By Karl Stenerson
Market Reporter - Fertecon
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.
Global ammonia prices edged slightly higher in early October on continued tightened supply, but prices seemed to stabilize toward the end of the month as production returned to more-normal volumes.
Supply in the west increased with Algerian loadings improving. CF continues to export from the U.K., and spot demand from Europe seems to have dried up for now. A rollover agreed by Yara in the Baltic monthly contract price at $232-$233 per metric ton (mt) FOB (free on board -- the buyer pays for transportation of the goods) seems to confirm that there is little upside from here.
Although phosphate prices remain very weak, Yara and Mosaic agreed on a $5 increase for the November Tampa contract, bringing the price to $260 per mt CFR (cost and freight).
The east was mostly quiet with steady CFRs, but as Indonesia brings more product to the market and freights increase, netbacks are being eroded.
The short-term outlook is soft with supply improving and natural gas prices still relatively cheap, considering the season.
Domestic ammonia prices were mostly stable in October with little interest from buyers emerging so far for more tons for fall application.
Corn harvest is over 50% complete, and fall application is slowly ramping up in the Corn Belt. However, there is concern an impending cold snap will freeze soils and put a halt to ammonia application work. In the northern regions, such as in western Canada, North Dakota and Minnesota, the freeze is almost certainly going to put an end to what has, so far, been an abysmal fall application. However, in states like South Dakota, Nebraska and Iowa, it seems likely the cold front will only slow down application before it warms back up again. Farther south, application in Kansas, Oklahoma and Missouri continues in pockets where conditions allow. Similarly, in the Eastern Corn Belt, application continues to slowly ramp up as more acres get harvested but conditions have not yet allowed for a widespread run.
Due to poor demand in the north, producers in Canada and North Dakota are shipping tons to southern markets, which is putting pressure on local FOB prices. Delivered sales are generally cited around $10 below FOB points, which are still mostly unchanged from last month at $385-$395 per short ton (t) in the Western Corn Belt, though there are some reports of producers willing to sell below this when necessary.
Ex-plant prices (the price at the factory, not including any other charges, such as delivery or subsequent taxes) in western Oklahoma/Coffeyville are slightly higher at $300-$320/t.
The short-term outlook is stable to soft for interior markets with reduced Northern Plains demand expected to pressure prices in certain markets.
Global urea prices softened in October, despite another India tender concluding with over 1 million metric tons (mmt) purchased. The pressure on prices seems to be stemming from heavy supplies, with China understood to be exporting at a much higher rate than last year, while Iranian product, which is subject to sanctions, is being sold into more markets compared to last year.
The India tender concluded on Oct. 14 with prices coming in at $270-$271 per mt CFR, down from $276-$278 in the September tender. Plenty of supply was on offer, and China is understood to have secured close to half of the 1.17 mmt purchased. Another tender from India is expected in November.
North African FOBs were under pressure in October, falling to $235-$240/mt by the end of the month, compared to $260-$263 at the end of September. Brazilian import demand has been ramping up but has not yet been strong enough to cause any tightness in supply, and buyers in Europe are in no rush to purchase considering the weak pricing environment.
The short-term outlook is steady to soft. Although demand is ramping up, it appears a rally in feedstock prices or a cutback in Chinese exports is needed for this market to realize any upside.
Domestic urea markets were very weak in October, seeing the barge market fall to around $215 by the end of the month, well below international values, compared to near $250 at the end of September. Market sentiment is bearish with global oversupply cited as the main reason, despite strong North American demand expected this year and imports of fertilizer year to date being roughly in line with last year. Buyers have time on their side for spring requirements and seem to think that since Brazil is not having to pay higher prices to find imports during its peak import period, then the U.S. will not need to either.
