FERTILIZER MARKET REPORT October 14, 2022
Expect sideways-ish and less volatile prices for the next few weeks as players plot their next positions
Commentary from Green Markets
India
Indian Potash Ltd. called a tender for an unnamed quantity of urea to close October 17 with validity until October 22. The shipping deadline is December 5, 2022. India still needs 3 million mt to close out the current application season. Sources said the main issue will once again be availability of material. With limited Russian product available and even less Chinese urea, traders offering into the tender will be hard pressed to secure large quantities at low prices. In fact, the general consensus is that prices in the upcoming tender will be higher than the $668-$675/mt CFR paid in the last tender.
Brazil
We find the commentary below interesting because it indicates that Brazil demand could be weak going into Q1 2023 which will free up supply to be redirected to other areas of demand. Do not take this comment as an indication that prices could fall dramatically. That is not our belief. We do however believe that weak demand from Brazil could prevent significant upward pressure through Q4 and into Q1 2023.
Urea prices in Brazil remain weak as supplies grow. Sources reported deals this week at USD$650-$660/mt CFR. The bearish market reportedly led some buyers to push for USD$640/mt CFR. There were even reports that urea from Iran or Venezuela – both sanctioned countries – was being offered at USD$600-$630/mt CFR. No takers were confirmed at the lower levels. Downward pressure is expected to continue on pricing. Sources said the vessel lineup for the fourth quarter already shows about 1.2 million mt of urea booked and on its way to Brazil. The vessels coming in will most likely find ports still backed up and warehouses full as farmers remain hesitant to commit to large purchases.
An oversupply of MAP in Brazil has forced some trading houses to ship cargoes to the US and Europe. Sources said in most of these cases, the traders were hit with substantial losses. The issue was the rising costs of storing the MAP for an undetermined time, along with competition from others holding large quantities. The softer price at the ports was reported at USD$670-$680/mt CFR. The lack of buying comes from farmers calculating the fertilizer/grain price ratio. So far, a number of farmers have reportedly said they are ready to skip a season of phosphate purchases. Experts said this is possible without causing any major loss in crop output.
Commentary from Argus
In ammonia, prices are largely stable across most markets with buyers resisting higher prices. Some European producers are considering restarts with feedstock prices being stable. The outlook is stable with further gains unlikely unless we see additional unscheduled supply disruptions.
In nitrogen we saw urea prices continuing to fall with sellers reducing prices to re-engage buyer demand. Egypt saw the most liquidity but prices dropped USD$100/mt in a week before recovering somewhat in the back end of last week. We also saw prices move down in the US, Brazil and Southeast Asia. On the bullish side, India issued a tender for urea. This will pull in significant volumes. The overall outlook is for continued volatility on the weak side until Europe engages again. There is little support for the market other than the Indian tender. Several producers are still long for October which is likely to lead to some softness until these positions are liquidated.
In phosphate the sentiment is bearish. DAP offers into India slipped to USD$700/mt cfr compared to USD$720-$750 the previous week. MAP cfr Brazil remains sluggish and prices fell another USD$20-$30/mt. NOLA barge prices fell a little bit. European DAP prices were also down on a lack of demand. The overall outlook is soft with pressure on DAP prices east of Suez continuing. Demand in Europe and Latin America is stagnant.
North America Urea Last Two Weeks
According to Green Markets, last week, The NOLA urea barge range stretched to $590-$635/st FOB from the week-ago $600-$635/st FOB.
Last week, The urea market in Eastern Canada was reported at C$1,090-$1,120/mt FOB in early October, depending on location and supplier.
Earlier this week, NOLA urea prices were reported to be a little stronger. So far this week, no trades were reported below USD$600/st FOB. The week-ago range was USD$590-$635/st FOB.
North America Phosphate Last Two Weeks
Interesting and unexpected price softening following Ian. According to Green Markets, last week, despite removing an estimated 200,000-250,000 mt of phosphate from third- and fourth-quarter production slates, Hurricane Ian’s Sept. 28 landfall along the west coast of Florida was reported to minimally impact the NOLA barge market during the week. Repairs to damaged production facilities in the state were expected to require one to two weeks to complete. Players noted offers unchanged from the week-ago low at USD$730/st FOB on Sept. 30, although values firmed to a USD$740/st FOB floor by Oct. 5. A rumored USD$715/st FOB transaction on Oct. 6 was believed by most sources to be a paper trade. The top of the NOLA DAP range was pegged at USD$750/st FOB for domestically-produced material, below the week-ago USD$755/st FOB top. Posted offers from domestic producers were adjusted to USD$760/st FOB, falling from the prior USD$765/st FOB offer. Most reported the weekly MAP low at USD$747/st FOB, a decline from the week-ago USD$755/st FOB floor. Russian tons reported trading on Oct. 3-5 at USD$730/st FOB were expected to load in November. Sources generally called the top of the market around USD$765/st FOB. Post-hurricane domestic producer offers softened to USD$775/st FOB from the last-reported USD$785/st FOB level. The nearby NOLA DAP barge market was reported in a wide USD$730-$750/st FOB range for the week, falling from USD$730-$755/st FOB the week before. MAP barges were heard at USD$747-$765/st FOB for October, below the USD$755-$765/st FOB range posted previously.
Last week, MAP pricing in Eastern Canada slipped to C$1,250-$1,280/mt FOB in early October. The DAP market at Montreal was reported at the C$1,240/mt FOB level.
Early this week, The NOLA DAP/MAP was trending lower, with new trades reported at USD$720-$725/st FOB versus the week-ago USD$730-$750/st FOB.
Industry Tidbits
- A majority of members of the Brotherhood of Maintenance of Way Employees Division (BMWED) voted to reject the tentative labor agreement reached last month with the six Class 1 railroads, according to an Oct. 10 statement from BMWED. The union represents almost 12,000 rail workers, 6,646 of whom voted against ratification.
- A logjam of more than 2,000 barges and tows is being cleared on the Mississippi River after the U.S. Coast Guard on Oct. 9 was able to reopen two choke points near Stack Island, Miss., and Memphis, Tenn., which were previously closed due to low water levels, Bloomberg Corn and soybean prices in Chicago climbed as the backup of vessels eased.
- Poland’s Grupa Azoty plans to restart its nitrogen fertilizer, caprolactam and polyamide units as of Oct. 12, according to Bloomberg, citing a regulatory filing. Separately, Azoty subsidiary Pulawy also announced a restart of nitrogen production for the same day.
- Tampa ammonia was up only $25/mt for October, to $1,175/mt CFR. With European nitrogen plants slowly starting to come back up, as was announced in Poland on Oct. 12, demand for offshore ammonia for Europe could start to wane in the near term.
