DTN Fertilizer Outlook
Tuesday, May 26, 2015 9:24AM CDT
By Ken Johnson
DTN Fertilizer Columnist
World ammonia prices drifted slightly lower through May with Yuzhnyy export tons trading at $390 to $400 early and at $390 to $395 late. (All prices in this column are wholesale.) Both Yuzhnyy and Baltic markets were quiet. Late in the month buyers were reported offering around $380 to $390 fob (free on board -- the buyer pays for transportation of the goods) for both markets but there has been no business conducted at this level; latest indications are around $390 to $395 fob. Mid-month in the Far East Yara/Australia sold a 15,000t cargo to Namhae/South Korea on a spot basis for mid-June delivery at $433 mt cfr (cost and freight). This was some $17 below the previous trade. There were several ammonia plant outages at North African suppliers (Algeria, Egypt) due to gas supply shortages and/or technical problems which seemed to not have much effect on world prices. In late May, the June Tampa contract import price dropped $15, crossing at $450 per short ton cfr. We look for world ammonia market prices to run flat to lower in the short term.
Domestic ammonia prices traded flat through the month as central Illinois terminal prices were at $610 per short ton through May. The spring run to corn preplant is nearly over in most markets. Supplies seem thin for the sidedress market coming soon, but there seems no pressure on prices in either direction. Late in the month ammonia prices in the Western Corn Belt moved slightly lower as supplies seemed a little long. Overall we expect domestic ammonia prices to run flat with an undertone of softness in the short term.
World urea prices moved higher through May on continued buying from India. Yuzhnyy prilled urea traded at $270 to $272 early and rose to $283 to $286 late. In late May, IPL, India, ran a tender and found it a struggle to find enough sellers to short the Chinese market and take an award for June shipment. At midmonth, Chinese product sold in the $280s and at month's end suppliers were asking $300. Iranian product was selling at $290 fob at month's end. Middle East producers sold product at $312 to $324 mt early and the high end of the range moved to $334 late. Producers in the Middle East are in a very comfortable position. For the limited tons available for June, they are targeting $315 and above. However Brazilian buyers are so far refusing to commit to any volume at these prices, unconvinced they will hold in the weeks to come. China still holds the key going forward; if they limit export availability, they can continue to command higher prices but if they decide to turn straight from the domestic market to export as the season ends, world prices will no doubt come under downward pressure. We look for world urea market prices to run flat with an undertone of weakness in the short term.
Domestic granular urea prices increased during May. Cash NOLA (New Orleans, Louisiana) barge prices moved from $325 to $340 per short ton early to $330 to $355 late. At mid-May, prices firmed as delays in arriving cargoes forced a large importer into the market as a buyer. Late in the month, urea was moving in moderate to heavy volume to corn preplant in many markets and interior buyers were stocking up for sidedress. Overall supplies still seem tight and we look for very short-term interior terminal prices to run steady to slightly higher. Although there is still plenty of corn sidedress to get done in some markets, spring demand is winding down. High prices for barges could continue for a few weeks but trading in the paper market indicates medium-term prices could be coming down.
NOLA UAN barge prices softened in May, trading at $240/32% early and dropping to $230 to $235 late. Prices for UAN at interior terminals remained flat even in the face of strong prospective demand for corn sidedress in many markets. Prices at NOLA came off $5-10 on pressure from imported supply. While prices for urea look firm in the short term, prospective lower urea prices in the medium term seem likely to forestall any run up in UAN numbers. We look for domestic UAN prices to run flat to lower in the short term.
The world phosphate market churned higher through May with Tampa export tons trading at $465 mt early and crossing at $474 late. New sales were made into Pakistan, Brazil and Argentina all edging up a few dollars on previous deals. Prices in Saudi Arabia and China have also increased as seen in sales to Pakistan and the Philippines. The Turkish market also showed some strength with one major DAP cargo placed there from Lithuania in the low $500s cfr. At month's end, however, new deals in the east remain few and far between as Pakistani and Indian buyers were absent from the market following the flurry of activity in May. European demand also remains subdued and it is expected to remain so as the season is coming to the end with producers trying to find buyers for the current stock available. Various major Chinese producers are down for regular annual maintenance and this is restricting export availability. We look for world DAP prices to run flat in the short term.
NOLA barge prices increased sharply at month's end, rising to $420 to $425 after starting the month in the $405 to $410 range. Domestic price for NOLA DAP barges took the jump as Mosaic took back 15-18 barges out on consignment and loaded them for export. Domestic DAP prices at central Illinois terminals were steady at 450 per short ton May over continuing light corn preplant demand. Wholesalers/dealers continue to indicate reluctance to build inventory in view of low corn crop prices. We look for domestic DAP/AP prices to run firm but flat in the very short term, perhaps coming under downward pressure as spring demand winds down.
Prices for potash barges and at interior terminals drifted lower through May despite the appearance of strong demand in some markets. NOLA potash barge prices traded at $330 to $340 early and crossed at $325 to $335 late. Prices at interior terminals were slightly lower through the month, with product at St. Louis trading at $375-$385 early and at $370-$380 late. Demand for potash at the wholesaler/dealer level remains moribund as they remain reluctant to build inventory. Spring corn preplant demand has been lackluster in most markets. We look for domestic potash prices to keep moving lower in the short term.
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