By Ken Johnson
DTN Fertilizer Columnist
AMMONIA
World ammonia market prices dropped steadily through December. Export ammonia prices from Yuzhnyy, former Soviet Union (FSU), fell from $340-$550 per metric ton early to $270-$310 late. (All prices in this column are wholesale.) Weakening phosphate prices and seasonally weaker demand for ammonia at the turn of the year continue to push international prices down. At month's end, Ameropa sold a Yuzhnyy cargo into Morocco at around $270 fob (free on board -- the buyer pays for transportation of the goods). Such a low price is understood as unacceptable for other Yuzhnyy suppliers, at least in the current market conditions and feedstock gas cost for 4Q. One FSU export supplier was planning to take one of its two ammonia lines down on Dec. 28 and is unlikely to restart until the price rebounds or production costs go down. There are reports of increased inquiries from some industrial buyers in the Far East who are hoping to secure feedstock ammonia for downstream production of acrylonitrile and caprolactam at the lowest possible price, thereby improving margins. Increased inquiries for January tons are also reported to be coming from India following settlement of the phosphoric acid price with OCP, Morocco, for the first quarter of 2016. Even so, the short-term outlook for world ammonia prices continues weak with the market still long.
Domestic ammonia prices held flat through year's end after falling at mid-month. Central Illinois prices were at $540 per short ton (ston) early in the month and there was a mid-month fall to $455. Low crop prices and ammonia's high price relative to urea are keeping farmers/dealers on the sidelines. We look for further decreases in domestic ammonia prices in the short term.
UREA
The new year in the world urea market is beginning on a mostly bearish note. Middle East and Yuzhnyy prices traded up slightly through December, but prices for North African product fell as did Chinese export urea prices. Yuzhnyy prices firmed slightly through the month, trading at $235-$238 mt early and rising to $240-$244 late; domestic demand created tight export availability. Yuzhnyy prices could continue to feel downward pressure in 1Q on account of granular availability from both North Africa and the Middle East. Urea from Middle East suppliers traded at $215-$230 mt fob early and increased to $224-$228 late. Egyptian tons had sold into Turkey at mid-month in the $260 fob range, but late in the month the sale of a panamax cargo from Qatar at around $255 cfr (cost and freight) into Turkey seems likely to further limit sales possibilities to this market from both North Africa and the Black Sea. Chinese prices are still sliding, trading at $245 mt fob early and falling to $232-$234 late. Middle East producers are feeling the pressure of weaker demand in Brazil and the U.S., and are looking for alternative outlets. We look for further deterioration in world urea market prices in the short term.
NOLA (New Orleans, Louisiana) urea barge prices started December in the mid-$220s, rose to $235 at mid-month, then fell back to the $220 level late. Interior demand has been slower than normal due to low crop prices, foul weather and falling prices for product. We are now only 60 days from wheat topdress demand in several markets, and sometime soon good demand seems likely to come into the market and bump prices higher in the medium term. Given the supply and demand balance in the world urea market, however, we do not expect any upward price movement can be sustained once wheat topdress demand has been served.
UAN
Domestic UAN prices moved lower through December. NOLA barges traded at $180/32% early and prices slipped to the $165-$170/32% level late. Weak prices for competing forms of N, low natural gas prices and the prospect for increased domestic supply are all combining to keep domestic UAN prices under downward pressure. Several wholesalers contacted through the month believe UAN prices are still too high relative to urea. We look for further decreases in domestic UAN prices in the short term.
DAP
World phosphate market prices are beginning the year on a weak note. The U.S. DAP export price began the month at $400-$408, and late in the month, the price had edged down to $400-$405 mt fob, as Chinese product took much-needed business away from Mosaic on the west coast of South America and into the Australian market. EuroChem has placed a small lot of Russian DAP into the U.S. at a price of $390 fob Baltic, which was $10-plus less than the early month price. Brazilian importers continue to wait in the wings, exerting further pressure on cfr values for MAP into this market. Demand in Asia is seasonally slow, and in the key markets of India and Pakistan, the prospect of excessive stocks being carried forward into the new 2016-17 fertilizer market is growing. We expect world DAP/MAP prices to run flat with undertone of weakness in the short term.
Domestic DAP prices at NOLA fluctuated slightly through the month. Barges traded at $355 early, fell to $325 at mid-month but recovered to the $335-$340 range late. Large wholesalers/dealers remain wary of significant inventory build until they get a better feel for potential farmer demand. Anecdotal evidence suggests farmers are holding back on grain sales, which reduces the need for year-end tax related buying. There are also reports of substantial quantities of imported MAP at NOLA still looking for a home, which is putting a drag on DAP prices. For the short term we expect domestic DAP/MAP prices to run flat with undertone of softness.
POTASH
Domestic potash prices continued to slide through December. NOLA barge prices dropped from the $260-$265 range early to the $230-$250 range late. The low end was for Russian material. Interior terminal prices dropped from $300 early to the $280 level late. Slow demand and a large volume of product placed on consignment seem likely to keep domestic potash price moving lower in the short term.
(AG)
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