DTN Fertilizer Outlook

By Ken Johnson
DTN Fertilizer Columnist


World market prices for ammonia increased from $445 to $450 mton fob Yuzhnyy in early August to $480 late. Price firmness and bullish sentiment in the market are driven by supply issues in important parts of the world. Two Ukrainian plants are still closed due to political upheaval and military operations in eastern Ukraine. Trinidad and Egypt continue to be affected by gas curtailments. There were questions raised over FSU material, and how it can be lifted amid fresh European and U.S. sanctions against Russia. In Southeast Asia, inventories are believed to be low with some customers expected to run out of stocks in early September. Industrial demand in that region has been increasing steadily over the past few months. For the short term, we look for world ammonia prices to run steady to higher.

Domestic ammonia prices are increasing despite little market activity in the Corn Belt. Cash prices in central Illinois traded at $560 to $570 early and were assessed at a nominal $610 late. Demand in the wheat belt is just beginning and ammonia prices at Oklahoma production points have increased sharply over the past few weeks. Late in August, however, Oklahoma wholesalers offered to dealers at numbers below the peak levels. Wheat belt dealers also saw some switching to ammonia away from high-priced urea for wheat preplant. Late in the month, CF fired a shot across the bow of fall Corn Belt buyers, announcing an asking price for fall fill at $645, which is $85 higher than recent sales. For the short term, we look for domestic ammonia prices to run higher.


Urea prices moved higher through August. Prilled material ex Yuzhnyy traded at $305 to $310 mton fob early and at month’s end crossed at $330 to $335. Early in the month, Chinese prills were selling at $260 and lately, the price had moved up to $285. Chinese granular prices moved up from $290 early to $345 late. IPL, India, ran a tender in late July and short sellers were having trouble covering in. Late in the month, Indian shorts were competing with traders positioning fresh Chinese tons for the next tender, which is expected to be announced in early September. Granular demand in South America allowed higher prices to be secured for both Chinese and Middle Eastern material, underpinned by a U.S. market, which did not slide away as dramatically as anticipated. European demand is quiet at present, but trader shorts could need product from North Africa to cover soon. We look for world urea prices to keep moving higher in the short term.

In the domestic market, cash NOLA (New Orleans, La.) barge prices traded at $360 to $365 through August. Wholesalers have been able to buy import tons coming in at lower levels in the forwards market. During the past few months, the forward NOLA urea barge numbers have been rising to current cash levels ($360 to $365). There have been delays in getting import urea here and the very tight barge supply situation is continuing. Most of the product landing so far has been sold. Thus there are virtually no floaters coming off the vessels arriving. Large interior wholesalers may have contracted imported product earlier at lower numbers and if their barge is now loaded, they probably have committed it into their own system and are unwilling to flip, at present at least. Even so, domestic demand is slow and the steady arrival of product could work against prices, moving significantly higher. Some larger distributors have been buying in tons at the steadily increasing numbers since they do not have the luxury of waiting to the last minute to secure their needs. Smaller dealers/distributors remain on the sidelines absent farmer interest. For the short term we expect domestic urea prices to run steady to slightly higher.


NOLA UAN barge prices held at $240 to $245 ston fob through August. Significant export volumes seem balanced by good import supplies of imported material. New sales of UAN remain seasonally slow. Late in the month, however, in the few markets with activity, prices were running slightly higher. Prices for competing forms of N are increasing both domestically and in world markets. We look for UAN prices to run steady to slightly higher in the short term.


World export DAP prices traded flat through the month, hovering at $440 to $445 mton. Steady demand for DAP in India and Pakistan has encouraged importers in both markets to pay higher prices at month’s end, in the low $480s cfr and the low $490s cfr, respectively. However buyers in South America and the U.S. are standing aside as crop prices continue to come under pressure. Late in the month, importers on the east coast of South America were being presented with lower offers for Chinese MAP as traders look to liquidate positions to complete vessels en route. Pressure is also growing on producers of U.S., Russian, Moroccan and Mexican MAP/DAP to find a home for product for September tonnage. Demand from European buyers is likely to remain slow until end of the fourth quarter. We look for world DAP/MAP prices to run flat in the short term.

Domestic DAP prices traded flat at NOLA through the month at $440 to $445 ston. While the interior distribution system is fairly empty, there is quite a lot of imported supply coming in imminently (Aug.-Sept. now total 285,000t DAP and 460,000t MAP) and coupling that with much lower crop prices one might expect some downward pressure to develop. The reality of slow re-supply due to logistical delays could work to keep interior supplies tight into the fall and help hold prices higher than one might expect given other factors. We look for domestic DAP/MAP prices to run firm but flat in the short term.


NOLA potash barge prices were flat through August, trading around $378 to $380 both early and late. Slow deliveries of potash both by barge and rail continue to keep supplies thin. When light demand does appear at inland terminals, prices are firming up. We expect short-term potash prices to keep moving higher until the supply side deliveries improve.