By Karl Stenerson
Market Reporter - Fertecon
Agribusiness Intelligence, IHS Markit
The following is a breakdown of wholesale prices and trends of the various fertilizers in the month of September.
The international ammonia market remained tight in September, with spot requirements continuing to emerge particularly in Europe and China. Reaffirming the firmer tone in the market, the Tampa and Baltic prices for October were settled with significant increases.
Yara and Mosaic agreed to a $30 increase in the Tampa contract price at the end of September, pushing it to up $255 per metric ton (mt) cost and freight (CFR). Before the settlement, there was a reported sale of 15,000 mt from CF to Nutrien at $260 per mt FOB (free on board -- the buyer pays for transportation of the goods) U.S. Gulf. The product will be used to cover shipments to northwest Europe, following an unexpected plant outage at Nutrien's site in Trinidad in September.
The Baltic contract price was agreed higher for October at $232-$233 mt FOB, an increase of $11-$16 on the $216-$222 agreed for September. Meanwhile, the Yuzhnyy, Ukraine, spot price ended the month at $225-$230 FOB with little on offer, up from $220 during late August.
There are further enquiries in China and Europe, and with some production in Algeria and Trinidad down, the market appears it will remain tight in the short term and prices are expected to firm.
Domestic ammonia prices were stable throughout September. At the end of the month, some prices moved higher as producers increased prompt offers to be in line with higher levels that have been on offer for fall prepay. The $30 increase in the Tampa contract price was supportive of higher interior prices, although, so far, there has been minimal fall application activity.
The change in ammonia pricing from summer fill to fall prepay brought FOB prices in the Corn Belt up to $390-$415/t FOB from $320-$350. Prompt offers at $260/t ex-Oklahoma plant were extended into October, but producers are still indicating $300 for November/December pull.
Concern continues to grow that the weather this fall will not be cooperative for fall ammonia application. Corn and soybean harvest is progressing behind average, and with the wet weather pattern, the potential for a big ammonia run seems to be diminishing.
The domestic price outlook is stable in the short term and weather dependent in the medium term.
Global urea prices were up and down in September but mostly ended the month flat from late August. There has been little demand emerging outside of India and Brazil and this has kept prices from making any sustained rally.
India tendered mid-September and purchased 949,000 mt at $276-$278 mt CFR, down nearly $20 from the July tender. Just 200,000 mt was reported to be sold out of China, in comparison to 1 million metric tons (mmt) shipped in the last tender. Such a rapid decline in Chinese export availability would usually be a positive for the market, but in this case, the reason for the limited offering was rationalized by the short shipment window required by India and the Chinese National Holiday Day falling within it, not necessarily due to a lack of Chinese supply.
Middle East FOB values were last reported at $254-$260 mt, up slightly from $251-$253 in late August. Producers were able to keep prices stable to firm, having made enough sales to India to remain comfortable with inventory.
India announced another tender on Oct. 7 following reported record domestic sales in September. The monsoon has provided above-average moisture, and urea demand is expected to be strong in the coming months. The tender will close one Oct. 14, and the entire market will be watching India to see how much they buy and China to see how much they supply.
The price outlook is stable to firm with India and Brazil expected to have strong imports through the end of the year.
New Orleans, Louisiana, (NOLA) urea prices softened in September, trading down to $243-$249/t FOB most recently, compared to $250-$257 in late August. River close demand failed to rally the market, and weaker international prices weighed on market sentiment throughout the month.
River terminal prices were steady with most around $285-$290/t FOB. Upper Mississippi terminal buyers stepped in for incremental tons ahead of river close. Wet weather in winter wheat territory has been limiting end-user demand as is the slightly weaker wheat price and slightly less expected planted acres compared to last year. Elsewhere, focus remained mostly on harvest, which has been progressing slowly, with buyers in no rush to secure product for spring.
Ex-plant (applied to a price, this means the price at the factory, and does not include any other charges, such as delivery or subsequent taxes) prices are reported flat from the end August with Port Neal, Iowa, at $290/t and $300 at Enid, Oklahoma.
