World and domestic ammonia prices ran flat through October. Export ammonia from Yuzhnyy, FSU, traded at $390 to $405 per metric ton and prices at domestic interior Corn Belt terminals were $540 to $550 per short ton. (All prices in this column are wholesale.) Saudi Arabian fob (free on board -- the buyer pays for transportation of the goods) ammonia price into India increased to $430 at mid-month. In late October, a spot sale between Sabic and Yara closed at $470 fob. Indian demand for ammonia used to make DAP has been strong and steady. The industrial market in the Far East for ammonia remains bleak, although in late the month there were signs of slight improvement. Export supplies in North Africa are still on the tight side as production in Egypt has been slow to return. We look for world ammonia prices to run flat with an undertone of weakness in the short term.
New sales of domestic ammonia remain slow. Several wholesalers mentioned the growing spread between urea and ammonia prices, and some believe this could begin to push ammonia costs lower. As a result of an oil unit train derailment in Pennsylvania recently, current law requires rail carriers to install positive train control (PTC) technology by the end of this year. A coalition of 43 national, regional and state agriculture organizations including TFI and the American Farm Bureau Federation urged Congress to pass the necessary extension to the deadline by Oct. 31 in a letter sent to House and Senate leadership. "Failure to secure an extension by Oct. 31, 2015, will have severe and far-reaching consequences..." Should the deadline not be extended, several railroads have indicated they would totally embargo rail delivery of ammonia. If the foregoing matter is resolved with a deadline extension, we feel domestic ammonia prices are likely to run firm but flat in the short term.
World urea market prices were basically flat through October with softness in some export markets and slight strength in others. Product from Yuzhnyy traded at $248 to $252 mt fob early and moved up to $251 to $257 late. Export tons from Middle East suppliers traded at $240 to $252 early, but slipped to $234 to $240 late as South American buyers stayed on the sidelines. Chinese export tons traded flat at $250 to $255 mt fob. Chinese production remains high, but demand from India has been absorbing it. Export production from North African suppliers was hit-and-miss due to gas supply issues for most of October, but at month's end, prospects were good for substantially increased production. South American and European markets were quiet for most of the month, but at month's end, light interest from both firmed urea prices slightly. In late October, various traders stepped in and bought lots at prices ranging between $251 and $254 mt fob Yuzhnyy. At least one lot was sold at $257 with other interest being shown, and FSU producers were countering at $259. All of the new sales have been for November shipment. Urea prices remain weak to stable in the Chinese domestic market but may go down again in the next few weeks. Local dealers are nervous about farmer willingness to make an early move, and they in turn are reluctant to restock too early. This should put pressure on producers for the next few weeks and encourage them to move more tons for export. There were 1 million tons in inventory at Chinese ports in late October. Prilled prices edged up a few dollars to $250 fob, and after accepting netbacks as low as $245, asking prices for granular have climbed back up toward $255 offered into the latest Indian tender. We look for world urea market prices to run flat with undertone of weakness in the short term.
Urea prices in the domestic market continued mostly flat as new sales remained slow. NOLA (New Orleans, Louisiana) granular barge prices traded flat at $250 to $255 per short ton. Imported product scheduled in to the U.S. from all origins for October now stands at 445,000 metric tons. Wholesalers said dealers/farmers are still reluctant to commit as farmers were focused on harvesting activities. Dry conditions in early to mid-October continued in the central and southern Wheat Belt, keeping demand there slower than normal. At month's end, however, heavy rains came to central, coastal bend and southeast Texas and demand for urea should pick up. We look for domestic urea prices to run flat with undertone of softness in the short term.
NOLA UAN barge prices traded from $200 to $205 through most of October and fell to $185/32% late. Wholesalers reported almost no dealer/farmer interest in making new UAN purchases. Urea prices look to continue weak, which could work to keep UAN prices at least flat if not under downward pressure in the short term. However, if prohibition of ammonia rail transport is in place, there could be a huge shift in demand to UAN for spring application and a concomitant increase in UAN prices.
World phosphate market prices were under downward pressure in October as demand in the main Asian and South American markets stayed weak. Tampa export ammonia prices dropped from $450 to $455 early to $425 to $430 mt late. Phosphate producers worldwide have few offshore orders on their books for November and several are hoping to place increasing quantities in their domestic markets going through the fourth quarter in an attempt to maintain export prices. However, Asian and South American importers have covered the majority of their seasonal requirements, and most buyers in Europe and Australia are not yet in urgent need of material. Russian and North African exporters reduced prices in October, as did Mosaic. Prices for DAP/MAP ex Morocco have been lowered to $490 to $495 mt fob for tonnage to be placed in Europe. Absent production cutbacks, we look for world DAP/MAP market prices to keep grinding lower in the short term.
NOLA DAP barge prices firmed slightly through the month, trading at $412 to $425 early and at $420 to $428 late. Domestic phosphate prices at interior terminals are running flat over light volume. As in the case with all other fertilizers, wholesalers/dealers are reluctant to build much inventory without some demand indication from farmers. In late October, demand began to appear in the Corn Belt as fall application got underway. Farmers are still indicating dissatisfaction with low corn prices and are being slow to come to market. With export prices weak domestic producers should have more product to sell domestically, which could put downward pressure on domestic DAP/MAP prices in the coming weeks.
NOLA potash barge prices traded at $290 to $295 through most of October, but in the last week fell to $270 to $275. Demand for potash remains generally slow at interior terminals, although several wholesalers late in the month indicated interest is picking up. We look for potash prices to run flat with undertone of softness in the short term.
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