By Logan Garcia, Market Reporter - Fertecon, Agribusiness Intelligence, IHS Markit
The following is a breakdown of wholesale prices and trends of the various fertilizers for August and early September 2021.
AMMONIA
Domestic:
The U.S. ammonia market remained muted with little activity or market chatter to speak of. With a few nitrogen plants still finishing summer turnarounds, prompt availability was tighter in Texas and Oklahoma, among other regions. However, Texas was one of the only markets seeing any prompt inquiries at the time, with many other participants out on holiday during this slow, seasonal period. Reports from the area around the Enid, Oklahoma, plant suggested prompt tons would be hard to find until the second half of September due to production difficulties and contract deliveries pulling volumes from the open market. Other Southern Plains plants including Borger, Texas, and Woodward, Oklahoma, were also said to be experiencing technical difficulties.
Volumes in the U.S. Corn Belt went mostly unchanged at $650-$665 per short ton (t) free-on-board (FOB) for fourth quarter delivery volumes, with lower offers from CF at $635 having been raised to match Koch, and $610-$615 for prompt central Corn Belt volumes in Illinois.
Prepay sales were estimated at 85% complete for fall application needs at the end of the month with contract volumes expected to begin shipping in mid-October and for direct field applications to follow when weather permits. Last offers on factory volumes in August were at $615-$635 in eastern Oklahoma and $670-$675/t from Port Neal offered on fourth quarter volumes, $5 lower from offers earlier in the month. However, some southern U.S. producers pulled their pricing in the wake of Hurricane Ida at the end of the month.
With CF's Donaldsonville facilities having spent less than two weeks offline before beginning restart after Hurricane Ida, the outlook for ammonia was flat to firm coming out of August, depending on how long it would take for New Orleans and area production to recover and whether or not fall availabilities would be heavily or only partially affected.
International:
Yara and Mosaic agreed to a price of $615 per metric tons (mt) cost and freight (CFR) Tampa for September shipments, a decrease of $10 from $625 CFR at the end of July for August shipments. The move was attributed in part to the fall in prompt demand from buyers in the Far East, who sourced heavily from the Caribbean in recent months.
In the Middle East, the exact situation at Ma'aden's ammonia plant remains a mystery. Production at the 1.1 million metric tons (mmt) per year plant, which went down in the second half of May following a fire, is yet to resume, with world prices having increased in the time since the outage began with one of the major global exporters nonoperational.
Baltic ammonia prices remained firmer through August at $588/mt FOB, in line with highs reported late in July but with lower spot values in the high $570s dried up. In the Black Sea, price levels moved similarly higher to $585-$590/mt FOB in $20 higher moves from lows seen the previous month. There was less downside in the market west of the Suez Canal, with the ammonia market in and around Europe appearing firm, supported by a lack of oversupply and record-breaking high gas prices.
Meanwhile, suppliers in Algeria were said to be comfortable for September, leaving our short-term price outlook largely stable in the Western Hemisphere but with signs of softening in the east.
UREA
Domestic:
Bearish sentiment toward urea grew throughout the month of August as the world awaited another India tender, which was eventually pushed into September. With little going on domestically, the NOLA market followed globally downward trends.
Urea barges at NOLA ended August at $420-$425/t FOB, in line with lower values seen much of the month after July's high close at $440/t but above the August low of $400 as trading remained rangebound in the month. River terminal markets fell $10-$15 from July to August, down to $450-$465/t FOB. Supply concerns on the Upper Mississippi River were only just beginning to emerge but would become exaggerated after Hurricane Ida's destructive landing at NOLA and catapulted early September prices to the mid-$500s.
More generally, major markets saw $5-$10 week-over-week losses at Inola, Cincinnati, and St. Louis in August. Pressure was low on buyers in August, but September may become more of a scramble as upriver buying will see a shorter window before the Upper Mississippi is closed. Urea prices may remain volatile in the first weeks of September but should begin to correct lower if U.S. Gulf nitrogen plants can promptly return online and import barging can resume as normal.
International:
As mentioned above, India declining to come to market in August left the global market well supplied, leading to softening prices. After Hurricane Ida at the end of the month, however, large gains were seen from Algerian and Egyptian producers buoyed by sharper prices in the U.S. Brazil granular urea ended August at $470-$475/mt CFR, $15-$20 lower from July levels largely on account of ample supply availability and thin trading through the latter half of the month. Egypt remained a more active market by comparison, but prices still moved down $15-$25 to $440-$450/t FOB. On the whole, August was uneventful until the last few days when firmness in the U.S. spread to other markets. World benchmark prices were expected to remain soft at the end of August with no more upward moves expected until the next India tender would be announced in September but firmed quickly due to bullishness at NOLA even without an Indian announcement.
UAN:
The UAN market remained mostly static in August with NOLA UAN barges continuing to see little interest on the buying side as well as no offers from major producers. CF did not return to market with any further summer fill offers in August as expected, and with little activity from both the largest domestic producer and Russian exporters, August was a mostly quiet month. Most domestic offers would eventually be pulled following Hurricane Ida's impacts to nitrogen production, with the last known prices falling between $340-$350/t FOB at major river terminals including Cincinnati, St. Louis and Mt. Vernon.
