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Fertilizer Market Report –November 6, 2024
CF Industries Third Quarter Earnings Nitrogen Market Outlook
Fertilizer Market Report – November 6, 2024
In this week’s fertilizer report: CF Industries Third Quarter Earnings Nitrogen Market Outlook; Canadian Dollar Future is Looking Spooky; Last Week’s North American Urea and Phosphate Action; and Other Industry Tidbits.
News of the Week
CF Industries Third Quarter Earnings Nitrogen Market Outlook
CF again stressing the input cost difference between North America and Europe due to North America’s low-priced natural gas. CF is also expecting longer-term, global nitrogen supply-demand balance to tighten as global nitrogen capacity growth over the next four years is projected to not keep pace with expected global nitrogen demand growth of approximately 1.5% per year for traditional applications and new demand growth for clean energy applications.
Global nitrogen pricing was supported in the third quarter of 2024 by strong global nitrogen demand and lower supply availability due to natural gas shortages in Trinidad and Egypt, China’s absence from the urea export market, and planned maintenance activities in the Middle East. In the near-term, management expects the global supply-demand balance to remain constructive, as inventories globally are believed to be below average and energy spreads continue to be significant between North America and high-cost production in Europe.
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North America: While grains prices in North America are under pressure from expected high crop production in 2024, management believes that the fall ammonia application season in the United States and Canada will be positive, if weather is favorable, given the relative affordability of nitrogen inputs. U.S. crop returns for 2025 are forecast at similar levels to 2024, which is expected to support stable planted corn acres year-over-year.
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Brazil: Through September 2024, urea imports to Brazil were 5.4 million metric tons, 13% higher than through the same period in 2023. Brazil is expected to import 2.0-2.5 million metric tons of urea in the fourth quarter of 2024 due to forecast higher planted corn acres and nominal domestic production.
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India: Management believes significant urea import requirements remain for India through March 2025 due to favorable weather for rice, wheat and other crop production as well as lower-than-targeted urea production in India driving greater import need.
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Europe: Approximately 20% of ammonia and urea capacity were reported in shutdown/curtailment in Europe as of September 2024. Management believes that ammonia operating rates and overall domestic nitrogen product output in Europe will remain below historical averages over the long-term given the region’s status as the global marginal producer.
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China: Ongoing urea export controls by the Chinese government continues to limit urea export availability from the country. Through September 2024, China has exported 254,000 metric tons of urea, 91 percent lower than the same period in 2023.
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Russia: Urea exports from Russia have increased by 5% in 2024 due to the start-up of new urea granulation capacity and the willingness of certain countries to purchase Russian fertilizer, including Brazil and the United States. Exports of ammonia from Russia are expected to rise with the completion of the country’s Taman port ammonia terminal though annual ammonia export volumes are projected to remain below pre-war levels.
Over the medium-term, significant energy cost differentials between North American producers and high-cost producers in Europe and Asia are expected to persist. As a result, the Company believes the global nitrogen cost structure will remain supportive of strong margin opportunities for low-cost North American producers.
Longer-term, management expects the global nitrogen supply-demand balance to tighten as global nitrogen capacity growth over the next four years is not projected to keep pace with expected global nitrogen demand growth of approximately 1.5% per year for traditional applications and new demand growth for clean energy applications. Global production is expected to remain constrained by continued challenges related to cost and availability of natural gas.
Canadian Dollar Future is Looking Spooky
Another article intelligently outlining the risks to the Canadian dollar including: Bank of Canada’s Dovish Stance: A Real Fright; U.S. Growth Resilience and Fed Caution: No Signs of Slowing; Oil Prices: The Canadian Dollar’s Ghostly Shadow; Trump Election Prospects and USD Strength: The Ghost of Policies Past.
The Canadian dollar (CAD) has faced substantial challenges in 2024, weakening by approximately 5% against the U.S. dollar (USD). This year marks the lowest point for the USD/CAD pair since 2020, and current trends indicate more downside may be lurking in the shadows. Here’s a breakdown of the factors haunting the Canadian dollar and keeping the USD strong.
Canadian Dollar Future is Looking Spooky
North America Urea Last Week
According to Green Markets, urea prices in Western Canada were flat WoW in a range of C$680-$700/mt for the third week in a row.
Last week, the NOLA urea price range fell another 2.6% on average to US$311-$325/st from US$325-$328/st the previous week.
As reporting by Direct Hedge, the week started with urea Nola spreads of US$315/st bid and US$320/st offer for November. December was quoted at US$320/st bid and US$325/st offer. January was US$325/st bid and $330/st offer and Q1 was US$325/st bid and US$340/st offer. All of these spreads were lower relative to last week’s quotes.
North America Phosphate Last Week
According to Green Markets, the latest delivered Western Canada MAP prices were flat WoW in a range of C$1,120-$1,160/mt for the third consecutive week. MAP supply remains tight across North America.
MAP NOLA prices were down slightly WoW to a range of US$635-$645/st from US$640-$652/st.
Industry Tidbits
