Fertilizer Market Report – August 14, 2024 

In this week’s fertilizer report:  

In this week’s fertilizer report:  

• • • India Issues Urea Tender 
    • CF Industries Q2 Nitrogen Market Outlook Supports Genesis Fertilizers Business Plan 
    • Mosaic and Nutrien Q2 Commentary Confirms Tightness in Phosphate Market 
    • Union Responds to CPKC, CN Lockout Plans; Canadian Industry Fears Impact of Shutdown 
    • North America Urea and Phosphate Action Last Week
    • Industry Tidbits 

India Issues Urea Tender

National Fertilizers Limited (NFL) called a urea tender on August 14th to close August 29th. Offers will be opened on August 30th. The industry is expecting NFL to target purchasing roughly 1million mt.  

The broader global urea market will likely wait for pricing and volume in this tender before reacting. India is sitting on a healthy 10 million mt of urea and still awaiting delivery of tonnes from the last tender. There is the possibility of another surprise in the form of lower-than-expected volume accepted in this offer which would likely put downward pressure on global urea prices. Genesis says? Wait and see.

CF Industries Q2 Results Nitrogen Market Outlook

The bolded commentary below supports the Genesis Fertilizers business plan 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.

From the end of the second quarter of 2024 into the third quarter of 2024, gas curtailments in Egypt and Trinidad, along with scheduled outages and a lack of substantial urea export availability from China, have supported global nitrogen pricing during a period of year that typically sees lower prices and low global shipments as demand shifts from the Northern Hemisphere to the Southern Hemisphere. In the near-term, management expects the global supply-demand balance to remain constructive, led by nitrogen import requirements through year-end for Brazil and India and continued wide energy spreads between North America and high-cost production in Europe.

• North America: Management believes nitrogen channel inventories in the region for all products are below average based on strong demand for urea and UAN during the spring application season and higher-than-expected planted corn acres. Reported UAN and ammonia fill programs achieved prices above 2023 levels despite softening farm economics in the region as corn and soybean prices have fallen due to higher forecasted production in 2024 in the United States and Brazil.
• Brazil: Urea consumption in Brazil in 2024 is forecast to increase 3% year-over-year to more than 8.0 million metric tons, supported by improved supply availability and lower global urea prices. Urea imports to Brazil in 2024 are expected to be in the range of 7.0-8.0 million metric tons as domestic production remains limited.
• India: India is expected to be active importing urea through the second half of the year as the country secured lower-than-expected volumes in its two most recent tenders and urea consumption is expected to rise to support rice, wheat and other crop production. Management expects urea imports to India in 2024, including volumes supplied on a contractual basis, to be in a range of 5.0-6.0 million metric tons as recently revitalized plants and new facilities in the country operate at higher rates.
• Europe: Approximately 25% of ammonia and 30% of urea capacity were reported in shutdown/curtailment in Europe in early July 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. As a result, the Company expects nitrogen imports of ammonia and upgraded products to the region to be higher than historical averages.
• China: Ongoing urea export controls by the Chinese government continues to limit urea export availability from the country. For the first six months of 2024, China exported 140,000 metric tons of urea, 86 percent lower than the same period in 2023.
• Russia: Urea exports from Russia are expected to increase 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 also expected to rise with the completion of the country’s Taman port ammonia terminal in the second half of 2024 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 curve 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.

Mosaic and Nutrien Outlooks Confirm the Tightness in the Phosphate Market

Mosaic Q2 Results Outlook Commentary

Grains and oilseeds stock-to-use ratios are expected to remain low and constructive agriculture fundamentals and economics are expected to continue to incentivize growers to maximize yields. In 2024, the El Niño weather pattern is expected to shift to La Niña, creating a favorable backdrop in Southeast Asia, India and Brazil.

While corn and soybean fundamentals and prices have softened recently, nutrients remain affordable which bodes well for fertilizer demand. North American demand is robust, with buyers seeking summer fill after emptying their bins this spring and Brazil in-season demand is solid on concerns of low stocks.

Global potash supply constraints are likely to continue to abate this year as we see higher exports from Belarus and Russia. However, the recent contract settlements in China and India should stimulate buying activities further in Southeast Asia and India.

Chinese phosphate exports declined 27 percent or over 1 million tonnes year over year in the first six months of 2024 and the long-term outlook remains favorable as domestic and industrial needs will continue to be prioritized over fertilizer exports in the long term.

These factors suggest the global potash market is balanced and the phosphate market will remain tight in 2024 and beyond.

Nutrien Q2 Results Outlook Commentary 

Global nitrogen markets are being supported by steady demand and continued supply challenges in key producing regions. Chinese urea export restrictions have been extended into the second half of 2024 and natural gas-related supply reductions could continue to impact nitrogen operating rates in Egypt and Trinidad. US nitrogen inventories were estimated to be below average levels entering the second half of 2024, contributing to strong engagement on our summer fill programs. 

Phosphate fertilizer prices are being supported by tight global supply due to Chinese export restrictions, low channel inventories in North America and seasonal demand in Brazil and India. We anticipate some impact on demand for phosphate fertilizer in the second half of 2024 as affordability levels have declined compared to potash and nitrogen. 

Union Responds to CPKC, CN Lockout Plans; Canadian Industry Fears Impact of Shutdown 

“The announcement by Canadian National and CPKC that they plan to lock out members of the Teamsters Canada Rail Conference on Aug. 22 represents “an unnecessary escalation that goes against the principles of good-faith bargaining that CN and CPKC claim to uphold,” the union said in a statement this afternoon (Friday, Aug. 9).” 

Union responds to CPKC, CN lockout plans; Canadian industry fears impact of shutdown

North America Urea Last Week   

According to Green Markets, urea prices in Western Canada were up slightly on the high-end of the range closing the week at C$640 -$645/mt delivered from a flat C$640/mt price seen over the previous two weeks. 

Last week, NOLA urea prices were down slightly to a range of US$305-315/st from US$307-$317/st from the previous week.  

According to Direct Hedge, this week started with urea Nola spreads of US$305/st bid and US$315/st offer for August and US$315/st bid and US$320/st offer for September. October was quoted at US$310/st bid and US$320/st offer. Q4 is US$305/st bid and US$315/st offer. All of these are up roughly US$5/st WoW. The NOLA market continues to lack direction. 

On Monday, Q1 Urea NOLA Swaps were quoted at US$317/st bid and US$322/st offer.  

North America Phosphate Last Week 

According to Green Markets, the latest delivered Western Canada MAP price range was flat WoW at C$1,050 – $1,060 for the third week in a row. MAP supply is reportedly very tight in North America. 

MAP in Eastern Canada increase to C$980-$995/mt FOB, up C$25/mt at the low end of the range, with DAP up to C$960/mt FOB Montreal, above the previous week’s C$925/mt FOB level. 

MAP NOLA was also flat WoW in a range of US$635 – $645/st.  

Industry Tidbits 

• Waterloo farmers are losing land to industry | The Narwhal 

• Canadian pea exports slow in June – AGCanada – AGCanada 

• The cornerstone of any fertiliser trade: Freight