DTN Fertilizer Outlook
Wholesale Phosphate Prices Rise as US Weighs Duties Against Morocco, Russia
The following is a breakdown of wholesale prices and trends of various fertilizers in the month of August and into the first two weeks of September.
AMMONIA
Domestic:
As expected, agricultural ammonia sales activity continues to drag at this time of year. Demand for ammonia in the industrial chemicals sector also remains lower due to reduced demand following COVID-19, which has kept agricultural supply plentiful. Terminals reported little truck movement on agricultural ammonia, except for some nitrogen application on wheat in Texas earlier in the month.
Despite very little change in terms of prices, ammonia in the Corn Belt was assessed higher than in July due to the consideration of prepay instead of spot prices as the primary measure of the market in August. In the eastern portion of the Corn Belt, from Ohio to Illinois, prices were assessed at $285-$340 per short ton (t) free on board (FOB) between spot and prepay. To the west of the Mississippi River in Iowa to Nebraska, prices were $265-$330/t FOB in the west. In July, prompt ammonia prices were assessed at $285-$290/t FOB in the Eastern Corn Belt and $265-$290 in the Western Corn Belt.
Ex-plant prices (the price at the factory, not including any other charges, such as delivery or subsequent taxes) in eastern Oklahoma ended August at $180-$195/t, down slightly from July when tons were said to still be available as high as $220/t. In Iowa, where prices were assessed at $285-$290/t in July for immediate pull, the price of prepay ammonia ended August at $325/t at Port Neal.
Supply cuts from producers in Trinidad helped to balance out relatively low demand in the Americas and resulted in a rise in the Tampa ammonia price. In the short term, our outlook for domestic ammonia prices is flat. There is potential additional support from crop prices if they continue to rise, following gains seen after the derecho windstorm damage in Iowa and hot and dry conditions in much of the Corn Belt.
International:
Yara and Mosaic have agreed on the Tampa price for September at $212 per metric ton (mt) cost and freight (CFR) -- up $7 on the $205 CFR agreed for July and August. The increase was at least partly attributable to recent curtailments by Yara and Nutrien at Trinidad plants following oversupply in nearby markets.
In the Eastern Hemisphere, price increased slightly following continued strength in the region where recovery from the COVID-19 pandemic has been stronger than in the Americas. The supply situation there has tightened further with a major plant in Indonesia down for turnaround longer than expected.
The spot ammonia price in Yuzhnyy, Ukraine, ended August at $180-$185/mt FOB, an increase of $5 from July prices. The Baltic contract price also rose from $176-$180 CFR the previous month to $182-$183.
Following shorter supply and continued good demand, the outlook for global ammonia is firm in the short term.
UREA
Domestic:
The New Orleans, Louisiana, (NOLA) urea barge price ended the month of August at $231-$235/t FOB, up from $215-$220 at the end of July. Urea prices seem to have stabilized in the low- to mid-$230s/t following a month of barges trading, mostly following the international market. Comparatively, prices in the U.S. are lower than in Brazil as there has been little domestic demand, as expected for the time of year.
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Prices along river terminals were around $265-$275/t FOB, up $15-$25 from July, reflecting increases in line with rising prices at NOLA. Markets in the Twin Cities and Cincinnati both settled higher, while higher-than-expected price increases in Tulsa were due also, in part, to dam and lock maintenance on the Arkansas River.
At the factory level (ex-plant), prices are also higher. At Enid, Oklahoma, the August price was reported at $270/t, an increase of about $5 month over month. In Iowa, the Port Neal urea price was also $270/t, up $30 from lows assessed well below other markets in early August.
The outlook on urea is stable in the short term. Most in the market seem to think larger offerings for India are more bullish, as they continue to pull product from eastern markets. And with much of the domestic urea buying still months away, the U.S. is expected to continue following global trends.
International:
August saw two, back-to-back India tenders as government buying agencies struggled to keep up with high farmer demand following a late start to purchases this year due to COVID-19. Seasonal rains continued to support strong fertilizer demand in India, and a lack of exports from China drove prices higher through the month, culminating in the purchase of 1.7 mmt of urea to end August.
The Egypt FOB price rose to $280/mt, up $20-$30 from July prices following higher prices achieved from the India tenders, which until August, had been far below before moving in line with prices at this time last year. Brazil prices strengthened to a lesser degree, ending August around $5 higher to $268-$275/mt CFR as the country is in between crops at the moment and quiet, similar to the U.S.
