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FERTILIZER MARKET REPORT March 17, 2023

Western Canadian Urea Pricing Flat WoW, Urea NOLA Down 6.2% – The Game Continues; India in the Driver’s Seat

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Global Commentary from Argus

I found the commentary below from Argus Media regarding the urea NOLA/DAP NOLA spread quite interesting. In my view, we must remember that Western Canada is a 100% import market for MAP since Agrium (Nutrien) Redwater, AB shut down, therefore commentary like this from Argus is important to Western Canadian producers.

I cherry picked the following quotes from the article that I believe are most relevant to Canadian producers.

“Nitrogen/phosphate price divergence has widened, with the urea/DAP price ratio at Nola now at a 15-year low.
Urea barge prices fell to US$290-US$315/st fob Nola for the week. While DAP was US$595-US$615/st fob. This translates to a urea/DAP price ratio of 0.5 – the lowest weekly ratio since 27 October 2008, when the ratio stood at 0.49.
So is urea cheap or DAP headed lower? Or is it both…?
Key to the price divergence are restricted phosphates exports from China – traditionally the largest DAP export market. The easing or maintaining of restrictions on phosphates out of China will be crucial to price direction in the coming months as demand in major markets will ramp up in 2Q-3Q. But urea prices have continued to fall quicker.”

North America Urea Last Two Weeks

According to Green Markets, urea pricing in Western Canada last week was quoted as flat week-over-week in a range of C$665-$730.

Urea slipped to C$720-C$875/mt FOB in Eastern Canada, down significantly from the C$880-C$1,020/mt FOB range reported in mid-February.

Most producers in Western Canada are at least 80% purchased on urea for this spring, and are willing to leave the balance for spot deliveries with the chance that prices will continue to fall. I would fill any remaining urea requirements for this spring but no more. In other words, do not yet fill your bins for the next round.

According to Green Markets, last week NOLA urea barges were quoted at US$290-US$315/st FOB for March business, down from last week’s US$310-US$335/st FOB. The upper end of the range was reported early in the week, with new business falling to US$295-US$305/st on March 7. Trades at the US$290/st FOB level were confirmed at midweek before prices once again eased up to the US$300-US$305/st FOB level on March 9.

Early this week, NOLA urea saw a price uptick in early-week trading, firming to US$302-US$332/st FOB from the week-ago US$290-US$315/st FOB.

North America Phosphate Last Two Weeks

Last week, DAP was quoted at the C$1,010/mt FOB level in Montreal, down C$80/mt from last report. MAP prices dropped to a wide C$1,020-$1,280/mt FOB range in early March, depending on location and supplier.

According to Green Markets, stagnant pricing in the NOLA barge MAP market was noted last week while DAP prices edged lower.

Sources described a slow MAP market. Offers for domestically produced fertilizer continued at US$575/st, steady from last week, while limited early-week trading was reported even with the previous $555/st FOB bottom. Some believed the lower prices were no longer available by the end of the week, however. “I don’t think I could buy better than $560-$565/st FOB now,” said one source on March 9. “The market has firmed up a bit,” he added.

Green Markets Global Macro Comments

India

Once it was clear that IPL would not take more than what they advertised, urea markets around the world showed increased softness. The surplus that will be left following this tender will continue to provide downward pressure on prices. Brazil, another major urea buyer, saw a drop in prices on the heels of the Indian awards announcement. Many producers went silent, knowing they would not like the prices being bid.

Brazil

Last week the market reacted to the results of the Indian tender with falling prices. Sources said the market was now down to US$330-US$335/mt CFR, with unconfirmed reports of a deal at US$325/mt CFR.

Industry Tidbits

• BHP is still interested in looking at a “myriad of options” with respect to Nutrien Ltd, according to a Globe & Mail article citing an interview with a senior BHP executive. In 2010, the Canadian government rejected BHP’s attempt to buy Nutrien’s legacy company Potash Corp. of Saskatchewan.

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