DTN Fertilizer Outlook

December Sees Typical Slowdown, Balancing of Commodity Fertilizer Prices

Commodity fertilizer markets, much like many working folks, tend to take time off in December around Christmas and other year-end holidays across the globe. This year was no exception as illustrated in the graph which shows a rollover in Yara and Mosaic's Tampa ammonia contract price for the month. Most other fertilizer prices declined or remained steady during the last month of 2023. (Chart courtesy of S&P Global)

The following is a recap of fertilizer price trends and market developments for December.

AMMONIA

Domestic: Ammonia producers in December issued winter fill and spring prepay sales at levels significantly cheaper compared to the previous year. In the Corn Belt, offers ranged from $645 to $650 per short ton (t) free-on-board (FOB -- sales price without transportation costs included) for prepay and $620/t FOB in Iowa for fill, respectively. The level of buyer engagement was uncertain at the time of publication as the market slowed down significantly around Christmas.

To compare, in winter 2022, ammonia fill offers were released at $890 to $955/t ex-works at Oklahoma production facilities and $1,100/t FOB Corn Belt. Prepay offers ranged from $950 to $1060/t ex-works.

In a major industry acquisition, OCI announced in December it had sold its 100% share of Iowa Fertilizer Company to Koch Industries for $3.6 billion. This came on the heels of its Dec. 15 announcement that it sold its 50% share in Fertiglobe to Abu Dhabi National Oil Company (ADNOC) for $3.62 billion.

After a robust year-end sales period, ammonia markets were expected to slow somewhat ahead of the spring buying rush.

International: Last month, Yara and Mosaic settled their Tampa ammonia contract for January at $525 per metric ton (mt) cost-and-freight (CFR -- or sales price of product with transportation costs to buyer included) which came as "no big surprise," according to one trader Fertecon spoke with, noting it was widely expected in the market given the inflated value of the Tampa contract for December at $625/mt CFR.

Global ammonia markets began to normalize following the Tampa settlement leading into the holidays, giving a $20/mt premium for cargoes shipped from the United States to the European market. This is more in line with historic premium levels, which have been largely out of whack in recent months, a trader said.

Ammonia prices in Northwest Europe to end 2023 declined to $525 to $600/mt CFR, down from $580 to $680/mt a month prior. Black Sea ammonia similarly ended December lower at $460 to $510 FOB compared to $555 to $615/mt in November on a nominal basis.

East of the Suez Canal, traffic ground to a halt with end-of-year sales largely completed. The impact of Red Sea disruptions on the global ammonia trade has been felt via inflated oceangoing freight rates and shipment delays.

UREA

Domestic: The main questions in the U.S. urea market last month centered on how prices would be impacted in the coming weeks following news of India returning to the global market as a buyer on Dec. 21 with a fresh purchase tender to end the year.

Urea fertilizer barge values at the U.S. Gulf trading hub in New Orleans (NOLA) were assessed at $292 to $308/st FOB in Fertecon's last weekly publication of 2024, lower compared to the end-November price range of $325 to $335/t FOB. Prompt barges traded around $303 to $308/t FOB to end December while product shipping closer to the spring season held a premium with February barges reported trading higher at $312/t FOB. Domestic demand for urea was muted to end the year as typical for the winter season.

River terminal offers were heard steady from $355 to $365/t FOB along the lower Mississippi River, while past the northern barging closure offers in Minnesota held a $20/t premium compared to markets southward from St. Louis. This range was roughly $100/t down from end-November terminal offers at $455 to $470/t FOB.

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At the end of the year, importers were checking freight for booking shipments of Qatari as well as Nigerian-origin urea, presumably to begin positioning material ahead of spring demand or fulfilling earlier sales. Heading into the end of 2023, the global urea market was similarly slow compared to the U.S., but a fresh India tender to start 2024 generated some activity to kickstart the new year.

International: Oversupply weighed heavy in the global urea market throughout December and prices faced downward pressure. This market also wound down ahead of the holiday period, with much of the European industry taking leave in the last week of December. Many within the market noted that suppliers, especially in the Arab Gulf, would likely be pleased with news from India's purchase tender in December given the opportunity to offload volumes in a market otherwise suffering from limited demand.

There were some short spurts of sales activity in Egypt, although prices slowly declined throughout the month to $335 to $340/mt FOB compared to the end-November range of $345 to $350/mt FOB. The story in Algeria was much the same, with producers targeting higher levels but buyer interest pegged lower.

