Fertilizer Outlook: Ammonia Running Flat in Short Term; Others Hanging Low06/28/2016
World ammonia prices softened slightly through June. Export ammonia prices from Yuzhnyy dropped from $270 to $290 metric ton fob early to $265 to $285 late. Landed prices into India were steady, trading in the $360 to $375 range through the month. Late in the month, the price for ammonia coming into Tampa dropped sharply, falling $30 to $285 mt cfr. At month’s end, prices were stable for industrial buyers in the Far East. Industrial demand was reasonably good at month’s end but buyers were heard pressing for lower levels when discussing forward commitments.
We look for world ammonia market prices to run flat to lower in the short term. Domestic ammonia prices also fell through June. Cash sales in central Illinois crossed at $475 per short ton early and had fallen to $450 late. Late in the month, CF came out with a fall-fill number of $400 to $415 per short ton in the northeast Corn Belt, which received a tepid response. Wholesalers/dealers are looking forward to the startup of the new OCI plant in Weaver, Iowa, this fall, which is expected to inject new competitive price pressure into the domestic ammonia market. We expect domestic ammonia prices to run flat to lower in the short term.
Export urea prices fell in several markets through June. Prilled material prices from Yuzhnyy dropped from $194 metric ton early to $185 to $190 late. Chinese export tons traded at $208 to $210 early, but lack of new buying interest from India pressured prices late to the $204 mt fob port level, with indications some exporters would sell at $200. The price for Egyptian granular tons was steady through the month on light buying from northwest European importers. Small Egyptian cargoes sold in the high $190s and midsized cargoes went in the low $190s. Middle East producers saw some price erosion through the month as South American buyers were slow to come to market, sensing price weakness. Early in the month Middle East product sold for $172 to $177 mt fob and later in the month product could be had for $164 to $170. A good monsoon is developing in India, which could encourage a new buying tender early in July. For the short term, we look for world urea market prices to run flat with undertone of softness. Domestic urea prices at NOLA basically traded flat for the month. In early June granular traded in the $178 to $180 range. There was a small price rally at midmonth into the low $180s but at month’s end prices had dropped back below $180. Interior prices slid lower with tons at St. Louis trading at $235 to $240 early and crossing at $220 to $225 late. Buyers continue to acquire product only on an “as needed” basis and few want to bring in product now to sweat through a long, hot summer in the warehouse. Supplies into the world market seem likely to remain substantial through the summer, keeping downward pressure on urea prices both internationally and domestically.
Prices for UAN dropped through June with NOLA barges trading at $175/32% per short ton and falling to $135 to $155 late. The high end of the range was for prompt product and the low end was for imported tons arriving shortly. Interior prices moved lower with UAN tons at St. Louis trading around $220/32% early and dropping to $213 late. Downward pressure came from falling urea prices and from imported material. At month’s end, with the season coming to a close, wholesalers/dealers are in a wait-and-see mode, awaiting summer fill offers from producers. We look for domestic UAN prices to keep moving lower in the short term.
Prices in the world phosphate market drifted slightly lower through June. Export DAP tons from Tampa traded at $350 mt fob early and were at $347 late. Late in the month, Pakistan purchased three DAP cargoes, benefitting Saudi Arabian, Chinese and Australian producers, while more Russian MAP has been sold by EuroChem to South America. Landed prices for Lithuanian DAP into northwest Europe traded at $370 to $375 mt through the month. There is growing pressure on Chinese producers to find a home for 11-44-0 MAP with prices for this product still weak. There is some concern about the size of third quarter DAP demand in India, given the more than 2 million metric tons, which have already been booked and the rupee falling in value in recent weeks, making imports more costly. Even so importers’ margins remain healthy and the most recent reports from India’s Meteorological Department indicate weather conditions (monsoon) are becoming more favorable. We look for world DAP/MAP prices to run flat in the short term. Domestic DAP prices traded flat at NOLA through June with barges trading in the $305 to $312 range early and late. Many large wholesalers remain reluctant to build inventory, although apparently a few large buyers did enter the market late in the month as Mosaic claimed to have sold 11 barges in the last week. Late in the month, producers received a reduction in production costs ($6.20 per short ton) with the decrease seen in ammonia prices. The amount of imported material scheduled to come in increased substantially at month’s end and should work to keep price pressure on domestic producers. We look for domestic DAP/MAP prices to run flat with an undertone of softness in the short term.
NOLA barges traded early in the month at $180 to $185 per short ton and late in the month prices had fallen to $170. Prices at interior terminals also moved lower, with tons at St. Louis crossing at $230 to $235 early and selling for $220 to $230 late. At month’s end, potash producers were still offering product either with price protection or on consignment. We expect potash prices to continue soft in the short term.