Fertilizer Market Report – September 13, 2023
Canadian Grain Commission Abandons Proposed Changes to Grain Grading Guide
The Canadian Grain Commission has repealed its proposed changes to the Official Grain Grading Guide for the 2023-24 crop. The Commission was going to align the primary and export tolerances for test weight and total foreign material for multiple wheat classes, which, the CGC felt were more relaxed at grain elevators compared to export standards. However, the proposal was met with strong opposition from various stakeholders, including the Saskatchewan Wheat Development Commission and Agricultural Producers Association of Saskatchewan, which pressured the CGC to reverse its decision.
Morocco Earthquake Raises Concerns for Global Phosphate Industry
The Morocco earthquake has raised concerns not only for its humanitarian impact but also for its potential consequences on the global phosphate industry. Currently, the primary focus is on saving lives, and there’s no official information available regarding any damage to industrial infrastructure. Unofficial reports suggest that phosphate operations have not been significantly affected.
The earthquake’s epicenter is approximately 125 km from one of OCP’s important mining sites to the east of Ben Guerir and about 140 km from another site just outside Youssouffia. These mines are key sources of raw materials for OCP’s primary phosphoric acid and TSP downstream processing facility in Safi, as well as for exports. Looking northward, the epicenter is around 220 km from the nearest point on the Khouribga/Jorf Lasfar rock slurry pipeline, 260 km from OCP’s flagship mining operations in the southeastern region of Khouribga, and approximately 250 km from Jorf Lasfar. To the west, the rock development area at Meskala is roughly 250 km away.
In a LinkedIn post, Profercy said those familiar with OCP’s mining and processing facilities understand the intricate and interconnected nature of phosphate rock mining equipment and operations. Safety and integrity concerns surrounding these operations are significant. Therefore, the potential for ground-level disturbances and the risk of subsequent aftershocks are critical issues that require careful consideration.
Commentary from Chris Lawson, Head of Fertilizer at CRU from interview on BNN
CRU is indicating that its view is that fertilizer prices have hit bottom as demand improves across the world. Nitrogen consumption will continue to grow and demand for phosphate and potash looks set for a modest rebound. Morocco earthquake may affect phosphate but the epicenter was far from industry facilities. Urea prices were up last week partly due to the Chinese government stepping in again and increasing export barriers after easing those barriers over the last few months. This caused a bit of a shock in the market at a time when there is some seasonal demand returning. With regards to Morocco (second largest phosphate producing company globally) and the impact on phosphates from the earthquake, OCP has not been impacted as far as CRU knows but there was some port disruption over the weekend that lasted about 18 hours. With regards to potash prices, CRU believes that we are at a bottom, but does not believe that the rebound will be too sharp. CRU is expecting demand to increase in 2024 by about 6% year-on-year but demand did take quite a hit in 2022. That was the primary reason as to why prices collapsed over the last 12 months. The issue with the Russian conflict and the Belarus sanctions is that both countries have been able to get much more than expected out and that’s particularly the case with Belarus. It was able to reroute its trade through Russia and it is exporting much more than the market expected. That is part of the reason we are seeing Canadian producers pull back on expansion plans.
Watch the video: BNN (bnnbloomberg.ca)
North America Urea Last Week – Markets Firm on Surprise Indian Tender (prices provided by Green Markets)
Urea prices in Western Canada rose to C$755/mt FOB up from the previous week’s C$695-C$720/mt FOB range, according to Green Markets.
Sources said one large retailer in Southern Saskatchewan pulled all offers on news of the unexpected Indian tender.
Urea NOLA prices increased to US$450/st FOB on Sept. 4 for September tons, much higher than the previous week’s US$340-US$376/st FOB range, according to Green Markets. Urea NOLA finished last week in a range of US$390-US$450/st.
North America Phosphate Last Week
According to Green Markets, the latest MAP offers in Western Canada were quoted at C$1,000-C$1,050/mt DEL, up from the previous week’s C$960-C$990/mt range.
International Commentary
Two surprises in the international urea market resulted in higher prices globally. India surprised the market with a urea tender that was expected later in September. A larger-than-expected shortfall in Indian urea inventory pushed IPL to tender early. China also announced new restrictions on exports, especially to India due to supposed political issues between the two countries. Chinese urea producers are required to have enough supply to meet domestic demand in the coming months. The combination of these two events forced the urea sellers to step back resulting in higher prices.