Interior prices are also softening with new sales slow due to slow harvest progress and bearish market sentiment. Hand-to-mouth purchases are reported for what limited application activity is taking place. Ex-plant prices were reported down $40 from last month to $260/t at Enid, Oklahoma, and down $25 to $265 at Port Neal, Iowa. River terminal prices are mostly reported around $255-$265/t FOB on open sections of the river system, compared to $285-$290 at the end of September.
The urea price outlook is slightly soft in the short term. Potential for re-exports will provide some stabilization, but if international markets continue to soften, then NOLA (New Orleans, Louisiana) will likely follow.
Domestic UAN markets were quiet in October with end users focusing on harvest, dealers thinking about other fertilizer products and producers busy shipping out previous orders. Market sentiment is bearish with weakness in urea expected to drag UAN prices down, despite expectations for strong nitrogen demand next year due to an increase in crop planted acres, especially for corn.
The NOLA barge market was quiet, but the price range is down a few dollars from last month to $150-$155/t FOB.
River terminal pricing is unchanged at $185-$190/t FOB Cincy and St. Louis and $195-$205 FOB Illinois River. Ex-Oklahoma-plant prices are 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 anti-dumping duties as well as the currency crisis 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, if ammonia applications go poorly this fall, there could be increased demand for spring UAN.
The downtrend in global phosphate prices continued in October. No further production curtailments were announced, and now that India is starting to move out of season, exporters are finding themselves competing aggressively for what little demand is emerging in North America, Brazil and Europe.
Brazil typically enters the market for DAP in the fourth quarter to cater for the smaller first-quarter Safrinha season, but importers are waiting for as long as possible in the hope that deferring their purchasing decisions will yield lower prices. So far, they have been correct with MAP prices falling below $300/mt CFR by the end of the month, compared to $310-$320 in late September.
Softening sulphur prices are allowing Chinese exporters to remain competitive with FOB prices available at $305-$314/mt, compared to $311-$316 last month.
The short-term outlooks remains soft. Without a revival in demand in Europe, Asia or the U.S., prices are looking increasingly vulnerable unless additional supply side control measures are applied.
NOLA DAP prices remain under enormous pressure, continuing to stem from lackluster demand amidst continued high level of imports. Trades were reported at $242-$259/t FOB in early November, down from $285-$288 in late September. The low end of the range is just $1 away from the low of $241 in May 2009 following the 2008 financial crisis and the preceding rally that saw DAP trade as high as $1,100 in July 2008.
MAP barge prices are holding relatively firmer, with availability understood to be tighter than DAP. Trades were most recently reported at $257-$262/t FOB NOLA.
As phosphate prices continue to fall, market participants are speculating as to which North American production site will be the next to make a curtailment.
River terminal prices are softening, but many are holding a slight premium to NOLA. DAP is quoted in the $295-$315/t FOB range while MAP is most often holding a $5 premium with offers at $300-$320. New sales opportunities are still expected to be slow with most buyers still working through existing inventories. Fall application work is ramping up with corn harvest now over 50% complete and soybeans at 75%. However, a widespread run is yet to emerge with poor field conditions still holding activity back in certain areas.
The outlook for NOLA phosphates is soft in the short term, and further production curtailments along with a decent November stretch of application, will likely be needed for this market to find support.
Domestic potash markets are mostly steady in inland markets, but there is weakness in river terminal markets and at NOLA. Barge prices declined to $235-$238/t FOB, compared to $240-$246 at the end of September, as sellers continue to cut prices in a market suffering from slow demand due to a delayed harvest.
River terminal prices are down to $265-$270/t FOB at some locations, a level that is $5-$10 lower than prices for summer fill.
Inland FOBs remain around $285-$295/t FOB in most cases -- the same level as summer fill. But, at this point, there seems to be more risk, so no buyers are actively stepping in at these levels for anything more than prompt needs.
The short-term outlook for domestic potash prices is soft with lower prices anticipated for summer fill, if not before.
Editor's Note: This information was supplied courtesy of Fertecon, Agribusiness Intelligence, IHS Markit.
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