by Ken Johnson, DTN Fertilizer Columnist
World ammonia prices firmed through March, largely driven by the political situation in Ukraine, which is a major exporter of both ammonia and urea. Ammonia prices ex Yuzhnyy ran from $420-$450 per metric ton (mton) early to $485-$490 late. (All prices in this column are wholesale.) Demand from India for Middle East tonnage has been steady, keeping supplies tight. Adding to supply woes, the Yara plant in Libya has been closed due to political problems and Egyptian plants have had operating rates reduced due to low gas pressures. One improvement on the supply side has been more product from Algeria finding its way through the export license maze. Despite these recent price increases, there are also factors which can limit further upside. In India, several major phosphate producers are expected to have maintenance shutdowns from April to the first half of May. Also, demand for caprolactam production in southeast Asia remains weak. We expect world ammonia market prices to run steady to higher in the short term.
Domestic ammonia prices moved higher in central Illinois, reflecting tensions in the world market and the imminent onset of spring corn preplant demand. Terminal prices moved from $520-$525 early to $590 late in the month. Prices moved higher at interior terminals in the wheat belt, reflecting spring corn preplant demand and higher world pricing. We look for domestic ammonia prices to run steady to slightly higher in the short term.
UREA
World urea market prices moved lower through the month with prices for prilled product ex Yuzhnyy dropping from $325-$335 mton early to $300-$305 late. There are still a lot of tons to place from the Baltic for April, adding to downward pressure. Prices for granular product moving from the Middle East to the U.S. also moved lower, falling from $404-$440 early to $377-$419 late. Late in the month, India ran a tender and purchased around 1.01 mm mtons. All the sales were covered by Chinese and Iranian product at $325 mton cfr (cost and freight). Chinese granular prices are also falling steadily, which will add to the pressure on Middle East product as traders chase after South American business. Lower prices are drawing out buyers in South America, Turkey and Europe, but it remains to be seen if this is sufficient to flood the market with endless supply, it seems, hitting the market from China and Middle East availability set to increase as shipments to the U.S. dry up. We look for world urea market prices to run lower in the short term.
Domestic urea prices at NOLA (New Orleans) fell during the month, moving from $428-$430 per short ton (ston) early to $410-$415 late. Even though weather has delayed the onset of spring demand, logistical delays for barges on the river and for rail cars coming from Canada are effectively reducing supply going into seasonally strong demand. Cash barges and those parked up river or moving on tows traded in the $410-$415 range late in March while short forwards (early April) are traded in the $368-$380 range. June granular paper is priced at $330-$340. Domestic prices at interior terminals could stay firm and even move higher in the short term, but medium-term prices could come under severe downward pressure once spring demand is served.
UAN
NOLA UAN barge prices traded flat through March at around $285 to $290/32{75f28365482020b1dc6796c337e8ca3e58b9dd590dc88a265b514ff5f3f56c30} ston. There was some mention early in the month that a late start to spring could prevent ammonia application and shift demand to UAN. However, ammonia moved out in strong volume in several markets late in the month, making fears of ammonia not getting applied for corn preplant unfounded. Imported supplies are coming in from Trinidad at normal levels, keeping prices soft at NOLA. Interior prices could be firming due to logistical delays, looming demand for corn preplant across much of the Corn Belt and prospects for strong sidedress demand in the medium term. Prices for competing forms of N are variable, with ammonia prices stronger but urea prices looking weak in the medium term. We expect short-term UAN prices to run firm but flat.
DAP
World DAP prices traded flat through the month with export tons available from Tampa at $495-$500 mton early and late. Late in the month, offers of $500 fob (free on board — the buyer pays for transportation of the goods) for U.S. DAP were not enticing buyers in the main east coast South American markets, who booked yet more DAP and MAP at lower prices from alternative sources, including the FSU, Saudi Arabia and China. Indian and Pakistani importers remain on the sidelines in the spot DAP market, waiting for a clearer picture on the mid-May onwards low tax window Chinese supply position, which it is hoped will emerge in second half of April. However, the pressure on India to purchase DAP will grow as the market moves through April and inventories are worked down. For the short term, we look for world DAP market prices to move lower.
Despite lower prices in import markets, domestic DAP/PMAP prices firmed through the month. NOLA DAP barge prices moved from $460-$485 early to $495-$505 late. The lack of anticipated supply arriving in a timely fashion from Morocco has kept the domestic market short even as spring demand gets underway and prices have responded. The main Moroccan port from which export DAP moves has been closed for much of the month due to extremely high ocean wave activity which halted loading and unloading operations. The same logistical delays affecting urea are also slowing DAP deliveries to inland points, which effectively reduces supply even as strong spring demand gets underway. For the short term, we expect interior terminal prices to run steady to higher. As in the case with urea, late-arriving imported product could put substantial downward pressure on medium-term DAP prices.
POTASH
The lack of Canadian product getting into Midwest markets in a timely fashion caused buyers needing potash to enter the barge market in the second half of March. NOLA barge prices moved for $310-$315 early in the month up to $335-$345 late. Given the imminence of spring demand, interior terminal prices also seem likely to rise to the recently increased published price of $370. However, farmer demand for potash could be diminished due to low corn prices. Potash prices have been gradually falling for the better part of the past 12 months, which has encouraged wholesalers/dealers to keep inventories thin, but now logistical delays are leading to stronger pricing for product in place. Short-term potash prices seem likely to run steady to higher.
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Posted with DTN Permission by Haylie Shipp
