12/09/2024 End of Day Fertilizer Market Update
International
- Nothing new here to report as the market continues to digest India
- Paper trades today
- December Egypt Urea @ $373 (down $1 from Friday's settlement)
- January Egypt Urea @ $374 (down $1 from Friday's settlement)
North America
- Wanted to spend a moment diving into the NH3 market, where we are, and what it means
- Our fall forecast was 2.1 to 2.2M tons applied
- Right now, we think we are around 75% of the forecast…and preferable weather ahead which could easily get us to 90% or higher
- But what if all application stopped today…would that have huge ramifications on spring?
- Long story short, not really
- 25% unapplied on a 2.15M ton forecast is approximately 537,500-ton shortfall
- 50/25/25 split means
- Additional 270K tons of spring NH3 demand (bit of a jump but sane)
- Additional 240K tons of spring urea demand – that’s about 6 vessels additional? Not that hard.
- Additional 344K tons of spring UAN demand – again, not insurmountable
- Let’s keep in mind that when the North American markets decide they want to call in tons, it does it in a big way
- We have seen the U.S. import 7-figures a couple months in a row in the past
- It can catch up in a short time…but need 2 factors in its favor
- The first is assuming the tonnage is out there
- I’m not going to say shortages or anything like that
- We know that money and time talk
- However, there can be squeezes
- Given how EU and China are keeping supplies tight, this remains a question mark for me
- The second is our price needs to be right…and today it isn’t right
- Using last week’s weekly average values and vessel freight rates, NOLA remains a $30 discount to M.E. replacement
- That isn’t a great destination if Middle Eastern producers are not desperate to sell
- That is where we could see a $50 swing in this market
- If we needed to move from our current $30 discount to a $20 premium to call tons…boom, $50 with no international movement
- Obviously, this is just one scenario that could happen but something I/we are watching very closely
- The first is assuming the tonnage is out there
- All this to say that I’m not worried about spring supplies…but this is why I have been more bullish on the outlooks
- Still watching the DAP/Corn ratio which is currently sitting around 132
- Look at the 2nd graph below
- For December, this is the 2nd highest ratio that the market has ever witnessed
- If this relationship continues (could see a slight dip in phosphate for fill but overall market still looks supported), Jan/Feb it will match/beat the highest ever seen for that period
- Now, demand still sounds very good out there and this recent period of application has been huge
- However, this is likely to be a point of contention for farmers
- They know there is something wrong with the values, even if they cannot articulate it
- Paper trades today
- December NOLA Urea at $317/$317 (up $2.5 from Friday's settlement)
- February NOLA Urea at $330 (up $3 from Friday's settlement)
- March NOLA Urea at $336/$338 (up $6.5 from Friday's settlement)
- NOLA Urea Q2'25 at $335/$335
- Physical trades today
- December NOLA MAP at $600
- January NOLA Urea at $320
- January TSP at $460/$460/$460
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