World ammonia market prices moved slightly lower through July, trading from Yuzhnyy, FSU, at $250 to $275 per metric ton fob early and at $250 to $260 late. There was a slowdown of activity in the ammonia market toward the end of the month which was partly caused by the wait-and-see approach taken by buyers while ammonia maintenance turnarounds were carried out at several export plants in Russia. Demand in India is still robust but downward pressure on prices continues. Middle East tons going to India traded at $310 to $335 mt fob early and prices fell to $295 to $320 late. In a predominantly soft market buyers are in no rush to enter the market as the possibility of further price reductions in the world ammonia market remains high. Improved operating rates in the caprolactam sector are reported in Thailand, Japan and South Korea, but even that increase in demand could not keep delivered prices from falling to the $345 to $365 range late in the month down from $352 to $375 early. We look for world ammonia market prices to run flat with undertone of softness. Domestic ammonia prices also moved lower in the month as sales became seasonally slow. Cash prices at central Illinois terminals traded down from $385 per short ton early to $365 late. Large distributor asking prices for fall prepay tons were in the $400 to $410 range late in the month, but wholesaler/dealer interest at that level was almost non-existent. Low corn prices are hurting farmer attitudes and there is much uncertainty surrounding the UAN summer fill price. The fall in urea prices also has contributed to uncertainty. For the short term, we look for domestic ammonia prices to run flat with an undertone of softness.
The world urea market stumbled lower through July with export prices dropping from all major origins. Yuzhnyy prilled urea prices moved from $183 to $185 mt early to $171 to $174 late. Middle East granular prices fell from $159 to $169 early to $152 to $164 late. Toward the end of the month IPL, India, ran a tender and upset the market with the intention to buy only 420,000 metric tons. Normally Indian buyers secure well over 1 million metric tons in their tenders. The second shock to the world market came when IPL purchased only 300,000 mt from the tender at $179 to $180 mt cfr, which was $10 below market expectation. All the product is to come from Iran. While Chinese prices were uncompetitive in the tender, there were signs of prices softening there this week as producers' price ideas moved down and traders showed willingness to establish shorts. Early in the month, Chinese export tons sold at $200 to $204 fob and at month's end were available at $189 to $190. Prices for North African (Egyptian, Algerian) material moving to Western Europe also fell, selling at $190 to $197 fob early and getting sold at $187 late. The fact that Chinese suppliers chose not to chase the IPL business aggressively could be an indication world urea prices are getting low enough to cause some financial pain to producers. While some high cost export producers may begin to cut output, there remains so much new urea production recently coming into the market that any significant price move to the upside is, we believe, quite unlikely. We look for world urea market prices to run flat with undertone of softness in the short term. In the domestic market, NOLA (New Orleans, Louisiana) granular barge prices moved from $170 to $176 early to $165 to $172 late. The high end was for August barges. At mid-month there were some trades in the low $160s, but prices firmed late as some large buyers began layering in fall needs. Trading in urea and other fertilizers at the South Western Fertilizer Conference (SWFC) held in San Antonio July 17-19 was described as "beyond dead." As in the case with ammonia and UAN, wholesaler/dealers are waiting for some demand indication from farmers and low-crop prices are keeping farmers' attitudes negative. Wholesalers in many markets mentioned the new corn crop is in excellent condition, which does not bode well for higher corn prices. The slightly higher NOLA barge numbers seen for August reflect the need by some large buyers to begin layering product for the fall run. This could lead to some slight firmness in the short term, but with a steady supply of imported product landing into a slow market and the general oversupply in the world market, domestic urea prices seem likely to run mostly flat well into the medium term.
NOLA UAN barge prices moved down $5 through July, landing in the $135 to $140/32% range late. A late start to the corn topdress run allowed St. Louis UAN prices to hold steady at $210 to $215 through the month. Since everyone interested in UAN at the SWFC was waiting for the CF UAN summer fill program price to come out and it did not, there was virtually no buying which took place. Speculation on the offering price ran from a low of $110 to a high of $145 to $150. Many wholesalers/dealers expressed disappointment with last year's program. Given buyer wariness and pressure from lower urea and ammonia prices, we expect further declines in domestic UAN prices in the short term.
World DAP/MAP prices were flat to slightly lower through July. Moroccan product traded flat in the $341 to $355 range while Tampa export prices moved down $5 to $340 fob on several small sales to South American customers. Late in the month EuroChem placed two cargoes in Brazil in the low/mid $350s cfr. Indian buyers bought a few new Chinese cargoes, but even so, Chinese DAP/MAP prices move lower, falling from $330 to $335 fob early to $323 to $331 late. Most producers are now comfortable for August as a result of buyers covering a large proportion of their near-term requirements late in the month. While some producers are likely to sit back and wait for buyers to raise their price ideas, given the high level of forward commitments, they may well end up disappointed. We expect world DAP/MAP prices to run flat with undertone of softness in the short term. Domestic DAP prices at NOLA traded at $305 to $310 early and were off $2 to $5 to $303 to $305 late. DAP/MAP trading at the SWFC was minimal at best. Some larger buyers need to begin layering in inventory for the fall run, but remain quite cautious about inventory build absent buying indications from farmers. As in the case of the nitrogens, low-crop prices are keeping farmer demand muted at present. While the world S/D balance for phosphates tightened late in the month, much short-term demand has now been covered. We look for domestic DAP/MAP prices to run flat with undertone of softness in the short term.
NOLA potash barges traded in the $170 to $175 range both early and late in July. Wholesalers/dealers continue to show little interest in making new potash purchases. Potash is still offered on consignment, but, producers are now cutting output to try and halt the slide in prices. We look for domestic potash prices to run flat with undertone of softness in the short term.
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