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DTN Fertilizer Outlook
Monday, June 29, 2015 9:18AM CDT

By Ken Johnson
DTN Fertilizer Columnist

AMMONIA

World ammonia prices were nearly flat in June with Yuzhnyy export tons crossing at $390 to $395 early and softening slightly to $380 to $395 late. (All prices in this column are wholesale.) Late in the month, the price of Trinidad contact ammonia moving to Tampa rose $10 to $460 per metric ton cfr (cost and freight). Slow demand for phosphates and more sales of phosphoric acid are decreasing Moroccan DAP/MAP producer demand for ammonia. Hurting the supply side, however, gas supply problems continue to bother Egyptian ammonia producers. Supply from Middle East producers was tight at month's end with only contract cargoes and previously sold spot tons moving mostly into the normal trade with India. Early in the month, the Indian government's weather service was predicting a decrease in rainfall from the monsoon. Those predictions have not materialized, and the rainfall in June so far is reported to be significantly above average and is expected to remain strong until at least the end of the month. Good rainfall renders support in demand for fertilizer and helps keep fertilizer/ammonia prices firm. We expect world ammonia prices to run firm but flat in the short term.

Domestic ammonia prices at interior terminals sold at $610 early and fell to $550 per short ton late as producers offered fall fill programs. Wholesaler response to the fill programs has varied by region. Wholesalers/dealers in Illinois, Indiana and Ohio have been slow (wet weather) to get all application work accomplished and simply don't want to talk about fall supply needs now. Wholesalers/dealers in the Western Corn Belt (Iowa, Nebraska, Dakotas, Minnesota) have been able to get more application done and are more receptive to consider fall needs. We expect short-term domestic ammonia prices to run firm but flat at fall fill price levels.

UREA

World urea prices traded slightly higher in June as Yuzhnyy prills traded at $290 to $292 mt fob (free on board -- the buyer pays for transportation of the goods) early and rose to $292 to $295 late. Late in the month, STC, India, ran a tender and secured 850,000t from various origins at $315 to $318 mt cfr. Supply of Chinese material was less than normal, and the higher numbers allowed product from Iran, Oman, Yuzhnyy and the Baltic to take some of the business. In a mid-month tender, India was able to buy at just over $298. Brazil continues to deflate any optimism in the market, with bids at $310 cfr widely rejected by the market following the Middle East spot sales into India. A continued weak real against the dollar is also providing little reason for importers to commit. Also, the U.S. market is looking weaker with July values for NOLA (New Orleans, Louisiana) barges now at $308 to $312 short ton, significantly below June prices. We look for world urea prices to run flat with an undertone of softness in the short term.

Domestic urea prices traded a wide range both early and late in June. Prices ranged from $335 to $360 early to $310 to $350 late. The higher numbers came about in early June as incoming cargoes at NOLA were unable to unload because of fog, which restricted supply availability. In addition, heavy rains in the wheat belt and Mid-South made the Arkansas River impassable for much of the month, which starved the Catoosa market. The knock-on effect of reduced supply at the same time of heavy demand for corn topdress drove interior terminal prices to over $400 at month's end. Netbacks to NOLA for cash barges upriver went as high as $380 at mid-month. Import product in late June was priced as low as $293, but very late, the continued tightness ran NOLA barge prices to the $308 to $312 range. Once spring demand subsides, we expect NOLA barge and interior terminal prices to move lower.

UAN

Domestic UAN prices moved lower through June. NOLA barges traded at $232/32% early and at $217 late. An export sale early in the month by CF to South America at $180 mt fob roiled the domestic market, as many wholesalers expected a large drop in NOLA barge prices to materialize. There were only a few actual trades crossed at NOLA at the lower numbers expected in the $205 to $210 range. Through June, there was strong demand for UAN at most interior terminals for corn sidedress and interior prices held flat. In late June, CF came out with their summer fill program at Oklahoma locations for up-river terminals on a delivered basis. Wholesalers estimated the river terminal offers would net back to around $220 at NOLA. It is too early to tell how strong or weak response has been. Several wholesalers pointed out that while urea prices are currently strong, urea price prospects look weak in the near term, which makes current asking prices for UAN too high in their view. We look for domestic UAN prices to run flat to lower in the short term.

DAP

DAP/MAP tons crossed in the low-mid $470s ex Tampa, both early and late. In late June, Pakistan stepped up to take further volumes and paid in the mid-$480s cfr, if not higher. The Brazilian market continued to show slow demand due to ongoing issues regarding currency, finance and low crop prices. Late in the month, however, OCP, Morocco, succeeded in placing 60,000 t MAP for June ship and a price as high as $507 cfr has been achieved in some ports. Demand from India was slow early in the month over fears the monsoon could be less than normal. Through the month, however, those fears proved unfounded. Still, buyers remain cautious. There is still the weak rupee to consider, and while the maximum retail price enables importers to pay higher prices, higher domestic prices may cause some demand destruction. Chinese suppliers, meanwhile, are holding firm on price in the mid-$460s mt fob in the hope that India will return for July tons and support the sales that are being made into Pakistan and other regional markets. We look for world DAP/MAP prices to run flat with an undertone of strength in the short term.

Domestic DAP prices at NOLA dropped slightly through June, trading at $423 to $427 per short ton early and moving down to the $410 to $420 range late. Wholesaler/dealer interest was very thin as the spring season is winding down. Low corn prices continue to weigh on farmer attitudes and wholesalers/dealers remain reluctant to build inventory. Late in the month, producers showed willingness to place product on consignment, which is, in our view, a significant indicator of demand weakness. We expect domestic DAP prices to run flat to slightly lower in the short term.

POTASH

NOLA potash barge prices drifted lower through the month, trading at $325 to $335 early and crossing at $320 to $325 late. New sales of potash continue very slow as wholesaler/dealer interest is almost totally lacking. At month's end, many wholesalers believed most suppliers would be willing to place product on consignment. We look for potash prices to keep working lower in the short term.

(BAS/CZ/AG)


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