Fertilizer Market Report – July 12, 2023

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News of the Week:

Dockworker Strike Cripples Canada’s West Coast Ports; Fertilizer Canada Urges Action from Federal Government

A strike by Canadian dockworkers has impacted exports and imports out of the Port of Vancouver and other West Coast ports, prompting calls from industry and business associations – including Fertilizer Canada – for the federal government to take swift action to end the strike.

Roughly 7,400 British Columbia port workers with the International Longshore and Warehouse Union (ILWU) walked off the job on July 1 after failing to reach a contract with the British Columbia Maritime Employers Association (BCMEA). The maintenance workers are seeking an 11% wage increase in the first year, a 6% increase in the second year, and a C$8,000 signing bonus, the Globe and Mail reported on July 4.

The two sides announced on July 4 that they were pausing negotiations, each blaming the other for the standstill. As of midweek, a total of 51 ships were either berthed or at anchor near Vancouver, Bloomberg reported, citing public port data. Two of seven terminals at Prince Rupert have also been affected, the Prince Rupert Port Authority said.

Almost 20% of Canada’s traded goods flow through both ports, the country’s first and third largest, representing more than C$800 million worth of cargo per day, according to BMO Capital Markets Corp. Canadian Pacific Kansas City Ltd. and Canadian National Railway Co. both announced that they have reduced movement of railcars to West Coast ports.

Fertilizer Canada on July 5 issued a statement calling on the federal government to take immediate action to end the work stoppage, noting that 95% of the potash produced in Canada is exported to global markets, with more than 75 countries relying on Canadian fertilizer exports, the majority of which flows through the Port of Vancouver.

Fertilizer Canada President and CEO Karen Proud on June 30 sent a letter to Seamus O’Regan, Canada’s Minister of Labor, saying the organization was “very concerned” about the impact a strike would have on potash exports. Proud stressed that Canada’s fertilizer industry contributes approximately C$24 billion annually to the country’s economy, with potash second only to gold in export value, contributing about C$5.52 billion to GDP annually.

“Potash is essential to global food security, and we are concerned the strike will jeopardize the delivery of our product to farmers around the world who need it to grow hearty, nutritious crops,” Proud said in the July 5 statement. “The fertilizer industry depends on reliable supply chains to get our products to farmers. This strike is one of many disruptions we have seen and underscores the importance of strengthening Canada’s supply chains.”

More than 120 trade groups also sent a joint letter to Prime Minister Justin Trudeau urging the government to safeguard the supply chain and pass back-to-work legislation, Bloomberg reported.

In April C$4.9 billion of goods were exported from British Columbia, including more than C$1 billion of coal, according to Statistics Canada. Imports totaled C$5.8 billion and included gas liquefaction equipment, vehicles, airplane parts, and biodiesel. Grain shipments have continued as required by the labor code, Bloomberg reported.

(Source: Green Markets)

North America Urea Last Week

According to Green Markets, the latest delivered urea prices in Western Canada were reported in the C$535-C$568/mt range for July-August shipment, down from the prior C$540-C$700/mt DEL. Terminal pricing remained at C$530-C$535/mt FOB for July tons in the region.

The NOLA urea market tightened again to US$295-US$310/st FOB for June-July tons, compared with last week’s US$285-US$315/st range.

Urea remained at US$440-US$480/st FOB in the Eastern Cornbelt, with the high reported at Cincinnati, Ohio, for limited tons. Sources said Cincinnati inventories were nearly sold out during the week. Based on NOLA barge prices, however, some contacts speculated that forward urea prices might slip to the US$365-US$375/st FOB range at Cincinnati when stocks are replenished.

Urea prices slipped slightly to U$425-US$460/st FOB in the Western Cornbelt, with the low confirmed at St. Louis, Mo., for what was described as “thin” supply. Based on current NOLA barge values, however, some sources suggested that forward urea business may drop to US$360-US$370/st FOB St. Louis, and US$380-US$390/st FOB St. Paul, Minn., and Catoosa/Inola, Okla.

North America Phosphate Last Week

MAP was lower in Western Canada, falling to C$815-C$830/mt FOB and C$810-C$825/mt rail-DEL for the latest offers, down from C$850-C$860/mt FOB at last report..

At NOLA, DAP moved up slightly. Market sources put prices at US$445-US$460/st FOB, above the week-ago US$445-US$457/st FOB, with domestic product reported at the top of the range.

MAP prices firmed on reports of limited availability, lifting to US$465-US$485/st FOB from the prior US$465-US$475/st FOB. Sources reported a general feeling of tightness in the NOLA market.

Green Markets Global Macro Comments

India

Industry watchers continue to expect the next urea tender call to come around July 15. Sources noted that because vessels have now been nominated for the last of the tonnage awarded in the Rashtriya Chemicals and Fertilizers Ltd. (RCF) tender, an earlier tender call might happen without fear of sellers withdrawing tons from the RCF lots.

Middle East

With sales books reportedly full through July and into August, Arab Gulf producers are showing no interest in inquiries for spot tons, sources said. The recent Fertiglobe deals, priced at US$295-US$312/mt FOB, remained the basis for public pricing in the region.

As the week closed, Egypt’s MOPCO closed two 5,000 mt granular urea sales, priced at US$365/m FOB and US$370/mt FOB. The business came on the heels of aggressive buying last week that ran the price up by more than US$40/mt. The week started quietly, with office staff returning to work from the Hajj holiday.

Brazil

Prices moved up to US$315-US$330/mt CFR. Trade discussions at the beginning of the week indicated values moving as high as US$350/mt FOB, but after some back and forth, deals were settled at US$330/mt CFR. Prices are expected to move up, however. Demand appears to be strong, while limited tonnage is being offered.

Sources said there is still time for farmers to finish up their urea purchases for the Safrinha season. More are expected to step up now that a price floor appears to have been reached and prices are moving upward.

China

Sources noted July export prices bumping up slightly. Granular urea was reportedly available at US$310-US$315/mt FOB, while prilled material was pegged at US$300-US$310/mt FOB. August prices for both grades of urea are expected to settle below US$300/mt FOB, however, with traders pointing to limited offshore selling opportunities and growing reserves within the country.

Industry Tidbits

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