DTN Fertilizer Outlook: Strong International Market, Good Fall Demand

©Debra L Ferguson

Here is a breakdown of wholesale prices and trends of the various fertilizers:

AMMONIA

International:

Global ammonia prices continued their upward march this past month. The firm market is still built largely on a run of outages and turnarounds that continue to dog production, including the running hiccups that prevent the new Panca Amara Utama (PAU) plant in Indonesia from making a regular contribution to the supply side. High gas costs in Europe continue to squeeze margins, but there is no sign of any further closures at present.

Spot metric tons (mt) ex Yuzhnyy, Ukraine, are priced at $320 to $322 per mt FOB (free on board — the buyer pays for transportation of the goods), up from $280 to $285 at the end of July. Ukraine’s ammonia and urea fertilizer producer Odessa Port Plant (OPZ) has not restarted, and there could be a reduction in supply from Russia in September as domestic producer Rossosh is in turnaround and pipeline maintenance is expected to reduce the volume that can be moved to Yuzhnyy.

Indian-based Fertilizers and Chemicals Travancore Limited (FACT), saw a $32 hike in its latest import tender, confirming the strength in the ammonia market. This brought Middle East spot prices up to $359 to $369 per mt FOB, compared to $280 to $340 in late July.

The west continues to lag a bit with the September Tampa contract price up $20 from August to $330 mt CFR (cost and freight).

The price outlook in the short term continues to be firm with gas costs remaining high in certain regions and from downstream support from higher nitrate and urea prices.

Domestic:

Producers increased their offers for prompt and prepay significantly in August as the fall application season draws nearer and replacements costs increased with the Tampa contract for September making another jump. Signs of an early harvest as well as low operating rates at some domestic plants are further contributing to producers’ comfortable supply position and ability to achieve higher prices.

Corn Belt FOB prompt values $385 to $440/short ton (t) FOB for prompt and $425 to $440 for fall prepay, up from $345 to $355 and $370, respectively, in late July. New sales at the higher price level have yet to emerge with inland storage full and many buyers waiting until harvest to secure additional requirements.

Prompt prices in the Southern Plains are steady to slightly firmer at $300 to $350/t ex plant, compared to $300 to $320 last month. Application ahead of winter wheat planting is starting to slow down, but distributors report robust demand over the past few weeks.

The outlook for ammonia prices continues to be firm basis a strengthening international market and expected good demand for fall applications.

UREA

International:

Urea prices continued to firm through August. India bought 712,000 mt in its last tender, effectively cleaning up all the Iranian tons that were weighing on the market and allowing producers to achieve higher prices into other markets later in the month. Price increases have been mostly driven by the supply side with Iran’s ability to export in question due to U.S. sanctions and Chinese operating rates remaining low.

Demand from India and Brazil is expected to carry the market into the next year. There is some uncertainty regarding Indian demand with the rupee hitting an all-time low against the dollar. However, positive developments with the monsoon, low stocks and reduced domestic production are expected to bring India back in by the end of September.

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Middle East FOB values increased to $296 to $301 per mt by the end of August, compared to $267 to $270 in late July.

North African prices saw similar increases with FOB values recently at $292 to $311, up from $271 to $284 at the end of July.

The outlook is still firm with demand from India, Brazil and Europe expected to support prices through the short-term.

Domestic:

New Orleans, Louisiana, (NOLA) barge prices rallied to three-year highs in August with trades as high as $295 per ton late in the month, compared to $248 to $255/t in late July. U.S. Gulf urea producer CF is reportedly sold out through September, and with importers taking most of the already limited import tons upriver for internal distribution, there is little spot barge supply in the Gulf.

Southern Plains buyers stepped in for the winter wheat run and supported higher values. Demand elsewhere is mostly lackadaisical with buyers who are able to wait, choosing to do so. However, buyers on the Upper Mississippi may soon be forced to make a tough decision with the last NOLA load dates for the Twin Cities before the river closes, which is about four weeks away.

River terminal prices moved up about $40 from last month to $315 to $325/t FOB, basis increased replacement costs, but new sales remain slow in most markets.

The outlook is firm with tight supplies and a firm international market expected to support higher prices in the short term. However, prices appear to be approaching a peak and are expected to move back down somewhat or at least stabilize in the medium term.

UAN

The domestic UAN market has been messy with domestic producer CF withholding offers and little activity from other sellers and buyers. The price outlook remains bullish. However, without CF in the market, distributors are unsure of their replacement costs and are generally unwilling to sell their limited ownership at today’s values. Most market participants expect CF to return sometime in the next few weeks, and then we will see another round of buying at a higher price level.

River terminal pricing is sparse but ended the month around $192 to $210/t FOB for 32%, compared to $177 to $188 in late July.

The price outlook for UAN prices is firm basis in a strong nitrogen market and plenty of unmet UAN demand.

PHOSPHATES

International:

Global phosphate prices were a mixed bag in August. Prices in the west were firm with seasonal purchasing by Brazil pushing its MAP CFR price up to $455 to $457 per mt, compared to $450 to $452 in late July. In contrast, flat to marginally lower pricing in the east was required as difficult macroeconomic conditions, particularly in India, bit harder. Chinese DAP was cut to as low as $414 FOB to secure DAP sales in India at just under $430 CFR, compared to $430 to $432 in July.

Phosphate prices are now looking for direction. Developments in India with the rupee depreciating and in the U.S. with fall demand will be pivotal to their progression in the coming weeks. The outlook calls for steady-to-firm prices in the west and stable-to-soft in the east.

Domestic:

DAP barge prices renewed their upward trend in August, ending the month at $415 to $417/t FOB NOLA around $10 higher than at the start. Prices for MAP at NOLA also climbed with barges ending the month at $420 to $425/t FOB NOLA, compared to $413 to $415 in late July.

DAP terminal prices moved up $10 to $15 to around $440 to $445/t with MAP continuing to command a $10 premium. Shipments are gathering pace ahead of the fall application season, but new sales are mostly yet to emerge. Corn and soybean crops are progressing ahead of average, supporting potential for an early harvest and a long fall application season. Solid yield expectations for new crop are indicating there will be a strong need to replenish nutrients this fall and spring.

The outlook for domestic DAP and MAP prices is stable to firm in the short term basis tight domestic supply and a stable-to-firm international market.

POTASH

Domestic potash prices continued the stable-to-firm trend through August with little changing on both the supply and demand sides. Barge prices ended the month at $260 to $270/t FOB, up $5 from late July.

River terminal prices are generally up $5 to $10 from last month to around $285 to $290/t FOB. Producers are holding firm to the increases they put in place after the fill season. Dealer interest is beginning to emerge, but most buyers are preferring to wait until their tons bought during fill are used up before making further purchases. Higher yield expectations for new crop are indicating there will be a strong need to replenish nutrients this fall and spring.

The price outlook is stable to slightly firmer with supply and demand mostly balanced in the short term.

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Editor’s Note: This information was supplied courtesy of Fertecon, Informa Agribusiness Intelligence.

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