Overall, the international market was quiet and watched India for indications on where prices would move. Higher prices did indeed follow, though to a lesser degree in the U.S. during this seasonally slow period. In the short term, our outlook on international urea is stable to soft, with India expected to call for more of the global supply in the coming weeks.
UAN
NOLA UAN barges were assessed at $118-$120/t FOB at the end of August, reflecting a small move upward from $115-$120/t FOB in July. Some firmer bids and trades toward the high end of both ranges brought values slightly higher. Overall, the barge market continued to see low liquidity in August, but values reflected moves a few dollars higher than netbacks from Cincinnati barges.
Cincinnati, Mt. Vernon and St. Louis river terminal prices continue to hover around $145-$155/t FOB, unchanged from the previous month. On the Eastern Seaboard, prices were unchanged at $140/mt CFR as the market remains slow and reflects a time of year with generally few imports. Low prices were further supported by producers apparently comfortable to leave prices at fill levels, now nearly two months after initial announcements.
Despite urea typically pulling UAN prices alongside it, prices remain stable. And with little pressure in a slow market, UAN continues to reflect higher affordability on a dollar-per-unit-of-nitrogen basis. If anything, UAN may start to exert some pressure on urea to fall in the short term if prices stay level, with producers said to be committed through October. The outlook on UAN prices is stable.
PHOSPHATES
Domestic:
DAP and MAP barges continued to rise in August on short availability with Moroccan- and Russian-sourced product largely absent from the market while the U.S. weighs countervailing duties against the countries. The U.S. International Trade Commission said in an August announcement that evidence suggests U.S. producers are "materially injured by reason of imports of phosphate fertilizers from Morocco and Russia ... that are alleged to be subsidized by the governments of Morocco and Russia." The next decision in the case will be announced in November by the U.S. Department of Commerce.
At NOLA, DAP prices rose to $355-$360/t FOB and on MAP to $360-$365, both moving $30-$40 higher than in July. Markets along the Mississippi River increased prices to $385-$400/t FOB DAP and $385-$415 MAP, $50 higher than the previous month. The end of August marked a nearly $100/t increase since the import duties investigation was announced.
With importers concerned over potential retroactive import duties on phosphate vessels, DAP and MAP will likely stay in short supply, and buyers will likely have no choice but to pay higher prices if they need the nutrients. The outlook on phosphate prices is firm in the short term with increases likely as imports continue to trail behind the same time period in previous years and the bulk of fall demand is yet to come.
International:
The supply flow of international phosphates continues to stay tight. Disruption of supply from Tunisia has benefitted Morocco, who has turned its attention from the U.S. to Europe and the wider world market. India continues to drive world prices higher, particularly on DAP. Markets in the Western Hemisphere are exhibiting less demand, but with overall supply tight, buyers that require product are bidding up the market against a platform of tight supply.
On tighter supply globally, prices continued to trend higher in August. The price of MAP in Brazil rose to $345-$355/mt CFR, which is $20-$30 from where July values concluded. In India, strong August demand drove the spot price for DAP $15 higher than July, to $339-$341/mt FOB.
The pull of U.S. imports from Australia and Saudi Arabia, coupled with limited exports from China, leaves markets in the Eastern Hemisphere looking tight through the latter stages of their buying seasons. The outlook for international phosphate prices is firm in the short term.
POTASH
Potash barges on the Gulf Coast were assessed at $190-$195/t FOB NOLA at the end of August, unchanged from prices in July as the potash market overall has remained slow and flat. Despite the low interest typical for the season, however, sellers are optimistic for fall demand to take off as potash remains an attractive value, especially considering how high phosphate values have climbed.
River terminal prices on potash were $225-$235/t FOB at the end of the month, flat from where fill values settled in late June to early July. August's one-two punch of a strong derecho windstorm and hot and dry conditions in the Corn Belt, however, introduced some factors that may reduce nutrient needs in some areas where crop conditions have seen declines.
A Canadian producer had been said to raise its Q4 potash price $5-$15 over the summer fill price in August, which could signal higher prices after September. However, fundamentals seem mostly flat in the short term with less supply this fall than the previous year, following Canadian mine production curtailments in late 2019, mostly balancing slow demand. The outlook on potash prices is stable in the short term.
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Editor's Note: This information was supplied courtesy of Fertecon, Agribusiness Intelligence, IHS Markit.
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