Slow start to harvest, fall application season keeps bulk fertilizer prices in check in September

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Urea prices at the river terminal proved to be more stable than barge prices with minimal demand from farmers and wholesalers, but overall still followed price trends at NOLA. Looking at some of the major hub markets – including St. Louis, Missouri; Inola, Oklahoma; and Cincinnati, Ohio – terminal urea in September ended the month in the $660-$680/t FOB range, about $30-$50 lower than August.

Hurricane Ian at the end of the month proved to have little initial effect on fertilizer prices, as its destructive path spared production sites in Texas and Louisiana. A more pressing issue that emerged was the extent to which Mississippi River water levels dropped, significantly affecting the transportation of grain and fertilizer.

Although we are still a long way from spring, urea prices are likely to remain most influenced by NOLA barge trading as well as price developments in Egypt and Brazil. Our price outlook ranges from stable to weaker in the near term.

International: Last month, India made a long-awaited return to the urea market with a tender that closed on September 9, and global markets received mixed messages when RCF received acceptances for delivery of 874,000 t of urea at $675 – $668/mt CFR. Prices were below previous levels, while at the same time acceptances were below the sought 1 million metric tonnes (mmt) at 1.2 mmt.

Following the conclusion of the tender and initial support in price levels, trading activity has slowed and offers have taken on a softer tone in anticipation of another Indian tender, which is expected to be announced in the second half of October.

In late September, Fertecon valued the Egypt price at $785-805/mt FOB, higher than $750-820 in August on higher net earnings in the European market, as nitrogen fertilizer production, including urea, remains reduced. Brazilian urea prices were valued between $630 and $675/mt CFR in September, compared to $540 and $580 in August, despite weak buying activity over the past month.

Demand in Brazil is expected to pick up in October, with buying levels lower than last year. Near-term price weakness looks likely as buyers remain cautious and sellers grow nervous over unsold inventory. Buyers are still looking for price guidance, which could come with the next Indian tender expected later this month.

In September, the 2022 TFI Annual Conference was held in Dallas, Texas, where much of the discussion focused on the nitrogen market, including market conditions in Europe, Ukraine and Russia, as well than on the larger US export flows of ammonia and UAN. The US market is still dropping to second place in exports, it seems, as bids continue to rise for the few tons available. It is said that sellers can bid on volume with little incentive to be aggressive in the local market.

Last month, the pace of exports to Europe remained strong and domestic offers were harder to come by due to the overwhelming volume of UAN being shipped overseas.

UAN barges at NOLA were valued at $550 – $560/t FOB, up more than $100/t from trading at $420 – $440 in August due to reduced barge availability in the US , as noted above, and the only viable offers listed by resellers at regular prices. rising price.

Rising second-hand ton trades in river terminal hub markets followed the firming NOLA market, with new sales made in the FOB range of $585-600/t on the Ohio River for 32% of ‘UAN. Previous offers during the summer fill were last heard between $435 and $440/t FOB in July, around the same time UAN export volumes started to attract a lot of interest. ‘Warning.

Demand in Europe could slow as tanks fill and previously booked orders are shipped, which could provide an opportunity later on for buyers if local UAN production begins to expand again. If the pull of products to overseas markets slows, we could see prices at home start to fall again.

On the other hand, if European demand continues and global buyers continue to seek out non-Russian fertilizers, UAN and other US nitrate prices could see continued bullish support.

National: Phosphates in the United States saw less export interest in September, which brought a generally softer tone to the market, although reduced Mosaic production at the end of the month due to the Hurricane Ian temporarily halting production in Florida served to provide last-minute support. at barge prices.

DAP barge prices ended September at $735-$755/t FOB NOLA, roughly flat with August prices at $740-$745. NOLA MAP barges lost some of their premium to DAP as prices were slightly lower at $755-$765/t FOB from August levels at $760-$773.

While demand remained generally slower ahead of some post-harvest applications expected later in the season, lower availability helped support trade values. Higher prices were also obtained by Mosaic before Hurricane Ian landed in Florida before the company withdrew all offers.

DAP river terminal prices improved despite flat prices seen at NOLA at $790-$820 FOB DAP, about $15 more than August offers. MAP offers in September ended at $810-$820, slightly higher than the $805-$815 reported the previous month.

It is possible that the drop in MAP prices is due to some trading at the sub-market level in order to price the imported volumes. However, an overabundance of supply is the cause of the overall weakness in phosphate markets, and we expect prices to remain stable or lower in the short term. However, restricted spot barge access in October could potentially support prices if terminals and other US domestic markets cannot provide replacement volumes for any post-harvest application consumption.

International: September was a month of weak prices on the world phosphate market. Rapid availability in South Asia weighed on prices in the East, and the Western Hemisphere followed suit. The United States and Brazil both saw weak phosphate demand in September, with inventories extremely high in the latter, while here at home the slow fall harvest pushed applications of fertilizer – and therefore the demand for phosphate – later in the year.

A lack of demand on negative price sentiment also pushed phosphate prices lower, with MAP values ​​in Brazil falling to $690-700/tonne CFR on idle – $100 lower than where prices were at the end of August.

India had calmed down after the last few weeks of activity, except for the finalization of DAP shipments under long-term contracts at the end of September. DAP prices in the country ended the month at $720-750/mt CFR, down sharply from the $856-890 seen in August and $200 off July’s highs.

The near-term outlook for global phosphate prices is under pressure. The high level of stocks in Brazilian ports is said to be such a pressing problem that incoming fertilizer ships are being diverted to other markets, indicating further weakness in values ​​in the coming weeks.

Like phosphates and ammonia, potash suffered from a slow harvest in September, having not yet been cleared from older warehouse stocks and supplies continued to decline during the month to to attract buyers before any year-end demand.

NOLA potash barge prices fell to $574/t FOB from $645 to $655 in the previous monthly column. The market has yet to kick into high gear for the fall demand period after the late summer slump, with some predicting Q4 2022 will be a heavier potash application window due lower spring sales earlier this year.

Prices from the river terminal fell about $40 from August to $670 to $700/t FOB last month as supplies were seen as sufficient for limited demand before the end of the harvest. The fall run will further depend on weather cooperation as to whether post-harvest conditions will allow pre-plant applications before winter weather begins in effect.

The global market is likely to remain dormant for some time, until early next year when it will again be time to settle major supply contracts. The continued absence of the majority of Belarusian potash from the United States also did not have a significant impact on prices due to the aforementioned high inventories in warehouses. Increased production at the Canadian mines of Nutrien and Mosaic appears to have filled any availability gaps that may have arisen.

In the short term, we believe that US potash prices are stable or weak, with potential for support from falling demand.

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Editor’s Note: This information was provided courtesy of Fertecon, Agribusiness Intelligence, IHS Markit.

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