The urea price outlook is slightly soft in the short term with demand slowing beyond river close.
UAN markets were quiet again in September. Prices failed to increase in September thought many were expecting them to. For now, buyers are content to focus on harvest and fall fertilizer applications, as there seems to be no rush to buy UAN. Producers also appear to be comfortable with enough sold during summer fill to keep busy.
There has been some talk about how the fall ammonia application is shaping up to be below average, which would likely mean more nitrogen requirements for the expected 94-million to 96 million-acre-planted corn crop next year would have to be met with increased UAN applications.
River terminal values for 32% remain at $180-$190/t FOB Cincinnati and St. Louis and $190-$210 on the upper Mississippi and Illinois rivers.
The Arkansas River from Van Buren to Catoosa reopened in early October so CF can resume barging UAN out of its Verdigris, Oklahoma, plant to other destinations on the river system. The ex-plant price at Verdigris was reported unchanged at $170-$175/t.
The domestic outlook is stable in the short term. However, some downside risk is evident in the medium term, with pressure from the supply side likely to stem from increased imports and decreased exports, due to the EU antidumping duties as well as the currency crises in Argentina. On the demand side, farmers are looking at another tough year, so retailers are not likely to get excited about UAN anytime soon. On the upside, the EU could reduce the level of duties in its October ruling, and if ammonia applications go poorly for ammonia this fall there could be increased demand for spring UAN.
Phosphate prices remained under pressure in September on limited demand and plentiful supply. Talk in the market continues to revolve around how much further prices might fall and which production site will be the next to curtail output.
The Brazilian market remains slow with heavy inventories amid delays in planting soybeans. MAP prices slid down to $310-$320 per mt CFR most recently, compared to $330 at the end of August.
Pakistan and India continue to buy but only at lower prices. Chinese exporters sold down to $310-$316 mt FOB in order to place product, compared to the low $320s last month.
The market outlook remains soft until demand in the U.S. and Brazil improves and/or more production curtailments are announced by major producers.
NOLA barge prices increased in the first half of September on the back of news from Mosaic that it will idle its Louisiana phosphate operations to reduce production by approximately 500,000 t in 2019. DAP barges traded as high as $295/t FOB NOLA during the third week of the month. However, by early October, prices were back down to $280-$290/t FOB, essentially flat from $281-$285 at the end of August. MAP traded at $286-$287/t FOB most recently, but traders largely still view MAP to be on par with DAP.
Barge prices came under pressure again due to the arrival of further imports and lack of fall application activity seen thus far. Harvest continues to lag behind average, and many market participants are losing hope there will be a big fall phosphate application.
River terminal prices have been able to sustain a $5 increase following the Mosaic announcement with MAP and DAP now around $320-$325/t FOB.
The outlook for NOLA phosphates is soft in the short term. Mosaic's cutbacks do help to balance supply with demand, but at least an average fall application season will be needed to clear out enough inventory and allow for some price appreciation. In the case of another poor fall application season, further production cutbacks will likely be needed to sustain price levels.
The big news in the potash market came on Sept. 11 when Nutrien announced that it plans to proactively take up to an eight-week inventory shutdown at its Allan, Lanigan and Vanscoy potash mines during the fourth quarter of 2019. The company says production downtime is in response to a short-term slowdown in global potash markets. If all three potash facilities were to remain idled for the full eight weeks, potash production could be reduced by approximately 700,000 mt.
Domestic potash prices saw some firming after the announcement, but like phosphates, the bullishness was short lived.
Barge prices ended the month at $240-$246/t FOB, down slightly from $243-$247 at the end of August. Trades were reported as high as $250 during the week following the cutback announcement.
Interior prices were steady with river terminals still reported at $275-$285/t FOB. Nutrien's announcement brought some buyers back in to secure tons, but it was not enough to support any price increases.
Similar to phosphates, high inventory is likely to lead to slight softening in the short term. In the case of another poor fall application season, further production cutbacks will likely be needed to sustain prices.
Editor's Note: This information was supplied courtesy of Fertecon, Agribusiness Intelligence, IHS Markit.
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