The following is a recap of wholesale fertilizer price trends and market developments for the month of November.
November was a hot month in the U.S. ammonia market as distributors struggled to find enough truck drivers to deliver what traders called another record year for ammonia applications.
Corn Belt ammonia volumes rose quickly to as high as $1,400 per short ton (t) free on board (FOB -- wholesale without transport costs) during a time when most ammonia price points had crossed the $1,000 mark by the end of November. Ammonia sales were extremely strong given its value per unit of nitrogen relative to urea and UAN, which also saw a rapid price increase of late. By the end of October, the most expensive ammonia wholesale markets had reached $1,100 per t.
Tight supplies were further shown by several ammonia parcels purchased by Nutrien from companies including U.S.-based Interoceanic (IOC) and Ma'aden in Saudi Arabia, which the company used to supplement its own ammonia needs.
Activity slowed ahead of Thanksgiving, along with activity for most fertilizers, but forecasts for another wide-open December for ammonia applications kept prices bullish and rising.
All signs are currently pointing toward higher ammonia prices in the short term.
It was a record-breaking month in the ammonia market, with an all-time high agreed at Tampa for December and four figures paid for the first time on record for a duty-free cargo in northwest Europe.
In late November, Yara and Mosaic settled at $990 per metric ton (mt) cost and freight, or price including delivery (CFR), for December shipments to Tampa. The higher settlement was up $165 on the $825 CFR Tampa agreed for November. This is, according to Fertecon price history, the highest price ever agreed at Tampa, far exceeding the $931 CFR reported September 2008.
Ammonia in the Baltic Sea also saw significant increases last month to $820-$822/mt FOB, compared to $656 in October, the highest price seen since 2008. Black Sea ammonia increased to a lesser degree of $100/mt to $697-$805 FOB.
The outlook for global ammonia is for Western Hemisphere prices to stay firm and reach record highs, while Asia will follow with tight supplies.
Urea trading was extremely volatile in November, varying by as much as $65/t week-to-week as pressure from the international market struggled to support values in a mostly quiet domestic market.
New Orleans, Louisiana, (NOLA) urea barge trading finished the month at $800-$815/t FOB, more than $100 higher from end-October values. Barge trading had slowed significantly around the time of Thanksgiving but remained stable on values after spiking from $735/t FOB to $800 in mid-November.
Terminal prices, meanwhile, rose to $835-860/t FOB at open sections of the Mississippi River, in line with NOLA increases at roughly $100 over October.
Regarding ex-factory urea without any transport costs, Port Neal, Iowa, was offering volumes at $900/t after completing its most recent turnaround. In eastern Oklahoma, prices were heard from $835-$840/t FCA at Enid at the end of the month, with the closure of the Upper Mississippi River partly attributable to the gap in pricing from north to south.
After these large price hikes, buyers turned toward spring urea in hopes of hedging against potential further increases, being that the U.S. remains a large discount to the global market, and tightening supplies with Russia and China are restricting exports to other countries.
In our view, U.S. urea prices will remain stable with the potential to firm if the international market continues to exert pressure on NOLA values, especially in view of an expected export vessel to load in January after a flurry of buying in early December.
Global urea trading slowed in November ahead of the conclusion of the latest Indian urea purchase tender, which ended with the country taking 1.58 million metric tons (mmt) from global suppliers. Once the tender finished, the market once again went quiet with producers having made good sales and awaiting the country's next tender.
Brazilian urea ended November at $870-$890/mt CFR on slower activity in the second half but still ended much higher from $795-$810 in October. Egyptian product saw growth, as well, but to a lesser degree, rising about $40-$70/mt from the previous month to $920-$945/mt FOB.
A fresh Indian tender is expected in December for shipment through to January, as the country continues to see low urea stocks. Trade is therefore likely to remain muted until India steps back in again, with prices seen as stable to firm in the short term.
UAN saw lots of activity in November, including an affirmative countervailing duty ruling by the U.S. Department of Commerce. The department will finish its antidumping investigation on Jan. 26, 2022, at which time current subsidy rates of 9.6%-9.8% for Russian producers and 1.8% for Trinidad could be adjusted.
