Here is a breakdown of wholesale prices and trends of the various fertilizers:
International: Ammonia prices continued trending upward in December behind healthy demand from phosphate producers as well as ongoing disruptions to merchant ammonia supply at key exporting hubs.
Middle East FOB (free on board -- the buyer pays for transportation of the goods) prices ended December at $315 to $340 per metric ton (mt) FOB, up slightly from $305 to $340 in November. Moving forward, the supply situation in the Middle East should begin to improve as turnarounds come to an end and the OPZ plant in Ukraine possibly restarting in late January.
The Tampa CFR (cost and freight) contract price between Yara and Mosaic moved up another $10 to $355 mt for January. Some resistance is expected to this price level in U.S. domestic ammonia markets. However, domestic DAP prices remain firm, and therefore, phosphate producers can probably live with the increase, especially as sulphur prices plummet.
The market is now entering the winter season where global import activity slows down somewhat, and buyers are liable to adopt a wait-and-see approach. With prices already appearing to be at a supply-side driven peak, we expect this seasonal slowdown in demand will provide some downward pressure on prices through the short term.
Domestic: The fall direct application season came to an end in December after seeing an extended application run in many regions due to supportive weather. Early in December, CF announced price increases of $20 to $30 across its terminal network for winter-fill tons and another $40 for spring prepay. Other producers matched CF's offers for their territory. Winter-fill and spring prepay buying commenced and ended before the holidays.
Prompt ammonia prices are moving up to match prepay values. In the Corn Belt, prompt prices were last heard in the $365 to $430 per ton (t) range, up from $325 to $360 at the end of November. Ex-plant pricing in Oklahoma firmed up to $390/t, the same as spring prepay. Producers are not posting offers for various terminals across the Corn Belt, which is seen by the market as a sign of limited availability.
The domestic outlook is stable to slightly firmer. With fill buying in the rear-view mirror and prepay buying slowing down, we expect the absence of buyers in the market will mostly neutralize fertilizer producers' attempts at pushing prices up much higher.
International: The urea market continued its downward trajectory early in December, still feeling the aftershocks of the scrapped India tender. However, by mid-December, prices started to stabilize and the Egyptian and Middle East benchmarks even managed to see an upward bounce.
India came back with another tender at the end of December and awarded 387,000 mt to Iran at a price level around $260 CFR. Ahead of the tender, offers into key markets moved up across the board. There was very little in the way of liquidity, however, as most participants waited to see how the India tender played out before making further moves.
China has also been a focal point for the market. In December, there was news that the majority of gas-based production in China was shut down and the natural gas diverted to power generation for domestic heating. China was also seen importing urea from the Middle East. There is now speculation that China may reintroduce an export tax. The situation is being read as a bullish signal by the market.
Middle East FOB prices were up to $225 to $250 mt by the end of December compared to $215 to $230 in November. Price support stemmed from the return of India and a rally in the U.S. barge market.
The short-term outlook for international urea prices calls for a slight bounce in January as the U.S. is looking to book metric tons ahead of its spring season and with India likely to return with another tender. However, by February, any rally will likely run out of steam as the U.S. pulls back and imports less due to new domestic capacity.
Domestic: Domestic urea prices climbed in December with NOLA (New Orleans, Louisiana) barges trading as high as $240 to $260/t FOB, up significantly from $210 to $220 at the end of November. Most barge trading is trader-driven as, so far, there has been a lack of dealer engagement. Spring supply uncertainty and firming nitrogen values in other fertilizer products such as ammonia are lending strength to urea.
With reduced imports, new production coming on later than expected, and various other plant disruptions, it is likely that domestic supply for the spring season is behind pace. This supply uncertainty is helping to keep NOLA barge values supported up to the point where spot imports are workable. This has led to traders booking some spot imports for the U.S. Gulf.
Interior urea prices moved up to reflect higher replacement costs. Most river terminal prices are now around $280 to $290/t FOB, up from $245 to $255 last month. There is some layering taking place, but not much of significance. Anecdotal reports suggest that most retailers still need to secure the majority of their spring urea requirements. However, taking a position for spring at today's values is generally deemed too risky, and buyers are electing to purchase other crop inputs instead.
