US Wholesale Fertilizer Prices Fall in June, but Posed to Reset Higher Following Summer Fill

Urea barges at New Orleans, Louisiana, (NOLA) were last assessed in June at $505-$530/t FOB for prompt through July shipment barges, up from its low of $410/t FOB during the month and down slightly from where it started the month at $510-$550 FOB. Barge trades had softened in June before demand for export sales supported higher trades, bringing values back above the $500/t mark but still down from the mid-to-high $500s in May.

River terminal urea fell to $550-$580, down about $100 from May values alongside the lower barge trades. Interior activity was much more subdued due to the greater length of supply in regions outside the U.S. Gulf.

In the short term, softer domestic demand in the U.S. predicts that barge trading, and followed by interior prices, will continue to trail developments in the global market. Later in the year, however, fundamentals are looking stronger for all nitrogen products as discussed in the ammonia sections above.

On the heels of a stark increase in urea prices in late June, markets leveled off as participants stepped back ahead of an expected Indian tender release. The market was largely supplier driven in the lull before the next Indian tender, expected in late July.

Brazilian demand remained relatively muted with several cargoes purchased and storage space limited. Sales at the end of June were reported in the $640-$660/mt CFR range, down from $660-$680 in the month prior but up from sales at $625 in mid-June. Egypt continued to make steady sales and shipments last month, which saw prices rise to $725-$763/mt FOB compared to highs of $730 in May.

Higher gas prices in Europe along with supply uncertainty around production shutdowns could drive prices higher in upcoming weeks, as well as import demand, and keep prices rising higher. Our short-term global urea price outlook is uncertain around gas prices, with fewer Chinese exports expected to support prices ahead of the next Indian tender and upcoming demand from Brazil.

As urea prices continued their sharp descent in June, the outsized pricing of nitrates had to correct lower as well, and UAN prices in particular saw increased responsiveness to the urea price drops in recent weeks.

In early June, NOLA UAN barges were assessed at $575-$580/t FOB, down from the previous weekly assessment of $600-$620 on further discounts to UAN in the U.S. interior bringing down prices in other regions. Barge prices would drop sharply in mid-June to $480-$550/t FOB and eventually drift lower to $450-$480/t FOB.

River terminal offers fell to $500/t FOB with even lower prices available in slower markets, compared to $620-$640 in June when values began to decline. Supplies were said to be tighter in storage along the Mississippi River system relative to production sites to explain the price differential between regions.

Factory prices were also reduced from previous offers at $600-$625/t FOB down to $530-$540 at eastern Oklahoma plants.

The final antidumping duties by the U.S. Department of Commerce were announced June 21, with the investigation on schedule to conclude in early August along its current trajectory. The immediate impact on the market with this latest announcement is difficult to assess, save for the continued absence of Russian and Trinidad spot volumes to the U.S. over the course of the investigations.

UAN prices are expected to remain stable to lower in the short term until summer fill and its associated reset, after which point prices could regain some value. Further price movement will, of course, hinge on the antidumping/countervailing case final decisions and importers' responses.

The U.S. phosphates market remained typically slow for the time of year, and generally saw little in the way of sales or price movement last month.

Our NOLA DAP barge assessment declined on the higher end from $750-$820/t FOB in early June to $765-$790/t FOB at the end of June. July barges were reported at $810 late in the month, in line with barge trades that Mosaic sold earlier in the month. MAP values were meanwhile assessed at $835-$845/t FOB NOLA at the end of June compared to the $780-$819/t FOB reported in early June.

River terminal phosphates were seeing little buy interest ahead of any more summer-fill announcements, after Simplot's earlier offers around $860 CFR MAP. Pricing fell between $805-$875/t FOB DAP and $845-$925/t MAP, down from reported previously at $880-$950/t FOB for DAP and $900-$950 for MAP.

The split between DAP and MAP was sustained with more export interest motivating stronger MAP trading values, which DAP would then follow later, as we see in early July. Values on both products and others continue to be supported on selling to foreign markets.

In the short term, we see U.S. phosphates pricing stable with potential to reset higher after any summer-fill programs later this season.

Liquidity in the phosphates market has been thin through June, with price benchmarks declining in the west as buyers remain noticeable by their absence. There remains a "wait-and-see" approach while both crop and fertilizer prices are at historically high levels despite coming off ceilings.

MAP prices in Brazil have come under pressure, declining to $1,000-$1,050/mt CFR compared to $1,100 in May and highs at $1,300 in the year so far. Indian DAP prices have remained flat at $920/mt CFR where the government capped prices, but demand remains low during what is typically the peak shipping season.

The major talking point in June regarded China's plans for further quotas to be introduced on phosphates exports, with speculation of shipment limits ranging from 10% of their production up to 25% capacity. The result, however, has been that the market has come to a standstill amid the uncertain conditions in the past month.

Our outlook regarding global phosphate prices is under pressure in the west on slower demand, and uncertain in the east due to China's export situation.

Fill buying interest continued to build for potash in June with the preplant period now entirely passed, but sellers have so far refrained from issuing any comprehensive summer programs.

NOLA potash barges were assessed from $770-$780/t FOB at the end of June, flat from May. A lower offer at $740 dried up midway through the month, but this would prove to be a continued indicator of market prices with offers in the $730s in early July. Product continued to be offered at a $770/t FOB NOLA equivalent along the Mississippi River during the entire month as well.

River terminal potash offers, however, declined by $5-$20/t to $750-$785/t as end-user demand remains extremely slow, even in comparison to the thinly traded barge market. June offers ranged from $780-$815/t FOB but moved lower with the cheaper barge product available.

Ahead of the aforementioned fill programs yet to be announced, the potash market remains quiet in the short term and seems more stable than in previous weeks. New price levels are not likely to shift significantly until after nitrogen price levels are more stable as well.

Russian potash has indeed resumed appearing at U.S. ports, and in early July, it became known that Belarusian potash could also begin flowing from Russian ports. In the short term, we expect potash prices in the U.S. to be somewhat stable to lower if Baltic Sea shipments increase through the rest of the year.

Editor's Note: This information was supplied courtesy of Fertecon, Agribusiness Intelligence, IHS Markit.