The world ammonia market remained quiet through March with Yuzhnyy prices trading flat at $260 to $270 mt fob. Caribbean prices also traded flat at $275. Middle East prices on sales into India were up slightly as DAP production demand remained heavy through the month. The low end of the delivered price range moved from $345 to $357. The short-term outlook for the international ammonia market is assessed as stable to firmer, mainly on the back of tight supply situation at a time when demand is expected to increase seasonally. The ammonia price story was quite different in the domestic market. Early in March, ammonia was available at central Illinois terminals at $470 per short ton but late in the month prices had shot up to $525. Strong demand for ammonia going to corn preplant developed across the wheat belt through the month. Over the turn of the year there was only limited prepay purchasing done by farmers/dealers and that seems now to be coming back to haunt as corn preplant demand for ammonia is really only just getting started. We look for domestic ammonia prices to run steady to slightly higher in the short term.
World urea market prices moved lower through March. Prilled prices at Yuzhnyy dropped from $210 to $212 mt early to $194 to $195 mt late. Baltic prices started the month at $204 and by month's end had dropped to $176 as producers/ traders chased new South American business late. Prices for Middle East granular fell from $205 mt early for sales into Brazil to $189 late. Chinese exporters have tried in vain to achieve higher prices with Indian importers hugging the sidelines. Chinese producers are holding firm and granular urea cannot be sourced below $210 fob and prills are even higher. They say prices will remain at these levels as long as domestic prices hold at higher levels. The risk may now be too high for traders to short at lower levels despite high inventories at the port. North African prices were down slightly through the month, with Egyptian product falling from $227 mt fob to $225 and Algerian material dropping from $241 to $230. We look for world urea market prices to run flat with an undertone of softness in the short term. Domestic urea prices fell at New Orleans, Louisiana (NOLA) through March with cash barge prices crossing at $262 to $265 early and falling to $235 to $242 late. Barges at upriver terminals commanded substantial premiums late in March. After a good run to wheat topdress, demand has continued strong for corn preplant in many wheat belt markets. Demand for urea in the Corn Belt has been slow to get started but it is still quite early in the season. Ammonia prices have jumped substantially this week (see Ammonia, above), which could support somewhat higher urea prices in the Corn Belt once demand gets underway. All that said, however, given the world supply and demand balance in urea, once spring preplant demand here has been served much lower urea prices could be on the way. With natural gas prices hovering around $2.00 mmcf the gas cost in a ton of urea is around $45.00 ston. We look for short-term urea prices to run flat with an undertone of softness.
NOLA barge UAN barge prices crossed at $197/32% early and firmed slightly to $202/32% late. The recent run-up in urea and ammonia prices has carried UAN prices along. As is the case with other forms of N, the lack of buying over the turn of the year by farmers/dealers has led to UAN supplies getting tight quickly once good levels of demand appeared. We look for domestic UAN prices to run flat to slightly higher in the short term.
World DAP market prices fell through the month. Even though Tampa export tons sold at $360 mt early and late, other DAP/MAP exporters saw prices fall. Saudi export tons dropped from $370 fob to $345, Chinese tons fell $2 to $338, and Moroccan product sold at $370 early and traded at $355 late. Relatively high U.S. prices encouraged importers in Argentina and Brazil to book cargoes of DAP and MAP from non-U.S. sources, including Russia and China. As the market moves into April, European and Australian demand tails off, followed later by the U.S. From a demand standpoint, it is the timing and strength of Indian demand which will influence phosphate prices most heavily in 2Q and 3Q. At month's end the Indian government announced a $50 mt drop in the level of subsidy paid to domestic producers. But this was largely irrelevant since Indian producer margins have improved immeasurably compared with this time last year, demand has not. Opening stocks in 2015 were at particularly low levels, estimated below 500,000 t, whereas this year, estimates vary enormously but the consensus is that stocks at the beginning of April, 2016, including all unsold product in the retail system and at the ports, could be nearer 2.5 million t, and very probably higher. With demand from Indian importers likely to continue slow, we look for world DAP/MAP prices to run flat in the short term. NOLA DAP barge prices sold around $335 to $345 per short ton early. Late in the month barge prices of imported material into NOLA dropped $15 to $18 to $315 to $320 per short ton, a consequence of a light but steady stream of import cargoes into NOLA. Very late in the month, NOLA import barge prices firmed to the $325 to $335 level. Through the month Mosaic was offering domestic DAP barges at the $350 to $355 mark. Late in March, domestic DAP/MAP prices firmed at many inland terminals as dealers flocked in to cover corn preplant needs only to be met by thin supplies. The thin supplies are a carryover effect from the lack of farmer/dealer buying over the turn of the year. Rising crop prices through the month also helped to encourage demand. With spring demand just underway, short-term domestic DAP/MAP prices seem likely to at least hold steady.
Prices for potash drifted lower through the month with NOLA barge prices dropping from $190 per short ton early to $180 to $190 per short ton late; the low end late was for Russian material. Prices at interior terminals also moved lower, decreasing from $252 early to $240 to $245 late. Despite heavy volume purchasing in some markets potash prices at several inland terminals moved lower late in the month. Supplies in place are adequate due to product placed on consignment over the turn of the year. We look for short-term potash prices to run flat to slightly lower.
Ken Johnson can be reached at firstname.lastname@example.org
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