Firming ammonia prices across the Midwest are also providing support for urea prices. Spring ammonia has been selling above $400/t FOB in the Corn Belt, about $60 higher than prompt ammonia prices this fall.
With buying for the spring season ahead of us, and the supply situation still unclear, there continues to be more upside price risk in the short-term, and prices are expected to run stable or slightly firmer.
UAN values continued their steady rise in December with help from firming ammonia and urea prices. Buyers stepped back in for another round of spring prepay buying that concluded in mid-December, leading to slightly higher prices. Activity then slowed again as the holidays approached.
Toward the end of the month, NOLA barge trade concluded at $170/t FOB for first-quarter shipment, up from last trade in November at the $160 to $165 range.
On the East Coast, EuroChem followed up a sale earlier in the month, selling volumes for discharge at Baltimore and Fairless Hills at $196 mt CFR for early January Baltic loading.
Interior UAN prices were stable to firm. CF brought its Cincinnati and Mt. Vernon price up $5 to $185/t FOB for 32%. Other terminals and ex-plant prices have held steady. Spring prepay values on the river have also held flat around $200/t FOB.
With nitrogen values in ammonia and urea on the rise, the door has been opened for CF to raise UAN prices. However, international UAN prices held steady through December, so domestic fertilizer producers may keep values relatively cheap as they look to keep imports out. The short-term outlook for UAN prices is stable to firm.
International: The rally in phosphate prices continued in December. However, one of the key drivers in the recent run-up -- the sharp hike in sulfur prices -- has been effectively removed. Global sulphur prices have declined as much as $75/mt from its recent peak. Nevertheless, phosphate producers have successfully achieved a steady increase in prices across much of the globe, fueled by a combination of recent higher costs, steady demand and lower-than-anticipated production volumes.
In the U.S., Mosaic has again achieved $385 mt FOB for DAP and is now asking $395, which it is expected to achieve on its next round of export sales. The producer would appear comfortable for January; its Plant City phosphate plant will be closed by the end of this year, anecdotal reports suggest the U.S. DAP/MAP pipeline inventory is at a low level, and there is little sign of demand abating in the U.S.
OCP, a large Moroccan producer, will be busy with existing shipments to African markets in January. This will limit the scope for Moroccan shipments to be made to the U.S. next month. Against this backdrop, asking prices for Russian MAP are higher at $385 to $390 FOB Baltic, and buyers in Latin America are facing the prospect of having to accept higher prices for January shipments.
With limited availability from most producers for January, the short-term outlook for phosphate prices continues to be firm. However, there is potential for lower prices later in the first quarter as global import demand seasonally wanes, especially if the Chinese domestic market does not perform well and surplus Chinese metric tons need to be directed offshore.
Domestic: Prices for barges remain firm. DAP was trading at $360 to $365/t FOB NOLA at the end of December and MAP at $385 to $390, up from $350 to $355 and $370 to $372 respectively in November.
The rally in barge pricing in recent weeks has encouraged importers to book additional phosphate cargoes from Russia, Morocco, and even one from Senegal.
The domestic market was busy early in the month with application and fill-buying ongoing, but things quieted down by the holidays. Most Mississippi River terminal prices are currently around $385 to $395/t FOB for DAP, up about $10 compared to $380 to $385 in November. The MAP premium to DAP has grown to at least $25 in most locations. Many dealers are switching to DAP due to the relatively attractive price.
The short-term outlook for phosphate prices is firm. However, once imports begin to arrive later in January and February, prices should stabilize.
It is becoming apparent that Canadian producers will not be holding potash fill programs this winter. With supply tight and prices appreciating, producers do not feel the need to incentivize potash buyers.
Dealers who were waiting for a fill program to buy potash stepped in and bought during December. Inland warehouses prices are generally around $270/t FOB. Prices off the river are up about $10 from last month to the $255 to $260/t FOB level.
NOLA barge prices increased to $230 to $235/t, up $5 from last month, as import supply tightened due to limited shipments in the fourth quarter.
Editor's Note: This information was supplied courtesy of Fertecon, Informa Agribusiness Intelligence.
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