CF was also active in the market last month, offering prompt UAN 32% at $575-$580/t FOB river terminals and December through February shipment from Donaldsonville at $545/t FOB, with the latter $5-$10 over October NOLA levels. CF's Louisiana offer quickly became the new reference point for UAN replacement costs and NOLA barge shipments going forward, and we adjusted our price assessment accordingly.
River terminal volumes would later climb to as high as $600/t FOB from other sellers, $10-$25 higher from October offers with Cincinnati UAN maintaining a $5 premium over other locations. Prices would remain stable through the second half of November over Thanksgiving.
The East Coast market increased, meanwhile, with achieved prices at $660/mt CFR ahead of the countervailing duties decision up $35 from October's assessment.
UAN appears well supported into the first and second quarters of 2022, leaving our short-term outlook firm with more price increases expected in line with strength in urea, ammonia and other nitrogen sources.
Trading activity on phosphates petered out slowly over the month, as well, on most fertilizers closer to Thanksgiving. Interestingly enough, over the course of the month, the premium between DAP and MAP began to shrink.
NOLA DAP was assessed at $730-$745/t FOB in November, up from highs at $675/t FOB in October. MAP prices were reported mostly flat, however, at $760-$770/t FOB -- only $10 higher from the previous month, while supplies stayed generally scarcer than DAP.
Terminal phosphates ranged from $740-$770/t FOB DAP and $820-$840/t FOB MAP, with prices generally moving $25/t for both products month-over-month.
Upper Mississippi River terminals also maintained higher offer levels for phosphates with barge transit now closed for the season and MAP volumes, in particular, very tight.
Midway through the month, Mosaic offered barges for phosphate fill for first-quarter 2022 shipment at $720 DAP and $740 MAP before raising prices for nearby barges.
The outlook for U.S. phosphates pricing is firm in the short term, supported by higher prices achieved on international business outside the country, which is keeping values supported and imports in less supply.
Demand destruction is being reported in Asia and the Middle East, where the lack of Chinese exports has left the window wide open for other product to be sold at ever-increasing prices. Container lots of DAP were sold above the $1,000 CFR mark into Asia, and as a result, many are predicting a 30%-50% drop in consumption predicted in various markets.
The Americas saw little significant movement in prices for several weeks, being between seasons. But MAP in Brazil still rose $5-$20/mt from October to $815-$830/mt CFR on rising global prices. Indian DAP also saw some increases to $799-$810/mt CFR, up from $780 in the month prior, with price gains limited by relatively few bids in the country and restricted availability.
The price outlook for global phosphates remains firm, with the Asian-centered pull of tons driving prices higher in Europe and other surrounding markets.
Potash movement started the season strong with favorable application conditions, but deliveries would eventually trail off as buyers secured only immediate needs while hoping for lower prices next spring, or perhaps with the intention of reducing potash applications due to high fertilizer prices relative to crops.
NOLA barges in November were stable from the previous month at $685/t FOB.
River terminal offerings were flat at the $715-730/t FOB range from October levels.
As reported earlier, the big market news in November came from Mosaic, which announced that it would hit full potash production by the end of first-quarter 2022, including a ramp-up of production at Esterhazy K3 in Esterhazy, Saskatchewan, Canada, and start-up at Colonsay, near Saskatoon, Saskatchewan, Canada, which was running at its expected rate of approximately 100,000 tons per month to about 1 million tons a year in early November.
Mosaic also said it had already sold approximately 90% of its production through the end of 2021.
Intrepid, meanwhile, reported that wet conditions at its Carlsbad, New Mexico, facility had disrupted its evaporation-process potash production and reduced available volumes in time for fall usage.
In the short term, U.S. potash prices are expected to remain stable with the potential to firm as the U.S. continues to engage in joint sanctions with the UK, EU and Canada against the Belarussian potash industry. Reduced Belarussian imports could be offset by increased production rates from North American-based producers. Flooding that prevented exports at the Canadian port of Vancouver was also said to have eased potential price increases due to short supplies in the northern U.S. and western Canada.
Editor's Note: This information was supplied courtesy of Fertecon, Agribusiness Intelligence, IHS Markit.
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