Fertilizer Market Report – October 25, 2023

Urea Western Canada vs. Urea NOLA Price Spread Increasing Again

Fertilizer Market Report 2023/10/25

This week we are highlighting one of our favourite measures which is the currency-adjusted spread between Urea Western Canada Delivered Prices and the Urea NOLA FOB prices. We focus on this spread because it should be roughly the cost of urea NOLA plus transportation up to Western Canada.

As you can see in the chart, since January 2021, this spread has been slowly increasing on average. The spread has widened in recent times again since early September, closing last week at C$213/mt versus the five-year average of C$170/mt. The NOLA market has been quiet for a few reasons including traders waiting on the pricing of Indian tenders and weak demand in the US at farm level, forcing the market to search for a price level.

We believe that the NOLA price will begin to increase again in early 2024 which should support urea prices in Western Canada. We believe that the market in Canada is not set for a major price correction.

News of the Week
Fertilizer Canada Calling for Prompt Resolution to St. Lawrence Seaway Strike

The closure of the St. Lawrence Seaway is a topic for producers to watch especially in Eastern Canada. The St. Lawrence is a vital passageway for the movement of all three major fertilizers, N, P and K. If this does not get resolved quickly, fertilizer supply for spring 2024 could be impacted. We will be monitoring the situation.

Fertilizer Canada Calling for Prompt Resolution to St. Lawrence Seaway Strike – Fertilizer Canada

India Urea Tender Closed October 20 Had 4.1m Tonnes Offered

The lowest price in the tender was US$400/mt West Coast and $404/mt East Coast totalling 605,900mt. Recall that the prevailing view is that India requires 3.1m tonnes through March 2024 to satisfy demand. IPL had to counterbid some companies to match those low prices. It is still a wait-and-see situation with regards to whether China will release more tonnes than originally expected and drop prices.

North America Urea Last Week  

Urea prices in Western Canada were down slightly to C$740/mt FOB and in a range of C$740-C$770/mt DEL, according to Green Markets.

We heard of a farmer purchasing urea tonnes at C$775/mt DEL in south Saskatchewan.

According to Green Markets, last week, urea NOLA price range was down to US$353-US$365/st from the previous week’s US$355-US$397/st. The cause of the weakness is lack of demand at farm level.

North America Phosphate Last Week

The latest MAP offers in Western Canada were up WoW to a range of C$1,050-C$1,060/mt DEL from the previous week’s C$1,035-C$1,050/mt DEL, according to Green Markets. Recall our topic in last week’s fertilizer newsletter. We believe that high input prices and potential supply disruptions will likely keep MAP prices elevated relative to historical averages here in Western Canada.

We are seeing November and December retail offers at C$1,070/mt near Regina.

According to Green Markets, the latest MAP NOLA prices were down WoW toUS$600-US$635/mt FOB from the previous week’s US$615-US$650/st FOB.

Industry Tidbits