By Ken Johnson
DTN Fertilizer Columnist
World ammonia market prices were flat in November with Yuzhnyy ammonia cargoes trading in the $600 to $610 per metric ton range. (All prices in this column are wholesale.) Some Far East industrial buyers were restricting plant output due to high ammonia prices, but others were paying gradually increasing prices for Middle East tons. There is some improvement in supply from North Africa, but overall the market seems well balanced. Prices in the world DAP markets are soft, and DAP producers could be looking for lower numbers in up-coming negotiations. We look for world ammonia prices to run flat with an undertone of weakness.
Domestic ammonia prices softened through November with product selling in central Illinois at $665 early and crossing at $650 late. Toward the end of the month, a severe early-winter storm halted fall ammonia application over much of the Corn Belt. Wholesalers in some markets are hoping to get a restart in the coming week, but others indicate a resumption of activity could be limited, at best. Several wholesalers/dealers we spoke with said the prospect of a shortened ammonia application season in the Corn Belt had raised farmer/dealer interest in acquiring spring urea and UAN tons. For the short term, we look for domestic ammonia prices to run flat to slightly lower.
World urea price moved lower through November. Prilled urea traded at Yuzhnyy at $315 to $318 mt early and crossed at $298 to $310 late. Late in the month, Middle East granular prices crossed at $325 fob (free on board -- the buyer pays for transportation of the goods) for cargo thought to be destined for Europe. Brazilian interest was noted at close to $350 cfr (cost and freight). U.S. importers were also reported showing more interest in spot cargoes, but at prices below levels achievable in Brazil and Europe. There still seems to be granular available from China at more competitive levels of $305 to $310 fob, but not all markets will take this material and may pay higher to secure Middle East material. Prilled prices in China found support late in the month at $290 mt fob as traders covered in mid-month sales made to India. Without further Indian support, China may well need to reduce production going forward if domestic demand cannot be found to absorb all the tonnage. At month's end, Middle East granular was still selling at $320 to $325, but it is also evident that some tons which appear to have been placed into Brazil, the U.S. and Europe have not yet been sold. Buyers in Europe are seeing offers from Egypt undercut by cheaper numbers from the Middle East and there is even Iranian cargo surfacing in many areas. We look for world urea prices to keep moving lower in the short term.
Domestic urea prices at NOLA (New Orleans, La.) traded in the $305 to $310 per short ton range through most of November and the trading range expanded slightly at month's end. There was a small rally early in the week, which sent prices above $310, but it fizzled late in the week and product crossed at $303. Extremely cold weather may have foreshortened the fall ammonia application run in some markets, which may translate into added demand for both urea and UAN in the spring. Late in the month, prices at some interior terminals firmed slightly but demand remained limited as dealers filled only a portion of projected needs. We expect domestic urea prices to run flat with an undertone of softness in the short term.
NOLA UAN barge prices held flat through most of the month at $242/32%. New sales were seasonally slow and interior prices held flat. In the last week of the month, the prospect of less ammonia usage this fall due to cold weather stimulated some farmer/dealer interest in buying first quarter UAN tons. Late in the month, NOLA barge prices moved up $5 to $247. In the short term, domestic UAN prices could run steady to slightly higher.
Export DAP/MAP prices drifted lower through November. Tampa export tons traded at $460 mt early and moved down to $445 to $450 late. Most buyers in the world phosphate market continue to adopt a wait-and-see approach with many in no urgent need of material and seeing little upside to prices. This is despite the price reductions already accepted by suppliers in recent weeks and reduced DAP/MAP operating rates. With seasonal shipments to Asia low, notably DAP to India, there is ample supply to meet emerging demand. Late in the month GCT, Tunisia, reduced its asking price for DAP by up to $10 to around $500 mton fob in an attempt to strike new deals in northwest Europe. OCP, Morocco, is reported to have sold additional DAP at $505 to $510 fob to Europe where more buyers have stepped in to cover part of their requirements as the window for demand deferral narrows. Moroccan production is being deliberately curtailed at present. While the producer is comfortable for November, it still needs to place December onward tonnage. Ma'aden, Saudi Arabia, has turned to South America to place uncommitted tons, but in a weak market has agreed to price the product sold into Uruguay according to a formula. The world market is looking at the increasingly likely possibility that Chinese supply could be higher, given latest expectations about the country's 2015 export tax policy. We look for world DAP/MAP prices to continue under downward pressure in the short term.
NOLA DAP barge prices traded flat through the month at $405 to $410 per short ton. Late in the month, some good demand appeared in the central Corn Belt, but there was no notable effect on interior prices. Supplies are adequate and low crop prices remain on the minds of many dealers when considering how much DAP they want to be carrying. Logistical considerations are causing a few to order in some product earlier than normal. Given the softness dominating world market prices, we doubt domestic phosphate prices have much upside potential anytime soon.
Domestic potash barge prices traded flat at NOLA through November at $370 to $375 per short ton. Supplies remain thin due to continuing slow rail logistics. Interior terminal prices firmed to around $410, even though demand seemed quite light. Wholesalers/dealers remain reluctant to build inventory due to low crop prices. Late in the month, news came that the Uralkali Solikamsk 2 potash mine was having a strong inflow of brine and operations were suspended for safety reasons. If the mine remains closed for an extended period, it will affect supply into the world market substantially. We look for domestic potash prices to run steady to higher in the short term.
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