The Brazilian urea market was set for a quiet end to the year, with the holiday season approaching and corn planting behind schedule. However, news from India of a fresh tender caused a stir and buyers stepped back into the market. Brazil urea prices, however, still ended December lower at $310 to $315/mt CFR, down from $310 to $320/mt CFR in November.

Global demand was due to pick up throughout January following the market return from the holidays and results of the December Indian purchase tender.

UREA AMMONIUM NITRATE (UAN)

UAN market values in the U.S. slipped slightly at NOLA to end 2024 following what market players described as a good winter buying period.

NOLA barges were assessed at $240/st FOB at the end of December, having dropped from $240 to $260/st FOB last week. Market fundamentals seem balanced for nitrates at the moment.

Along the Mississippi River, terminal offers for UAN 32% were unchanged from November price levels with Cincinnati priced at around $280/st FOB. Our equivalent UAN NOLA Cincinnati netback levels dropped slightly to $240 to $250/st FOB given higher spot barge freight indications at around $40/st.

On the East Coast market, supply and demand fundamentals remained unchanged, and the UAN U.S. East Coast CFR was assessed at $275 to $280/mt CFR.

Last month American Plant Food (APF) halted permitting and construction processes of a planned 500,000-t capacity ammonium sulfate plant in Waggaman, Louisiana. APF was considering a new production facility at an existing chemical plant in Waggaman in November 2022. The facility currently operated by Cornerstone Chemical Company already handles anhydrous ammonia and produces unutilized ammonium sulfate as a byproduct of other production.

PHOSPHATES

Domestic: Phosphate trading values increased overall last month on account of mild weather extending the application season as well as shorter supplies of both diammonium phosphate (DAP) and monoammonium phosphate (MAP) barges in the U.S. Gulf.

NOLA DAP barges are assessed at $570 to $575/t FOB, flat from the previous weekly report on steady indications from market players as the U.S. trading market slowed ahead of the year-end holiday period.

MAP barges were similarly assessed at $620/t FOB, higher from the last week of November at $590 to $600/t FOB. DAP barges would continue to trade higher in the week before Christmas to as high as $580 to $585/t FOB.

DAP offers along the lower Mississippi River increased in December to $600 to $635/t FOB, up from $590-595/t in November, while MAP volumes were also higher, raising our terminal MAP range to $690 to $720 compared to $670 to $680/t FOB in the previous month.

On account of the higher demand in states including Kansas, Nebraska and Iowa, one distributor in the region estimated the surge of winter activity well past November cutting into spring phosphate requirements to the tune of 15% to 20% of expected demand.

International: The phosphates market saw prices steady across December on tight supply availability from major suppliers being balanced out by a slowdown in buying from top importers ahead of the holidays.

The phosphate market in Brazil was calm through the last month of 2023 with MAP prices unchanged from November at $560 to $565/mt CFR. Rainfall also slowed fieldwork in top production states in the country during December.

Another top importer of phosphates, India, saw DAP prices assessed at $595/mt CFR to end December just $1 higher compared to one month prior. Buying activity through the month was muted, and sales that did occur on Moroccan DAP were in line precisely with previous sales.

The big question in the market for 2024 will be how many Chinese tons make it past government quotas. Chinese producers' focus is set to remain on the local market as spring application looms large and the government may continue to discourage phosphate exports in Q1.

POTASH

Demand for winter applications was expected to begin winding down into early December, but market participants noted steady interest in potash fill buying through November and into the December holidays.

Buyers who did not step into the market last month were awaiting any potential announcements from major sellers. However, that has not stopped some distributors from already layering in volume purchases to the tune of 10% to 15% of spring demand, according to one distributor.

NOLA granular potash barges were assessed $320 to $325/t FOB to end 2023 down from the range of $335 to $340/t FOB at the end of November.

Market fundamentals saw few changes in December save for the more general slowdown of fertilizer buying, but favorable weather conditions which allowed for potash applications from November and well into December capped price declines.

Mississippi River terminal prices are similarly flat at a range of $380 to $400/t FOB along hub markets including St. Louis, Tulsa and Cincinnati.

Fertecon sources in the market were optimistic about the value proposition of potash fertilizers, thanks in part to the mild winter which complemented buying as well as applying phosphates and potash.

Editor's Note: This information was supplied courtesy of Fertecon, S&P Global Commodity Insights.

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