FERTILIZER MARKET REPORT November 4, 2022

More turbulence in markets

Commentary from Green Markets

India

The IPL tender settled with the company awarding 1.528 million mt. This amount reflected 57% of the offered tonnage, which is above the average take of most tenders. The urea will be sourced from a variety of locations. Sources noted the lack of Indonesian and Vietnamese urea in the mix. Reportedly, at the regional IFA meeting in Singapore just before the tender was called, representatives from Indonesia were assuring traders that they would have up to 250,000 mt of urea available for the tender. After the tender was called, however, sources said those same representatives claimed a surge in domestic demand made it impossible to supply product. Reportedly, the Vietnamese agents were always hesitant about committing to support offers into the tender, noting that they might be able to get a better price from other customers. In the end, they did hold back. The earlier estimates that IPL would take close to 2 million mt were based on Vietnam and Indonesia participating in the tender. Without the approximately 350,000 mt estimated from these countries, IPL had to settle for 1.528 million mt. While the awarded tonnage matches the target quantity set in the tender documents, sources said all this amount will do is keep Indian supplies from falling too far behind expected demand. Reportedly, there were hopes that a larger take could provide enough tonnage to get ahead of demand and allow for a longer wait before the next tender. Now, said sources, the next tender will need to be called close to the Dec. 5 shipping deadline of the IPL tender.

Brazil

Urea prices in Brazil keep softening, with the landed price now at USD$630-$640/mt CFR. Reports are also circulating that limited tonnage from sanctioned countries such as Venezuela and Iran are being offered at USD$610/mt CFR. Buyers are looking to take advantage of the softening market and the presence of cheaper material. Reportedly, bids are now starting at USD$600/mt CFR, with expectations that in the near future the price will drop to sub-USD$600/mt CFR levels. Some hesitation in buying is not only related to the strict needs of the farmers. Sources said both sides are watching the results of the Oct. 30 presidential election as closely as they are the grain futures markets. Rondonopolis urea pricing is reported down to USD$735-$790/mt FOB ex-warehouse. Sources said once the elections are over, the market will react to the planting expectations instead of the political debates and possible policy fluctuations.

Egyptian Producers’ Quick Price Turnaround

According to Profercy, with Egyptian urea producers having cut their offers to find liquidity on Tuesday, granular values have since rebounded, climbing USD$70pt since in less than 24 hours on Wednesday.  Producers have now committed around 160,000t of granular urea over the past 48 hours, most of which is for shipment in November to European destinations and Turkey. One 50,000t lot has been sold to a non-European market. The latest business by MOPCO at USD$615pt fob has taken Egyptian granular urea values to just USD$10pt below those achieved at the end of last week for November shipment, and has extended the producer’s order book into early December.

Commentary from Argus

In ammonia, last week was a very slow week. Spot liquidity was very thin and therefore prices turned down. The Tampa monthly price was down USD$25/mt and European prices fell to USD$1,160-$1,180/mt cfr. In the east, supply is subdued and Chinese supply is priced competitively. The overall outlook is still slightly bearish near term.

In urea, prices fell across most geographical regions, particular weakness was witnessed in Europe, North Africa and the Americas. The Americas markets are seeing plenty of supply and weak demand. The overall outlook remains volatile due to uncertain gas prices.

In phosphates, India came back to the market. OCP sold 220,000mt into India which supported DAP cfr and prices increased. Chinese DAP prices were maintained on a sale into the Philippines. MAP in Brazil fell again to USD$600-$640/mt cfr and another cargo was re-exported out of Brazil. In the North American market barge prices fell for DAP and MAP. The overall outlook is for the east to remain stable due to that heavy round of buying in India but eventually that demand will be satisfied and India will go into the offseason in terms of imports. Then expect the market to go soft globally on lack of seasonal activity which will pressure prices in the east and west.

North America Urea Last Two Weeks

According to Green Markets, last week, NOLA urea barges were reported in the USD$540-$570/st FOB range, down from the week-ago USD$580-$600/st FOB. One source attributed the softness to the river situation. “Who would want a urea barge with nowhere to ship?” he asked. Nitrogen products positioned upriver were reported to be faring much better. Another player, however, added that river conditions and water levels at some major terminals were starting to improve, though slowly.

This week, The NOLA urea market dropped to as low as $508/st FOB in early-week trading, down from the week-ago $540-$570/st FOB.

Last week, the urea market in Eastern Canada was reported at C$1,060-$1,120/mt FOB in late October, depending on location and supplier, down C$30/mt from last report at the low end of the ranges. Delivered urea prices in Western Canada were reported at C$1,110-$1,130/mt for the second week in a row.

North America Phosphate Last Two Weeks

According to Green Markets, last week, With the upper Mississippi River now effectively closed to new barge sales loading from NOLA, players reported falling prices for the week. Offers for prompt and nearby loading reportedly fell to at least USD$700/st FOB for DAP, down from the week-ago USD$720/st FOB low. Offers for domestically produced DAP barges continued to be quote at USD$775/st FOB, with no sales reported. Some tipped the current NOLA DAP market closer to the USD$695-$705/st FOB range, although a lack of bidding during the week failed to confirm those levels as of Oct. 27. Sources noted trading of moving barges at a USD$727/st FOB NOLA-equivalent, suggesting an ongoing market preference for upriver cargoes. Nearby MAP barges fared worse than DAP, sources said, with offers for prompt NOLA tons reported at a USD$695/st FOB low, off from the prior USD$725/st FOB floor. Domestic MAP barge offers were posted at USD$775/st FOB, unchanged from one week earlier. In addition to the impending river close, low water levels on the Mississippi River continued to snag river transit, further pressuring NOLA tons. The adverse river conditions were expected to extend into the second week of November at a minimum. The NOLA DAP barge market was noted softening to the USD$700-$720/st FOB range for the week, down from USD$720-$730/st FOB reported previously. MAP barges were reported at USD$695-$725/st FOB, below the prior week’s USD$725-$740/st FOB range.

This week, early-week price ideas were off slightly for NOLA DAP/MAP compared to the week-ago USD$700-$720/st FOB and USD$695-$725/st FOB, respectively.

Last week MAP pricing in Eastern Canada slipped to C$1,200-$1,280/mt FOB in late October, down C$50/mt at the low end of the range. The DAP market at Montreal was quoted at the C$1,180/mt FOB level, down from C$1,240/mt FOB at last report. Delivered MAP prices in Western Canada were reported at C$1,270-$1,280/mt for the second week in a row.