DTN Fertilizer Outlook

Wet Early Spring in Corn Belt, Northern Plains Keeps Wholesale Fertilizer Prices Steady

(Chart courtesy of Karl Stenerson)

Here is a breakdown of international and domestic wholesale prices and trends by the various fertilizers:

AMMONIA

International: The international ammonia market continued to firm during March with uplifts as high as $50 recorded in the spot prices in the Middle East while most global ammonia price indices are also on the rise.

There has been no new known spot business in the Black Sea or Baltic with just contract volumes moving in the Baltic. In the Black Sea, vessels have been delayed at the Turkish straits returning to Yuzhnyy for loading, forcing reduced pumping rates from the plants due to storage fullness at the port. Export tonnes fob (free on board -- the buyer pays for transportation of the goods) Yuzhnyy, Ukraine, are assessed at $310 to $330 per metric ton (mton), up from $300 to $310 mton at the end of February.

Late in the month, in the Middle East, Ma'aden reported the conclusion of new spot business with Trammo for 15,000 tonne (t) ammonia to be lifted in April priced at $400 fob Saudi Arabia. This is a sharp $50 increase on previous spot deals around $345 at the end of February.

On the supply side in the Middle East, Sabic announced that the Safco III ammonia/urea plant will go down for a scheduled shutdown during April for 20 days. Moreover, the 660,000-tonne-per year capacity Fertil 2 ammonia plant in UAE has gone down, and efforts are ongoing to restart the plant.

The latest import tender in India has attracted two offers, heard to be $450 cfr (cost and freight) from Trammo and $475 cfr from Muntajat, but the tender is still pending an award. The offers are significantly above the current price level in India.

In the United States, Yara and Mosaic have settled the contract price for April deliveries of ammonia into Tampa at $340 cfr, a $10 increase from the March price of $330 cfr.

The near-term outlook for ammonia continues to be firm on the back of demand from India increasing, good demand from the Far East and an ongoing tightness in the spot availability from major supply hubs.

Domestic: The Central Plains and central Corn Belt regions are reported to be the furthest along with their preplant ammonia application. Missouri, Kansas and Oklahoma are, for the most part, done and Nebraska, Iowa and Illinois are reported to be on the tail end of anhydrous application. Prices in the Sioux City and Omaha areas have increased to $450 to $465 per short ton (ston), from $430-$435/ston last month, reflecting stronger application demand.

Tightness in the central Corn Belt seen last month due to an early strong start has abated thanks to the rainy weather pushing back application activity and allowing suppliers enough time to replenish inventories before the next run. Prices have come down from their peaks, and now suppliers are marketing more aggressively to capture remaining sales. In Illinois and Indiana, prices off the river moved as high as $500 to $510/ston early in March, but have come down since to $435 to $460/ston.

Fields in the Northern Plains have had too much moisture to get anything done yet, and application work isn't expected to start until at least mid-April. The Northern Plains look to remain oversupplied through upcoming weeks. Canadian producers are long and quoting delivered values into North Dakota areas as low as $390/ston. Prices off the pipeline in North Dakota and Minnesota moved down to $380 to $385/ston, from $405 to $410 in February, in order to compete with Canadian tons.

The Eastern Corn Belt is wet as well, and there have only been a few small areas where application has been able to start. Prices fob pipeline and plant in Ohio and Indiana are at $450 to $465/ston with good demand still ahead.

Southern Plains ex-plant prices saw decreases as demand slowed and sellers were able to catch up with old orders. All plants have reportedly been taken off allocation. Producer prices were reported in the $400 to $420/ston in Oklahoma and Kansas, down from $460 to $470/ston in February.

In Texas, wholesalers report having a good preplant ammonia application run and have now moved on to side-dress following corn planting.

Sections of the Magellan ammonia pipeline are down. Agrium's Borger facility is not injecting into the pipeline, so that leg of the pipeline is down indefinitely. The plant is producing and loading trucks but has not been able to put tons into the pipeline. Additionally, from approximately Gardner, Kansas, to Aurora, Iowa, the pipeline is down, undergoing a hydro test for an undetermined amount of time.

OCI's Wever, Iowa, plant has still not been brought online, but the company has hopes it will be producing soon.

The short-term outlook for ammonia prices is stable to soft. Application demand will support prices in areas of the Corn Belt in the next few weeks. However, many prices have already come off their spring peaks. As we move through the rest of the season, sellers will lower prices in an effort to clear through positions as prices are expected to move lower at the end of spring.

UREA

International: Global urea prices continued to trend lower through March but showed early signs of stabilizing at the end of the month.

The weak spot seemed to be Egypt with prices drifting down into the $220s mton fob, from the $260s in late February. Middle East fob also traded lower at $170 to $210 mton, down from $213 to $250 mton a month ago, with sales to the U.S. accounting for the low end of netbacks at $170 to $180 mton fob.

In what was perceived as a weak market, India failed to secure more than 265,000 metric tons in their late March tender. All the metric tons were sourced from the Arab Gulf as Iran and China deemed the price level too low and refused to participate. MMTC had to step right back in and tender again to secure the balance of India's April requirement. Awards haven't been made yet, but with Arab Gulf sellers now comfortable with April sales MMTC is likely to have to pay higher prices to source more tons.

Outages for April are certainly helping the market; Qafco and Sabic have planned maintenance for April, and Fertil went down unexpectedly. There are also turnarounds taking place in Russia.

Although demand is still pretty soft, it appears urea markets may have found a short-term bottom, and prices look to run stable through April.

Domestic: Rain, snow and cold temperatures across much of the Midwest are keeping urea demand slow; however, many welcome the moisture and feel it will be better for demand in the long run. In the meantime, urea prices continue to soften as new sales are hard to come by.

