By Karl Stenerson
Market Reporter - Fertecon
Informa Agribusiness Intelligence
Here is a breakdown of wholesale prices and trends of the various fertilizers.
Global ammonia prices continued to weaken in December. Yara and Mosaic settled the January price for Tampa, Florida, at $285 per metric ton (mt) CFR (cost and freight), down $40 from the $325 agreed by the pair for December. Similarly, the Baltic price for January was settled $30 down from last month, in the low $280s FOB (free on board -- the buyer pays for transportation of the goods).
Yuzhnyy, Ukraine, remains quiet for now, with no new spot business reported. Vessels moving through the Turkish Straits to Yuzhnyy continue to face delays, with a return journey now taking up to 25 days. As a result, loadings at Yuzhnyy are delayed, with late-December shipments now penciled in for January.
The short-term outlook for ammonia prices is soft. Weak fertilizer prices -- urea, DAP and nitrate are all under pressure -- weak caprolactam, MDI and acrylonitrile prices are doing nothing to support this long market. High gas prices should eventually help to floor the price, but today, there seems to be no end to the current downward trend.
While prices on the international market are declining, interior U.S. ammonia prices are holding comparatively firm. Strong demand in spring due to a poor fall application season is expected to stress the distribution system, and this is supporting higher prices.
There are reports producers are comfortable enough with spring prepay books that they are now limiting sales volumes. On the other hand, the prompt market remains weak with tonnage available close to a $150 discount from spring prepay values. The market is over-supplied in the short term, but there will likely be a push to export in the coming months to help alleviate this pressure.
Producers cancelled 2018 fall prepay contracts that were unable to be used at the end of 2018. Buyers were aware this would be the case and many repurchased a large percentage of this tonnage for spring prepay at the initial offer level of $505 to $525 per short ton (t) FOB made by producers in early December.
Spring prepay buying has since slowed down, but producer offers are up about $20 from the initial level to around $525 to $545/t FOB. Producer offers for prompt delivery are unchanged but are reported to be biddable, and some have reported business around $400/t FOB.
Ex-plant prices in the Southern Plains are slightly softer with prompt business reported as low as $360/t FOB. Some spot demand emerged in the final weeks of 2018 as weather supported an application run in areas of Kansas and Missouri. Reports on volumes vary by wholesalers with some estimating the area was able to move 40% volume of a typical fall season while others said it was closer to 90%. Either way, because of the late push, this area was a bright spot relative to the fall season in other areas of the Midwest.
The outlook is bearish for prompt prices but stable for Corn Belt prepay, at least in the short term.
Urea prices crashed in early December, but most benchmarks found a bottom fairly quickly as traders stepped in and took long positions, and a few prices began to move back up by the end of the month.
North Africa led the way with producers in Egypt and Algeria selling most of their January availability at prices from the $270s per mt FOB up to $300 FOB in Egypt, compared to as low as $266 in early December. This is still off roughly $20 from price levels at the end of November.
Prices in China moved down to below $280 FOB, but levels here had been faring better than in other supply markets. This could, therefore, just be a delayed response, with sellers now said to be back offering $290 FOB.
The outlook for urea prices is stable to firm with price support anticipated to be driven by seasonally declining Chinese exports and seasonally increasing import demand from the U.S., Europe and Turkey. India is also expected to be back with another tender in the first quarter, though the requirement this time will be much smaller than last.
NOLA (New Orleans, Louisiana) barge prices tracked North African prices lower during early December, and then followed them back up, ending the month at $267 to $275/t FOB, which is down slightly from $275 to $281 at the end of November. Liquidity was thin for most the month.
River terminal markets were equally quiet with retail interest seasonally slow. Wholesalers reported some end-of-year sales as buyers stepped in at the last minute, but volumes were said to be down compared to a normal year. Most prices are around $300 to $310/t FOB, off $15 from late November.
Strong demand is expected for the spring season, considering a projected increase in corn plantings as well as potential for more nitrogen needs having to be met by applying urea due to the dismal fall ammonia application season. However, whether barge prices will need to move higher to secure enough imports to meet this demand is uncertain. For now, the short-term outlook is stable to firm.
Domestic UAN prices softened in December for the first time since July. Pressure stemmed from the weakness in urea prices over the last two months as well as seasonally slow UAN demand. Barge prices fell to $205 to $215/t FOB, compared to a high of $225 to $230/t FOB in November.
Before the holidays, CF lowered its river terminal prices by $10 to $15 to $240 for January/February shipment. There is little interest in UAN for this timeframe. The market continues to wait for the producer to issue offers for spring prepay. Importers have achieved $255/t FOB Cincinnati for spring prepay, and market expectations are that CF will come out with a similar value in its prepay program.
The price outlook for UAN is slightly soft, considering urea remains relatively cheap and producers have to yet to make much of a dent in 2019 UAN sales.
Global phosphate prices ended the year on a softer note, as all benchmark prices came under pressure when Brazilian demand seasonally slowed, and buyers elsewhere failed to surface.
Thin liquidity in the U.S. domestic market, together with few apparent sales opportunities in Latin America, caused export prices for U.S. DAP to fall to $405 to $412 per mt FOB, compared to $418 to $425 in late November.
Demand in southern Asia is also slow with India out of season. Chinese FOB values have subsequently come under pressure, with offers for DAP falling to the high $390s FOB, compared to $406 to $408 at the end of November.
Cheaper raw material costs (sulfur and ammonia), combined with seasonally slow global demand, is keeping the short-term price outlook soft.
Domestic DAP and MAP prices weakened in December but saw some recovery in the last week of the year.
Barge prices continued to soften following Mosaic's launching of its winter fill program in early December. DAP barges traded as low as $383 to $387/t FOB but were back up to $388 to $390 by the New Year. However, this level is still below Mosaic's original asking price of $405 to $410/t FOB. MAP prices have continued to track DAP, bouncing between a $5 to $10 premium.
River terminal prices are about $5 softer from last month at $420 to $430/t FOB and $425 to $435 for MAP. Demand is seasonally slow as winter conditions, albeit quite mild, have set in across the Midwest. More focus is on spring prepay, which suppliers are currently asking a $5 to $10 premium for compared to prompt prices.
There should be solid demand this spring, assuming decent weather, considering lost volumes this fall will have to be made up for and expectations for an increase in planted corn acres. However, growers and dealers have so far been slow to put money down for fertilizer purchases, as farmer cash is expected to be tight again in 2019.
Non-U.S. producers have continued to look to the U.S. as a potential outlet for uncommitted first-quarter tonnage with, for example, Ma'aden and reportedly Sabic sending additional product from Saudi Arabia in this direction.
Imports this fertilizer year have so far made up for the loss of domestic production, resulting from the closure of Mosaic's Plant City, Florida, phosphate plant. With little global demand elsewhere in the short term, U.S. phosphate prices are expected to run steady as global producers keep this market well fed.
December was another quiet month in the domestic potash market. This product continues to buck the softer trend seen amongst the other nutrients; however, price increases are coming at a much slower pace. Barge prices have held steady around $285 to $290/t FOB and $305 to $315/t FOB river terminal for the second consecutive month. Forward physical offers for second-quarter delivery are showing a $5 to $10 carry. There is some speculation Canadian producers will be looking to increase warehouse prices in January by about $10.
The outlook for potash prices continues to be stable to firm due to tight supply relative to demand.
Editor's Note: This information was supplied courtesy of Fertecon, Informa Agribusiness Intelligence.
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