FERTILIZER MARKET REPORT September 30, 2022
Fertilizer Prices Resist Knee-Jerk Reaction to Hurricane Ian – Bloomberg
The phosphate-fertilizer market may take a few days to react to Hurricane Ian’s arrival over a key production area in Florida. Prices for crop nutrients haven’t jumped even as the storm arrived in the state that’s home to Mosaic Co.’s phosphate rock assets, where they mine and process the rock into fertilizers like diammonium phosphate and monoammonium phosphate, commonly known as DAP and MAP. “Traders are waiting to see the impacts of the hurricane before making their next moves on futures,” said Taylor Eastman, fertilizer derivatives broker at Freight Investor Services in Kansas City, Missouri. “Of course everyone remembers what happened in 2017 with the production loss then, but we’re hearing from the trade it’s too soon to tell how this will impact supply going forward.”
Commentary from Green Markets
India
Sources said India will need at least two more tenders to close out the year. One trader said the country needs at least 3 million mt to close out the season. Anything less could put the country into panic buying mode for the next season, said another trader. The next tender is expected to be called in mid-October. The call could come earlier if all the tonnage awarded in the recent RCF tender has nominated vessels. The shipping deadline for the RCF tender is Oct. 21. Sources expect to see higher prices in the next tender.
China
Reports are circulating that some of the smaller producers are quietly moving tons to portside warehouses in the hope that they will get clearance to export the material. Sources said quiet inquiries are circulating among international traders, many of whom are skittish about making a deal unless all the proper customs paperwork is completed. January-August 2022 urea exports were reported at 1.2 million mt by Trade Data Monitor, down 58% from the 2.9 million mt exported during the same period in 2021. India has dominated the buyers so far this year, taking 332,000 mt. This is down dramatically from the 1.1 million mt sent to India in January-August 2021. Other buyers this year were South Korea with 269,000 mt, and Pakistan with 204,000 mt. August 2022 exports were reported at 351,000 mt, down 34% from the 261,000 mt exported during August 2021. Pakistan topped the buyers with 103,000 mt, for 29% of the exports. India took 98,000 mt for 28% of sales, followed by South Korea with 55,000 mt for 16% of the exports.
Commentary from Argus
In ammonia, the story is about high demand in Europe because of the production curtailments there pulling in spot availability from other parts of the world. This week we saw prices out of Trinidad rise by about USD$75/mt. The spike in Trinidad prices comes at the end of the month before entering into contract for the October Tampa price.
In nitrogen, liquidity is thin pressuring prices a bit. Brazil prices drifted lower. The US NOLA price sunk also. The outlook is weak in the near term however 4Q will likely see higher prices due to demand from India, Europe and Brazil all expected to kick in soon which will support higher price levels.
In phosphates another round of lower DAP prices. NOLA barge prices were softer. MAP prices in Brazil also fell to USD$700-$730/mt.
North America Urea Last Two Weeks
According to Green Markets, last week, new NOLA urea barge business was quoted in the USD$620-$672/st FOB range, down from the week-ago USD$640-$687/st FOB. Early-week business was reported toward the high end of the range, but USD$620/st FOB was a common number by midweek.
Last week, Urea pricing in Western Canada was flat for the third week in a row at C$1130-$1150/mt.
Earlier this week, initial reports had NOLA urea barge trades as low as $600/st FOB, compared to the week-ago range of $620-$672/st FOB.
North America Phosphate Last Two Weeks
According to Green Markets, last week, NOLA DAP and MAP barge pricing was trending lower during the week. Players reported DAP trades bottoming at USD$725/st FOB on Sept. 22, down USD$30/st FOB from the prior USD$755/st FOB low. Subsequent offers were heard bouncing slightly to USD$730/st FOB, while posted offers for domestically produced DAP remained at the week-ago USD$765/st FOB on Sept. 22. Prior to the price drop, sources called the week’s high in the USD$745-$755/st FOB range. MAP offers were reported falling as low as USD$745/st FOB during the Sept. 16-22 trading week, off from the prior USD$780/st FOB bottom. Domestic producer offers continued to be quoted at USD$785/st FOB, while sources put the early-week market at USD$780/st FOB. Some sources pointed to a perceived downturn in demand at both the international and domestic US levels as dragging prices lower, while others speculated an index play could be weighing on nearby values. DAP barge values were pegged in a wide USD$725-$755/st FOB range through the period. NOLA MAP barges were called USD$745-$780/st FOB, falling from USD$780-$790/st FOB reported previously.
Last week, in Western Canada, MAP was pegged in a wider range of C$1220-$1280 vs the previous week’s wide range at C$1,220-$1,230/mt FOB.
Early this week, little was heard on NOLA DAP/MAP trades, but what was reported showed a $10/st uptick from week-ago numbers, most likely due to the production outages expected in Florida due to Hurricane Ian.
Industry Tidbits
- Rail workers on Sept. 22 were scheduled to begin the voting process to ratify the tentative agreements reached last week between Class 1 freight railroads and unions that averted a potential strike or lockout on Sept. 16. According to multiple media reports, however, many union members are unhappy with the deal, and ratification is far from certain.
- What little Russian gas supply is still coming to Europe may be under threat. Reports by Russia’s security service this week that they had thwarted a planned attack by Ukraine on the TurkStream pipeline – a claim that Kyiv has denied – have highlighted risks to the remaining Russian supply to Europe, Bloomberg
- A tightening and clarification of the European Commission’s (EC) sanctions on Russia now makes it impossible to supply Russian potassium chloride and compound fertilizers to third countries that use European services, such as insurers and shippers. The new prohibition applies even if the cargoes are not transiting European Union (EU) territory.
- The USDA has begun accepting applications for its $500 million in grants to encourage domestic production of fertilizer.
