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Fertilizer Market Report – May22, 2024

 

Low US Natgas Prices Help Ammonia Economics

In this week’s fertilizer report:

  • Low US Natgas Prices Help Ammonia Economics Supports Genesis Business Model 
  • Sinking Crop Values Weigh on US Farmer Profits in 2024-Could Impact Nitrogen Prices 
  • North American Urea and MAP prices 
  • Industry Tidbits 

News of the Week 

Low US Natgas Prices Help Ammonia Economics

This article is directly related to the Genesis Fertilizers low-cost nitrogen production model. Argus explains how low price of natural gas, which is the feedstock for nitrogen production, is creating favorable margin opportunities for North American nitrogen producers. Genesis Fertilizers will be one of the lowest cost producers in North American and therefore the attractive margins, and thus cash flows, produced with low-cost natural gas will flow through to investors.  

“Nitrogen fertilizer production costs in the US are primed to hit historically low levels through the third quarter, potentially creating favorable margin and arbitrage opportunities during the offseason as bloated natural gas inventories depress key feedstock prices.” 

Low US natgas prices help ammonia economics | Latest Market News (argusmedia.com)

Sinking Crop Values Weigh on US Farmer Profits in 2024 

Argus is forecasting a loss for US corn growers of US$65.75/acre, down from peak profit of US$242.33/acre in 2022.  

“The cycle of above-average profits that has defined the US agricultural economy in recent seasons is fraying this year as crop prices slacken against elevated expenses.” 

“Corn is a fertilizer-intensive crop, and changes in farmer profitability can erode input prices. Urea, the most widely traded fertilizer globally, is strongly tied to front-month corn futures and domestic barge prices have sunk to levels last seen in January 2021, tracking lower front-month corn futures since the start of the 2023-24 fertilizer season.” 

Here at Genesis, we are sticking with our wait-and-see approach with urea. 

Sinking crop values weigh on US farmer profits in 2024 | Latest Market News (argusmedia.com)

North America Urea Last Week 

According to Green Markets, urea prices in Western Canada were quoted in a range of C$775-$780/mt DEL, unchanged WoW.  

Last week, NOLA urea prices rose slightly to a range of US$282-$298/st from the previous week’s range of US$280-$297/st. Full May business was quoted by Green Markets at US$285-$295/st and first half June was pegged at US$282-$290/st.  

We believe that urea prices in Western Canada are going to eventually correct to the downside. Our advice is sit and wait.  

 

 

North America Phosphate Last Week 

According to Green Markets, the latest delivered Western Canada MAP prices were flat WoW for the sixth week in a row in a range of C$1,135-$1,145/mt. 

MAP NOLA was up on the high end of the range to US$520-$535/st from the previous week’s range of US$520-$530/st.

 

Industry Tidbits

 

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