Wheat top-dress demand has been very weak in all areas and has not pulled enough tons to make wholesalers/retailers need to reload. New production coming online from CF's Port Neal, Iowa, plant and Agrium's Borger, Texas, plant are adding to the softness.

Despite prices moving lower than most expected, dealers/retailers are still hesitant to make additional purchases. Most corn preplant needs are already covered, and buyers would rather wait and see if this market continues this downtrend before purchasing tons for side dress.

Not seeing any real demand, the New Orleans, Louisiana, (NOLA) barge market traded down to $184 to $192/ston fob during the last week of March. At this level, urea prices are down roughly $30 from February, and $60 from the end of January.

Warehouse prices were lower as interior markets succumb to the pressure of the depressed NOLA market. Truck prices fob major river terminals are generally in the $225 to $235/ston range, with some reported as low as $220. These prices are down $40 from the end of February. Some sellers continue to keep list prices high in hopes urea prices rebound.

The short-term outlook for urea prices is flat to slightly firmer. There isn't much room for urea prices to keep moving down, and with plenty of demand still ahead, prices should stabilize at current levels and have potential to move up as distributors look to make up on losses from earlier price drops.

UAN

Midwest UAN offers are slipping lower but are failing to garner any interest from buyers. All eyes remain on urea prices as wet fields keep the UAN application seasons in the Corn Belt at least three to four weeks away. Buyers are arguing that UAN is overvalued compared to urea and prices need to adjust downward. Meanwhile, some sellers are holding on to higher list prices as they find little reason to move down, but if urea prices don't rebound, they will have to adjust downward when demand hits or risk missing out on sales.

Offers out of river terminals are generally in the $200 to $220/ston range for 32%. Ex-plant prices in Iowa range from $200 to $215/ston fob for prompt. Oklahoma and Kansas production fob points are flat, ranging from $200 to $225/ston.

The last imported vessel to the East Coast was priced at $187 mton cfr but next purchase will most likely be closer to $180.

The NOLA barge market remains quiet with very few, if any, real buyers and sellers. An offer was heard at $185/ston. The NOLA fob price range is indicated at $180 to $185/ston, down from $185 to $192/ston at end of January.

OCI's Wever, Iowa, has not begun its new ammonia plant. The company has been informing people production is imminent. Even if that proves true, market participants do not expect any UAN production this spring.

The short-term outlook for domestic UAN prices is flat to slightly softer unless urea prices come across a substantial rally. Limited availability from domestic producers has been able to support UAN prices over the last month, but the outstanding relationship with urea prices will likely come to pressure UAN prices downward a bit.

PHOSPHATES

International: World prices for DAP and MAP were stable for much of March but have started to soften recently due to limited buying interest both east and west of Suez.

In Morocco, export prices held steady at $385 to $390 mton fob from the end of February but appear to be softening as demand in the U.S. and Brazil slows. Meanwhile, Chinese DAP prices have slid from the $370s mton fob last month to the $360s this month.

In Brazil, most buyers are waiting and MAP prices have come under pressure. Price levels of MAP are in the range of $380 to $385 mton cfr, down $10 from last month. Argentina has joined Brazil's price slide, with competitive trader offers for Moroccan MAP/DAP heading down to $400 cfr.

Prices appear set to decline in the coming weeks on easing supply and limited demand for April shipments.

Domestic: In February, NOLA DAP barges firmed up to $337 to $345/ston fob on strong early application demand and tight supply due to delays in vessel shipments from Morocco. However, those high values proved to be short-lived, and March saw DAP barges trade all the way down to $303/ston before Mosaic stepped in and started purchasing barges en masse and propped the market back up to $315 to $320/ston at the end of the month. Also, NOLA MAP barge prices fell back to a more typical premium to DAP at $325 to $335/ston after trading at a premium near $40 some weeks in March.

The Central Plains and central Corn Belt regions are reported to be the furthest along with their first round of their spring dry applications. Missouri and Kansas are about 70%-90% done. Application has been spotty in the Corn Belt. Fields in the Northern Plains have too much moisture to get anything done yet and the far Eastern Corn Belt is wet as well.

Rain and cold weather for much of the month kept phosphate sales slow; however, many feel the moisture will be better for demand in the long-run. River prices are showing some softer prices, but for the most part are stable relative to the NOLA market. River terminal truck prices for DAP vary between $345 to $365/ston with the lowest quotes heard on the Cincinnati and the highest along the Mississippi in Iowa and Illinois. MAP offers on the River are generally in the $385 to $395/ston range with little to no sales. Inland MAP markets are still tight and truck prices are still heard as high as $415 to $425/ston fob in Missouri, Nebraska and Iowa.

DAP/MAP supplies at river terminals and interior locations have been pretty tight, which has helped keep prices flat. However, when resupplies arrive, MAP/DAP prices will most likely soften as many markets will be past peak demand.

POTASH

Potash sales were also slower through March due to the weather and prices were flat from last month.

Warehouses prices are mostly unchanged at $250 to $260/ston on the rivers. There have been rumors a Canadian supplier is looking to bring their warehouse prices up to $275/ston. Most don't think this potential increase would stick, as prices have pretty much stalled out over the past few weeks, and there are still plenty of offers lower than the current producer warehouse price of $265/ston in most markets. Some inland markets have hit the $265/ston mark, most of those in the central Plains where potash has been tight.

However, there have been reports of a Canadian producer having trouble filling orders, which may be bullish for prices in the short term. Traders have looked toward imports to cover sales caught short by the delays. NOLA potash barges are trading around $219 to $225/ston for April delivery, which is down slightly from $220 to $228/ston at end of February.

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(AG/BAS)