FERTILIZER MARKET REPORT March 24, 2022
Markets see slight rise week on week
Last week was a bit volatile. NOLA granular barges retreated early in the week before heading back toward USD $900/ST. Trades for the week were reported at $865-$905/ST, up from the week-ago $770-$900/ST. In the Great Lakes region, new urea pricing FOB Toledo, Ohio, was reported as high as $975-$1,050/ST. January urea NOLA imports were down 4.7%, and the US has been exporting more urea which has the market believing the US could be short post spring which could keep prices propped up through the summer. Urea exports were reported at 85,816 ST for January, up 396% from 17,308 ST in the prior year. The June futures Urea NOLA price increased to USD $862.50/ST at close yesterday from $707.50/ST in the first week of January. This indicates that the market believes that the summer price will continue to be supported by supply issues. Near-term, the market will remained focused on Indian tenders which are expected to come soon. This will keep tension on supply.
In summary, we believe that the market in western Canada will remain tight for the next few quarters at least. It will take time to sort out the geopolitical issues which, in our view, will keep the fertilizer markets on edge. We do not see any significant price relief this spring and possibly through summer fill.
New MAP postings in California were quoted at the $1,070/st FOB or DEL level, up another $50/st from the prior week. The same increase was confirmed in the Pacific Northwest, with new MAP prices reported at $1,050-$1,060/st DEL. In Western Canada, MAP offers were pegged in the C$1,400-$1,500/mt FOB range at midweek, up from C$1,220-$1,280/mt at last report. This is getting way beyond historical levels of CAD $645/MT five-year average price from 2016 through 2020. We chose those years because that was the five-year period preceding the craziness that began in July 2021.
- EuroChem Group AG, Zug, Switzerland, was one of the latest fertilizer producers in Europe this week to have made production curtailments amid record high natural gas prices in the region. It temporarily reduced fertilizer output at two of its plants in Belgium and Lithuania.
- Production curtailment announcements have also come over the past week from Lithuania’s nitrogen fertilizer and chemicals producer AB Achema, Croatian fertilizer producer Petrokemija d.d, and Polish producer Grupa Azoty.
- Lithuania’s nitrogen fertilizer and chemicals producer Achema is reported to have decided to extend the shutdown of its ammonia 1 plant until at least August due to high natural gas prices.
- A recent decision by the Canadian government to implement a 35 percent tariff on virtually all imported goods from Russia and Belarus that were not in transit prior to March 2, 2022, has raised red flags among farmers and member of the Canadian fertilizer industry, who said the tariff could severely restrict spring fertilizer supplies in Eastern Canada.
All Ukrainian ports are closed because of the Russian invasion of Ukraine. The invasion prompted insurance companies to declare the whole Black Sea a “war zone,” with insurance rates jacked up accordingly.