Fertilizer Market Report – May 10, 2023
Mandatory Fertilizer Target Rejected by All-Party Agriculture Committee
The big news past week was the all-party agriculture committee in Ottawa recommending against mandatory fertilizer emissions reduction. According to a report in The Western Producer, witnesses told the committee that even if the target to reduce emissions from fertilizer use by 30% from 2020 levels by 2030 is voluntary, it is another demand on producers at a time of uncertainty.
The recommendation was part of the recent report from the standing committee’s food security study, Feeding the World: Strengthening Canada’s Capacity to Respond to Global Food Insecurity.
Steve Webb, who heads the Global Institute for Food Security in Saskatoon, was quoted by the newspaper as saying the target didn’t provide an accurate picture of what farmers have already done. The report also noted that Tyler McCann, managing director of the Canadian Agri-Food Policy Institute, said the governments were placing too many demands on food systems.
Among the 22 recommendations placed by the agriculture committee, one specifically asks the federal government to “recognize that Canadian agricultural producers are leading the world in the efficient use of fertilizers and that it not proceed with any mandatory fertilizer emissions reduction policy that would jeopardize farmers’ yields”. The committee instead calls on the government to encourage them to implement best nutrient practices such as the 4R Program, and look at opportunities to fund research into innovative fertilizer use.
The report also addressed supply chain concerns, including ways to reduce bottlenecks that are limiting the flow of food supplies, and encouraging investment in rail systems to move goods at lesser cost and lower carbon footprint.
North America Urea Last Two Weeks
According to Green Markets, urea pricing in Western Canada last week firmed to C$665-C$730/mt FOB and C$720-C$765/mt DEL, up from the previous C$630-C$650/mt FOB and C$670-C$700/mt DEL ranges.
Prompt urea barges continued to garner a significant premium last week at US$440-US$450/st FOB versus those for full-month May. The market for full-May was reported at US$355/st FOB early in the week, but fell to US$320-US$325/st FOB by late Thursday.
North America Phosphate Last Two Weeks
MAP market in Western Canada firmed to C$1,070-C$1,110/mt FOB last week in Western Canada, up from C$1,060-C$1,080/mt FOB in April. Delivered MAP moved to a reported high of C$1,150/mt, up from C$1,080-C$1,115/mt DEL. “Prices continue to push higher, and quickly, as the market seems to be vastly under positioned, just as the US was a few weeks ago,” said one contact.
NOLA phosphate barge prices were reported softening from week-ago levels. Players noted offers for full-May DAP barges dropping to US$530/st FOB, echoing price declines seen in the MAP market one week before, while traded values tracked at a flat US$520/st FOB, a sharp decline from the week-ago US$646/st FOB floor. Prompt offers reported at US$600/st FOB did not attract public bids, sources said.
MAP pricing was heard slipping to US$485/st FOB, down from US$499/st FOB in the prior report, while players put the top of the traded range at US$500/st FOB. New offer levels for May barges were generally reported in a US$510-US$530/st FOB range at midweek.
Sources attributed the falling values to a number of factors, including fears of inventory spillover into June, possible indexing efforts related to an expected strong May-June import lineup, and ongoing flood-related freight holdups on the Upper Mississippi River.
MAP barge pricing softened to US$485-US$500/st FOB, off from US$499-US$630/st FOB at last report.
Green Markets Global Macro Comments
India
Some traders are still reported to be looking for urea to cover awards from the March Indian Potash Ltd. (IPL) tender. There are reportedly at least five vessels that still need to be nominated to fulfil the awards.
With urea prices rising, some have said that those still looking for product will find the US$330-US$335/mt CFR tender price to be too low for the current market. China, the Arab Gulf, and Indonesia are now all in the US$330s/mt FOB and higher.
With about 225,000 mt still to be booked and loaded by the end of the month, no new tender call is expected until the last week of May, at the earliest. Even with more domestic production coming online, traders said India will have to call another tender to ensure a plentiful supply of urea.
Brazil
Prices softened to US$340-US$345/mt CFR. The shift represents a minor adjustment, rather than an indicator of a major change in the market. Urea from sanctioned countries such as Venezuela and Iran has been putting downward pressure on prices. Sources said that offers for this product have been quoted as low as the upper-US$320s/mt CFR, but with no deals finalized at that level.
China
The pricing indications are being described as all over the map. Fudao reportedly sold a cargo of granular urea at US$335-US$338/mt FOB. Even as confirmation of the Fudao business arrived, other producers claimed their prices to be firm in the low-US$350s/mt FOB. However, no deals could be confirmed at that level.
The Fudao price put Chinese urea back in line with the Arab Gulf price in the US$330s/mt FOB. Prior to the imposition of export controls by China, the Arab Gulf and Chinese markets were usually priced within a few dollars of each other. The move to limit exports from China boosted the global price for Chinese product, however, while lowering it for the domestic market.
Middle East
The area has slowly returned from the Eid celebrations, with no new spot deals reported. The limited interest in buying or selling during the week reportedly left prices steady at US$330-US$332/mt FOB.
Egyptian producers took advantage of European buyers looking for top-off tons for the spring season. Kima settled a 3,000 mt sale at US$366/mt FOB at the close of last week, while MOPCO slipped in with another 3,000 mt at US$367/mt FOB as the current week opened. Both cargoes were slated for shipment in the first half of May.
Industry Tidbits
- Farmers being asked to show their 4R bona-fides
- Comment from CF Industries quarterly earnings report: “Despite downward pressure in the global nitrogen market compared to the unprecedented pricing environment in 2022, industry fundamentals remain positive and forward global energy curves suggest attractive margin opportunities for our cost-advantaged network for the foreseeable future,”
- Yara’s nitrates and NPK production curtailments are now being discontinued due to strong demand in Europe, Yara President and CEO Svein Tore Holsether told participants in an April 28 presentation of first-quarter earnings.
- Mosaic delivered another strong first quarter. According to Mosaic President and CEO Joc O’Rourke, “While fertilizer prices have pulled back from last year’s peak levels, they remain constructive. At the same time, North American fertilizer demand has accelerated as growers are being incented to maximize yields.”
- Wildfires prompt state of emergency in Alberta
- Canada moves ahead with gene editing for crops
