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Fertilizer Market Report – December 20, 2023
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Closing 2023: CRU Fertilizer’s Top Ten Predictions, Key Sale by OCI, and North American Price Insights
Fertilizer Market Report 2023/12/20 | This will be the last fertilizer weekly report for 2023. We wish everyone a safe and happy holiday. We will be back in January with a recap of 2023. In this week’s report, CRU Fertilizer’s Top Ten Calls for 2024, OCI selling its Iowa Fertilizer Company (IFCO) Weaver Iowa Nitrogen Plant to Koch Ag and Energy Solutions, last week’s North American fertilizer price settlements, and Industry Tidbits.
News of the Week
CRU Fertilizers Top Ten Calls for 2024
CRU held its annual webinar to outline its Top 10 fertilizer calls for 2024. We summarize below.
- CRU expects fertilizer demand to continue its recovery as affordability improves. It is expecting a modest uptick in nitrogen demand and strong increases in phosphate and potash demand.
- European fertilizer capacity will remain constrained. High natural gas prices will continue to impact production.
- The European Carbon Border Adjustment Mechanism (CBAM) will catch some in the industry off guard. Importers of fertilizer into Europe will have to report on embedded emissions of the goods they are importing. Fines are expected. Beyond 2024, CRU is expecting CBAM to push European urea prices higher. What does this mean for Canada? It’s too early to tell in our view.
- European producers will invest in more North American ammonia projects. This is being driven by the input cost (natural gas) gap between North America and Europe.
- Ammonia investment decisions are due, but CRU expects only a fraction of the low-emissions ammonia capacity to commission. CRU is expecting only 1Mt of 11.7Mt of new capacity will get financed in 2024.
- Purified phosphoric acid capacity will receive capital injections.
- China potash import trade flows will continue to favour Belarus, Russia and Laos leaving Canada to find market share elsewhere.
- China’s urea and phosphate export restrictions will be tight in the first half of 2024 and loosen in the second half. The Chinese government’s strategy is to lower domestic prices. This is important for Canadian farmers, especially regarding phosphates, as Canada is fully dependent on imports of phosphates. China out of the phosphate export market could tighten supply thus supporting prices.
- CRU is expecting more exports from Morocco and Russia.
- Fertilizer price moves will be muted. Tighter markets will not translate to sharply higher prices. In urea, CRU is expecting ample supply to keep a lid on prices in 2024 but still expecting slightly higher prices.
(Source CRU Fertilizers)
OCI to Sell Iowa Fertilizer Company (IFCO) to Koch Ag & Energy Solutions
In our view, this was huge and vital news. IFCO was commissioned in 2017 and touted as opening competition in the tight US nitrogen market dominated by CF Industries. The four largest nitrogen producers in the US, in descending order of capacity, are CF Industries, Nutrien, Koch, and IFCO. This acquisition will propel Koch into second spot in production capacity, vaulting past Nutrien, if it passes US antitrust hurdles. And if it passes, two companies will once again control a majority of the nitrogen capacity in the US. What does this mean for Nitrogen pricing?
In our view, the Genesis Fertilizer project is bolstered just that much more if this acquisition happens as it supports the requirement for more competition in North America.
North America Urea Last Week
According to Green Markets, urea prices were flat WoW in Western Canada in a range of C$660-$685/mt.
Last week, urea NOLA dropped to a range of US$295-$310/st from the previous week’s range of US$315-$330/st. The NOLA market has been volatile partly due to strong imports in October and weak exports. The US market is wondering if inventories are building quickly in preparation for the spring season.
Prices are either down or stagnant WoW globally due to limited demand. This is somewhat normal for this time of year.
North America Phosphate Last Week
The latest MAP offers in Western Canada were flat WoW in a range of C$1,050-$1,060/mt DEL.
MAP prices in Eastern Canada were up C$55/mt at the low end to a range of C$960-$985/mt.
According to Green Markets, the NOLA phosphate market was quiet with NOLA MAP prices firming to a range of US$605-$620/st from US$600-$615/st the previous week.
Industry Tidbits
- Americas fertilizer prices may rise in H1 on strong US, Brazil demand – EuroChem | ICIS
- Canada’s agricultural policies need to better serve local farmers and communities | msn.com
- Senate passes sunset clause shortening the time for Bill C-234 | West Central Online
- It’s Going to Get a Little Bumpy – How to navigate the next 36 months of lower prices and high costs. Part 2 – The Solutions | Farmer Coach
- Viterra workers vote ‘overwhelmingly’ in favour of strike action, union says | CTV News
- Ag Canada boosts non-durum wheat export estimate | The Western Producer
- Flax price stable as production woes continue | The Western Producer
- Carbon intensity is ‘game changer’ | The Western Producer
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