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DTN Fertilizer Outlook
Monday, March 30, 2015 9:55AM CDT

By Ken Johnson
DTN Fertilizer Columnist

AMMONIA

World ammonia prices ran flat through March with Yuzhnyy export tons trading at $400 to $410 per metric ton fob (free on board -- the buyer pays for transportation of the goods). There was one small sign of strength as Tampa buyers paid $10 higher at $485 mt cfr (cost and freight) late in the month. (All prices in this column are wholesale.) This may reflect prospects for gas supplies available for Trinidad producers to remain 30% below normal through April. Elsewhere, prices look to remain weak as Far East industrial buying was lackluster and Indian demand enters a seasonally slow period. We look for world prices to run flat in the short term.

Ammonia prices at central and Eastern Corn Belt terminals traded flat at $625 through March. At month's end, pre-plant demand in the Western Corn Belt prompted Koch to increase asking prices for ammonia going north from its Oklahoma production plants to $540 per short ton fob; product going south is still priced at $500. There is still substantial volume to serve pre-plant needs in the central and Eastern Corn Belt. Indications from wholesalers are that carryover of tons unsold in the fall and recent fill purchases should cover spring demand. In markets where growers sometimes switch between ammonia and urea, weak urea prices are likely to keep ammonia prices from running up sharply. We expect domestic ammonia prices to run flat with an undertone of strength in the short term.

UREA

World and domestic urea prices fell in March. Yuzhnyy prilled material sold at $275 to $285 mt fob early and was down to $255 t0 $260 late. In Europe, the euro's continued weakness against the dollar continued to dampen demand. Buyers in general were reluctant to step into what is still seen as a falling market. Middle East granular prices for sales into South America crossed at $275 to $300 mt fob early in March and were bought at $252 to $289 late. Production costs at all export producers are being examined to see where diminished production might come from as it is highly unlikely the halt in price declines might come from the demand side in coming weeks. Ukrainian costs are putting production under threat, and next in line should be some European production. Chinese plants have to be under threat in some areas, but they have already slowed the relentless move to the port in the absence of any new opportunities at workable prices. March exports should be well down on the huge levels seen for January and February. India looked to be running a new tender early in April, but indications at month's end were the tender would not open until mid-April. We look for further deterioration in world urea prices in the short term.

Domestic prices for granular urea softened through March at NOLA (New Orleans, Louisiana) as barges traded at $290 to $295 per short ton early and dropped to $268 for April units. Prices at Catoosa dropped from $335 to $345 early in the month to $325 to $330 late. Barge traffic from NOLA has been delayed by fog, which slowed loading of grain onto ships and unloading of fertilizer onto barges. The problem is going away, but a backlog remains. The spring season should be breaking wide open in the next seven to 10 days in almost all markets. With farmers/dealers all coming through the demand door at once, we expect there could be some spot shortages of urea and other fertilizers, and prices could hold flat or increase at interior terminals where supplies in place are not adequate. Some wholesalers expect a dead-cat bounce in NOLA barge prices in the next few weeks, but with the world market in shambles, no one wants to be long once spring demand is over.

UAN

After dropping to the $250 to $255 range early in the month, NOLA UAN barge prices moved back up to the $255 to $260/32% range late. There was good demand in some interior markets through March, which kept prices firm. As with urea, there have been a substantial number of imported cargoes arriving and wholesalers remain reluctant to build inventory. Producer margins remain wide and they seem more likely to want to sell every load they can rather than hold out for higher prices. That said, the lateness of the season could begin to transfer some spring demand away from ammonia to UAN. On yet another hand, falling urea prices never help UAN prices to increase. On balance, we look for domestic UAN prices to run flat to slightly higher in the short term.

DAP

Prices for phosphates dropped on the world and domestic markets through March. NOLA export prices fell $10 from $485 mt early to $475 mt late. Importers in Brazil and Argentina booked several part cargoes of MAP and DAP, securing slightly lower prices each time. As the market moves into April, European and Australian demand tails off, followed later by the U.S. The timing and strength of Indian demand will influence prices most heavily through the mid-year. Saudi Arabian and Chinese producers realize India needs to be supported in terms of pricing to move volume or else product will not find a home; thus they are expected to support India at price levels required to permit Indian importers to make a margin and tons to flow. EuroChem, FSU, moved prices down to the $455 to $460 mt fob range to place MAP into South America, and Wengfu, China, accepted in the low $460s fob to book additional DAP into India. We look for world DAP/MAP prices to keep moving lower in the short term.

Domestic DAP prices at NOLA tumbled $30 to $35 per short ton to $405 to $410 through the month as pressure from imported tons increased and spring corn pre-plant demand was slow to get started. Interior terminal prices were mostly flat over inactivity. The start-up of spring demand is imminent and many small wholesalers/dealers have been reluctant to take on inventory risk. As with urea, by waiting until the last minute, dealers could face at least steady prices at interior terminals even as NOLA barge prices drop. With strong demand likely coming into the market soon, DAP/MAP prices seem likely to hold firm, but weakness in world prices, we believe, makes any sustained upward movement in even short-term interior DAP prices unlikely at best.

POTASH

NOLA potash barge prices were off slightly through the month, selling at $355 to $358 and at $355 late. Canadian exporters achieved a $10 increase in export prices to China from $305 mt to $315 cfr, but netbacks on exports remain almost $70 per short ton below prices into the U.S. market. Wholesalers/dealers remain reluctant to build significant inventory, and potash suppliers seem quite willing to put product in on consignment. We look for domestic potash prices to keep moving lower in the short term.

(CZ/AG)


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