By Ken Johnson
DTN Fertilizer Columnist
AMMONIA
World ammonia prices moved slightly higher through September. Tons from Yuzhnyy crossed at $390 to $395 early and at month's end sold at $390 to $405. Prices were mostly sustained by production outages at Russian facilities (mainly turnarounds) and issues affecting production at North African suppliers (turnarounds and gas supply shortages) rather than any substantial changes in demand. Prices for Middle East product rose from $395 to $425 early to $410 to $435 through the month on the back of steady, strong Indian import demand for DAP production. Demand from industrial production in the Far East was generally slow but was picking up slightly at month's end. At September's end however, in the Black Sea, ammonia supply was improving with the restart of production at one or two facilities. In addition, an LPG terminal was opening in North Africa, which should begin to alleviate gas supply issues in the region. We look for world ammonia market pieces to run flat in the short term.
The story was slightly different in the domestic ammonia market. Barge prices at NOLA (New Orleans, Louisiana) fell from $400 per short ton early to a broad range of $350 to $400 late as a producer needed to move product out of their tank. Prices for ammonia at central Illinois terminals were $550 early and fell slightly to $540 to $550 ston late. Ongoing oversupply of ammonia in the U.S. Gulf and Caribbean region partly due to postponement of the increased gas curtailments in Trinidad were the primary drivers for the price reduction. Farmer attitudes have been soured by low corn prices and they have been slow to make fall ammonia prepay purchases. Lack of activity is keeping price pressure from developing in either direction. Further out, weak urea and UAN prices could put some downward pressure on ammonia prices. We look for domestic ammonia prices to run flat with an undertone of softness in the short term.
UREA
World urea prices fell steadily through September as supply continuously outstripped demand. Yuzhnyy prills traded at $265 to $270 per metric ton early and at month's end were crossing at $252 to $255. Prices for Middle East granular also fell, going from $253 to $269 mt early to $247 to $250 late. Through the month, Brazilian buyers hugged the sidelines, watching Middle East prices erode. Prices in North Africa for product going to northwest Europe were under pressure through September, even though there is product available only from Algeria mainly due to weak pricing for Middle East product. In mid-September, India ran a tender and prilled prices fell to around $274 mt cfr, an $11 decrease from the previous tender. Virtually all awards in the Indian tender went to Chinese and Iranian suppliers. At month's end China was scrambling for sales as the domestic market was closing seasonally; both prills and granular are available in the low $260s fob. We look for world urea market prices to keep moving lower in the short term.
Domestic urea prices continued to move lower both at NOLA and at inland terminals. NOLA granular barge prices traded at $275 to $279 early and fell to $255 to $260 late. There was a small rally at month's end to around $270 for barges, which could make river close, but even that fizzled under pressure from imported product coming in. A good deal of forward business (Dec.-Jan. barges) traded even lower at $250 to $255. Anecdotal evidence suggests low wheat prices are discouraging many wheat belt farmers from doing much in the way of fertilizing for next year's crop. Slow demand on that front combined with downward pressure on world urea prices lead us to believe domestic urea prices could keep moving lower in the short term.
UAN
NOLA UAN barge prices drifted slightly lower through the month, trading at $205 to $210 early and crossing at $203 to $205 late. Seasonally slow demand for UAN maintains over much of the Midwest and interior prices seem under no pressure to move in either direction. Low-priced imported material is arriving regularly and weakness in urea prices is never a good thing for UAN price prospects. We look for domestic UAN prices to run flat with an undertone of weakness in the short term.
DAP
World phosphate prices were under strong downward pressure through September. Even though Tampa export prices only dropped $5 (from $465 to $460 mt), prices for product delivered to various importers from other sources dropped substantially. Late in the month the Saudis captured a 25,000t DAP sale into Pakistan at $460 cfr, but this was a price drop of $15 to $20 from the last trade in that country. Russian MAP sold at $465 to $475 into Brazil at mid-month, but prices fell to $450 to $460 late. Chinese prices are under pressure with offers late in the month in the low $440s fob for DAP against mid-month prices of $455 to $460. Indian importing was quiet through the month. Product sold into India at $460 at mid-month, but at month's end sellers needed to offer prices in the $450s to get a buyer to the table. While there were a few spot sales late in the month, demand is not enough to stem the downward trend. Brazil is still dead and swimming in inventory, offering little hope of an outlet for the Russians. European demand continues at a slow pace and prices there seem to be holding. We look for world DAP/MAP prices to keep moving lower in the short term.
Domestic prices at NOLA moved lower as barge prices slipped from $430 to $435 early to $425 to $430 late. Prices for DAP in central Illinois terminals were flat at $465 through the month. Low crop prices are stifling dealer fall fill demand so far. As is the case with urea, pressure from slow demand and weak world market prices seems likely to keep domestic DAP/MAP prices moving lower in the short term.
POTASH
Potash barge prices at NOLA drifted $5 lower through September, trading at $300 to $305 early and moving to $295 to $300 late. Lack of demand and long supplies at interior terminals continue to keep domestic potash prices under pressure. Wholesalers contacted through the month indicated supplies of potash on consignment in their warehouses continue long. Slow demand seems likely to keep domestic potash prices weak in the near term.
Ken Johnson can be reached at talk@dtn.com
(CZ/BAS)
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