10/10/2024 Mid-Day Fertilizer Market Update
International
- Always count on a twist in most India tenders!
- As expected, it appears that the west coast awards will be limited to the shockingly low value offer of 50K tons
- All other west coast offers effectively said no
- I'm guessing there was a lot of laughing at even the consideration of matching the L1
- I also thought the East coast would struggle to get awards
- Maybe this thing would end with 150 - 250K secured but offers have been more willing to participate
- So far, it looks like approximately 500K tons of offers have agreed to match the L1 to participate
- If this holds true, that 500K will be on the lowest end of early expectation ranges but on the highest end of recent expectations
- So what does this mean/how can it be interpreted?
- First, I think we see another purchase tender very shortly (next few weeks/1st week November) where the focus is on the west coast
- Shipment period likely grabs the remainder of 2024
- If successful, this "should" take care of any excessive inventories left in the western world
- Then Q1 starts with very comfortably sold manufacturers who are well aware of spring preparations for Northern Hemisphere markets
- What are the dangers in this scenario?
- I still think it is China
- There are few to no firm indications that they are returning in Q4
- There have been rumors but thus far, no substance behind them
- But, if the rumors do come true and we see wave after wave of exports, it is going to hurt the market psyche of the marketplace
- Would be much harder to maintain a bullish attitude if they return, even if the fundamentals point to a tight marketplace
- So like most times, watch China
Paper trades today
- November Middle East Urea Paper - $370 / $372
North America
- While it is too early to make a definitive call, it looks like Florida phosphate dodged a huge bullet by the slimmest of margins
- This storm has been tracking east with Tampa dead in its crosshairs
- Storm surge was expected to be 10 - 15' high
- Insane winds as it came ashore as a Cat 4 hurricane was expected to flatten everything in its path
- ...then at the last minute it shifted just south
- Rather than slamming directly into Tampa (or worse, just north of Tampa), the storm shifted south and made landfall around the Sarasota area
- While there will certainly be cleanup, it appears the worst stayed away
- Now, the cleanup is still the part that worries me
- How long will it take for roads to be cleared?
- How long before electric/water/etc. is returned to normal?
- How long before properties and homes are back to normal?
- All of these lead to one thing: how long before workers return to work?
- The phosphate facilities could be largely untouched but without workers, it doesn't matter.
- At this point, there will be production loss if only for the plants being stopped in preparation for the storm.
- How long they are offline will determine how bad this hurts.
- Regardless of the damage/production loss, phosphate values have been on the rise with NOLA DAP barges now in the upper $570's/lower $580's
- NOLA DAP, from a destination perspective, has been "cheap" vs competitors such as Brazil and India
- We have continued to see N.A. inventories "tight" compared to normal
- And now we are believing a surge in demand will be coming as farmers find better yields and slightly improved grain values
- Not to say economics are phenomenal, but you have to agree they are better than they were weeks ago
- We still expect fall demand destruction...but maybe not to the same degree we originally thought
- Paper trades today
- None observed
- Physical trades today
- December NOLA Urea Physical - $343
- January NOLA Urea Physical - $343
- Prompt NOLA DAP Physical - $579
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