional terminals and falling in the Eastern Cornbelt, but sources reported minimal business to test the market.
Western Cornbelt: Urea continued to move on rice and cotton in southern Missouri. Sources quoted the market as low as $545/st FOB terminals in that location, with the upper end of the range pegged at the $600/st FOB mark in Iowa.
California: Granular urea pricing had reportedly slipped to $605-$625/st FOB in California for any available tons, but supplies were tight. No delivered prices were reported in the state at mid-month.
Pacific Northwest: Granular urea pricing in the region had reportedly slipped to $650/st DEL on the low end of the range, though sources said they expect some additional weakness going forward.
Western Canada: Granular urea was unchanged at $870-$895/mt DEL in Western Canada, with the lower numbers reported in Manitoba and Saskatchewan and the upper end in Alberta and British Columbia.
Indonesia: Pusri closed a tender Friday, June 15, after Green Markets went to press.
All told, the holding company is offering 70,000 mt of granular urea from Kaltim and 10,000 mt of its own prills.
Industry watchers will be paying close attention to the tender for indications of how the rest of the market sees pricing.
Loadings are expected to take place though July 15.
Go to the Green Markets website for updates on the auction.
India: Industry watchers expect to see a tender called any day now.
The general consensus is that India is comfortable thanks to material in the pipeline from previous tenders, but will need to get the next large order processed and ready for loading soon.
With the global urea market softening, sources figure an Indian buyer – most likely MMTC – will step in soon and take a large order that will place a floor under the market.
One of the cards the Indians will play is its role as the sole large buyer in the market. Even though TCP is still on track to close its own tender next week, it will only take 200,000 mt at the most. The next Indian tender could take more than 1 million mt.
Other buyers are not taking large forward positions. The Australians and Latin Americans are each taking what is needed in the short term. One trader