By Ken Johnson
DTN Fertilizer Columnist
World ammonia market prices traded flat through February. Yuzhnyy export ammonia was crossing at $400-$410 per metric ton (mton). (All prices in this column are wholesale.) Tight spot availability continued for Middle East material with cargoes destined for long-term contract customers lifted as a priority. The phos acid price for 1Q 2015 shipments into India was not settled at month's end and was putting a general feel of uncertainty into the market. Even so, demand for imported ammonia is still quite strong and March deliveries are presently being fixed. We look for world ammonia prices to run firm but flat in the short term.
Central Illinois terminal ammonia traded flat at $625 per short ton (ston) through the month. It remains to be seen if falling urea prices might spill over into ammonia when activity resumes. There is still a substantial number of Corn Belt ammonia tons carried over from fall (+30%) which have accrued storage costs. Their presence could diminish spring demand levels for fresh tons. Even with a late start, however, the equipment base in place can apply normal volumes of ammonia in a very short time (10-14 days). For the short term we expect domestic ammonia prices to run flat.
International urea prices moved lower through the month. Yuzhnyy prilled tons traded at $310-$320 mton early and were crossing at $275-$285 late. Prices for Middle East granular prices also tumbled, dropping from $300-$326 mton early to $275-$285 late. Yuzhnyy prices were under strong downward pressure despite the fact that two export plants still sit idle and domestic demand in the Ukraine is thought to be much higher than last year. Granular prices into Brazil slumped to $305 cfr (cost and freight -- seller must pay the costs and freight to bring the goods to the port of destination) late in the month. There was nothing offered out of Egypt to test the market late in the month there, but offers/sales into France in the last week plummeted to a netback to Egypt of $320 fob (free on board -- the buyer pays for transportation of the goods) or possibly lower. This was down $40 from early February prices. In China, traders are said to be shorting March sales as low as $285 fob while the spot price is closer to $300. The prompt price for Chinese prills was holding at $288-$290 late in the month as traders continue to cover shorts, but forward sales were being shorted as low as $275. We look for world urea market prices to keep moving lower in the short term.
In the domestic market, harsh winter conditions continued to keep new urea sales limited over the Midwest. The continuing arrival of imported product pressured NOLA (New Orleans, La.) barge prices $30-$35 lower through the month. Granular barges traded at $325-$327 ston early and at month's end were crossing at $290-$295. Wintery conditions covered the wheat belt, Corn Belt and reached into the Deep South. Many farmers/dealers are being sidelined by the weather, but present procrastination could lead to some price increases at interior terminals when demand does kick in. Given the extreme weakness in the world urea market, we see no long-term upside and expect any medium-term rally to be stunted and short lived.
NOLA UAN barge prices traded flat at $260/32% ston for most of the month then took a $10 drop to $250 late. There have been pockets of good demand for UAN over the past few weeks, but the resurgence of winter conditions late in the month quashed even that limited activity. Producers continued to claim sold out through March and are asking higher, but were unsuccessful in moving interior prices up. Producer margins remain wide and prices for competing forms of N are steady (ammonia) or soft (urea). Once spring demand does get started, we believe UAN producers will be more interested in moving product than increasing prices. We expect short-term UAN prices to run flat.
Tampa export DAP prices moved down slightly in the month, trading at $485-$487 mton and crossing at $485 late. Various holiday activities led to little activity in the world phosphate market through the month. The Chinese market has recently been quiet due to the New Year holidays and there is yet no clarity on how Chinese phosphate exporters will react to the Chinese government easing of its export-tax policy. At month's end Indian buyers were starting to purchase tons to replenish low stocks. However most of the DAP plants in India are running at slow rates of production, as evidenced from diminished ammonia arrivals in February. There was no price settlement for phosphoric acid at month's end and several Indian DAP producers may consider taking maintenance turns. Against this backdrop, world DAP/MAP market prices in general are expected to move sideways, though with a bias toward some softening.
In the domestic market, it has been the weather rather than holidays which has stymied demand. NOLA DAP barge prices traded around $442-$443 ston early in the month and fell to the $438-$442 range late. Several large cold fronts moved through the Midwest though the month, dashing hopes of an early spring. There is a large volume of imported Moroccan material on the way which has buyers skittish, and the delay in application caused by winter weather is not helping demand. We look for domestic DAP/MAP prices to run flat with undertone of softness in the short term
Domestic potash prices softened slightly through the month with NOLA barges trading at $358-$360 early and priced at $355-$358 late. As in the case with urea, imported potash is pressuring NOLA barge prices lower. New domestic inland sales remain very slow due to bad weather. Interior prices are holding flat but are under no real buying or selling pressure. Interior supplies seem slightly improved over last year. While there has been some spreading of potash over frozen corn ground, wholesalers indicate volume has been less than normal, primarily due to weather. Lower corn prices seem also to be taking a toll on demand. We look for domestic potash prices to run flat with undertone of softness.
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