The U.S. International Trade Commission (ITC) on Aug. 13 determined there is a reasonable indication that a U.S. industry is "materially injured by reason of imports" of UAN solutions from Russia and Trinidad and Tobago that are allegedly subsidized and sold in the United States at less than fair value.
As a result of the Commission's affirmative determinations, the U.S. Department of Commerce (DOC) will continue its investigations of imports of urea ammonium nitrate solutions from Russia and Trinidad and Tobago.
According to the ITC, the DOC preliminary countervailing duty determinations are due on or about Sept. 23, and its final set of determinations due on or about Dec. 7, 2021.
Trinidadian volumes continued to flow into the U.S. while Russian volumes tapered off after the investigation's announcement, with imports now expected to dry up in the second half of September from named origins in the investigation ahead of the before-mentioned duty rate announcements. As such, no new sales of Russian UAN were reported on the U.S. East Coast with last trades done at $310-$315/mt CFR.
UAN would appear firm in the short term with additional bullishness if nitrogen production in the U.S. Gulf remains impacted for some weeks and skyrocketing urea prices in early September. CF said its Donaldsonville complex was beginning its restart of ammonia production after over two weeks of downtime, and that upgrade products including UAN would follow, but the market impact of the outage was not yet widely known.
PHOSPHATES
Domestic:
August in the U.S. continued to be a seasonally slow period across the board with no widespread P&K application expected until October. Imports for July and August 2021 were projected much higher over 2020 levels due to lower carryover supplies from the spring, according to market participants, and warehouses were said to be better stocked ahead of renewed activity expected in the fourth quarter.
NOLA DAP was assessed at $598-$610/t FOB in late August, about $5 lower from $602-$615 in the previous month on some lighter liquidity before tighter MAP supplies in latter weeks lent support across phosphates. For its part, MAP moved $5-$15 higher month-over-month to $650-$660/t FOB NOLA.
River terminal phosphate prices lost $5 in August on the aforementioned quiet month for inland buying to $635-$650/t FOB DAP and $675-$695/t FOB MAP. After Hurricane Ida, however, barge prices shot higher to as high as $665 for DAP and $700 on MAP and river terminal prices rose prices in line.
Prices are expected to remain firm through September ahead of fall applications, especially considering downtime for Mosaic's Faustina plant in the wake of Ida, which the company said would reduce its quarterly output by 300,000 tons during an estimated eight to nine weeks of repairs to restore full production.
International:
Phosphates moved in opposing directions in the global market with prices firming further in the Eastern Hemisphere while continuing to take a breath in the west. A higher price was achieved on Saudi Arabian DAP in India at $648-$649/mt CFR, and renewed interest from Jordanian producers shows how these are some of the strongest pricing levels seen in the second half of 2021 so far.
Brazil meanwhile finished its previous crop and has been quiet ahead of the forthcoming summer crop, causing prices to soften $20-$30 from July levels to $720-$730/mt CFR.
The two above examples demonstrate the current dichotomy in world pricing. Pricing is expected to firm in North America and Europe with higher prices in the crosshairs but remain unachieved. In the short term, global supplies should continue to be drawn into the Eastern Hemisphere until the Brazilian and American markets firm in the coming weeks.
POTASH
Potash sales remained slow in August as prices continued to rise and distributors report that warehouses are well stocked following earlier summer buying. Despite the steep price hikes observed in 2021, market participants are confident that fall demand should see robust interest.
NOLA barges were assessed unchanged from early August levels at $550/t FOB at the end of the month on no new confirmed trades. Last trades confirmed for the fourth quarter 2021 timeframe were at $580/t FOB for October barges, a level which was reoffered after the fact.
Fourth quarter volumes began seeing greater liquidity beginning with a prepay program from Mosaic in early August, with initial pricing at $530/t FOB NOLA equivalents for limited volumes.
River terminal potash moved higher to $590-615/t FOB in August, up from $565-$605 in late July. A co-op was reported offering limited summer fill tons at $425-$430/t FOB earlier in August on older product purchased before midsummer price hikes.
While these cheaper tons were not widely available, the lower cost supplies did support some buyers' decisions to wait for more favorable offers on a wider scale. President Biden on Aug. 9 signed an executive order imposing a further round of sanctions upon Alexander Lukashenko and his regime for "their ongoing assault against the democratic aspirations and human rights of the Belarusian people." The move to impose sanctions was done in coordination with Canada and the UK.
IHS Markit trade data show the U.S. has been a significant importer of Belarusian potash, accounting for 5.8% of Belarus's exports in 2020 or just under 681,000 mt. In the short term, U.S. potash prices should begin to stabilize with potential fall resets given fewer realized supply impacts from Belarusian sanctions and demand destruction seen at current high prices.
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Editor's Note: This information was supplied courtesy of Fertecon, Agribusiness Intelligence, IHS Markit.
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