By Ken Johnson
DTN Fertilizer Columnist
World ammonia market prices eased higher through the month. Export ammonia from Yuzhnyy traded at $590 per metric ton (mton) early and moved to $600-$610 late. (All prices in this column are wholesale.) Spot prices for Middle East product moved from $600 up to $635 late in the month. Far East industrial buyers showed strong resistance to higher prices for Middle East product through the month, but Indian DAP producers kept buying at slightly increased numbers. Supply issues remained in key producing countries like Russia/Ukraine (political), and in Trinidad, Algeria, Egypt, and Libya (gas supply shortages). Late in the month, a sale of Middle East ammonia closed into the Far East at $635 fob (free on board -- the buyer pays for transportation of the goods). At month's end, a trader claimed delivered price ideas are approaching $720 cost and freight in the Far East. This signals that some Far East buyers may have low inventories of ammonia. On the other hand, some industrial customers in Asia are still reporting lower demand and lower operating rates in reaction to higher ammonia costs. For the short term, we expect world ammonia prices to run firm but flat.
Domestic ammonia prices ran flat through the month with NOLA (New Orleans, La.) prices unchanged at $567 per short ton (ston) and central Illinois terminal prices holding steady at around $665. Low crop prices could be a concern to diminish fall ammonia demand to the extent that some switching to soybeans or wheat could occur in non-core corn growing areas. While lower crop prices might affect demand for P and K in general, N usage volume is unlikely to be affected for acres planted to corn and other crops. For the short term, we expect domestic ammonia prices to run firm but flat.
World urea market prices drifted slightly lower through the month with Yuzhnyy prills trading at $315-$327 early and crossing at $315-$323 late. It seems poor farm economics are taking their toll on the market in several areas. We may now have seen some demand destruction and not just delays in buying because of the high cost of urea relative to crop prices. World prices were under pressure through the month, more so granular than prills. At month's end, Chinese granular was widely offered at $310 mton fob but was finding little interest in markets such as the U.S. and west coast of Central America. Very late in the month, India decided to run another tender, and western European buyers became active to purchase Egyptian granular. It now remains to be seen if Brazil steps in and adds its support to the granular market. Prilled prices in China found support late in the month upon news of the Indian tender. Iranian tons are said to be tight but on offer at $310 fob. We look for short-term world urea market prices to run flat with an undertone of strength.
Domestic urea prices at NOLA softened slightly through the month, with granular trading at $310-$320 early and at $305-$310 late. Granular prices at Catoosa softened around $10 to $355-$365 as barges were arriving into a slow market; inactivity kept prices flat at most other interior terminals. It remains to be seen what the effects of much lower crop prices will have on demand this fall. Supplies of imported product also are quite a lot higher this year than last, and given the weakness in the world urea market, we doubt domestic urea prices have much upside in the short term.
Domestic UAN prices held flat at inland terminals and NOLA over slow demand. NOLA UAN barge prices traded in the $240-$245/32% range through the month. Prices for competing forms of N are steady (ammonia) to lower (urea). Low gas prices are keeping UAN producer margins very strong. Several import UAN cargoes are on the way, which could serve to keep a lid on NOLA barge prices. We look for domestic UAN prices to run flat in the short term.
Prices for DAP in the world market drifted slightly lower through the month. Tampa export trades crossed at $460-$470 mton early and tons were available at $460-$465 late. The main Asian and South American markets are moving out of season. The consequent slowing of demand and a quiet market are pressuring phosphate prices lower despite the re-introduction of the high tax on DAP and MAP exports from China. Buyers in the U.S. and Europe are in no immediate need of product and, sensing little upside to prices, they are largely holding back from the market. We look for world DAP/MAP market prices to continue under downward pressure in the short term.
Domestic DAP prices fell through the month, with NOLA barges trading at $420-$425 ston early and crossing at $405-$410 late. Many would-be buyers are concerned about the effect of low crop prices on fall preplant demand. Mosaic announced production reductions in the mid-month, but a continuing flow of imported material could keep downward pressure on domestic DAP prices. With world prices in a funk, we doubt domestic DAP prices have much upside in the short term.
NOLA potash barge prices held flat in the high $380s through most of the month, but month's-end pressure from imported material lowered quotes to $370-$375. The dismal situation of slow rail deliveries of potash (and other fertilizers) looks to continue for some time. While this will no doubt serve to keep potash supplies thin, anecdotal evidence suggests low crop prices could negatively affect potash and DAP demand volumes this fall more than the demand for N. We look for domestic potash prices to run firm but flat in the short term.
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