12/10/2024 Mid-Day Fertilizer Market Update
Weekly Video Link
https://stonex.wistia.com/medias/wqjeut19cj
Also, December WASDE report was published this morning. Here are the details:
International
- North African nitrogen producers continue to take advantage of the bullish feel of the urea market
- Yesterday saw Egypt selling a high of $371 for January loading
- This morning has seen $374 and $376 for December and January loading
- None of these have been big tonnages that are going to wipe out any excess tonnages
- However, the higher trend is going to continue to be seen by the world
- Iran has been the other production origin point that has had tons to sell…and their production is suffering
- The government has been scaling back expectations for gas supplies
- As a result, nitrogen manufacturers there have either scaled back or completely stopped production until a better outlook appears
- While still a steep discount to the world, their price ideas have improved to over $300 once again
- So, the “world manufacturers are well sold” POV continues
- Keep in mind that this is what Chinese exports look like for the year
- Also, European natural gas values are still high (winter months near $14MMbtu)
- Doesn’t give much hope on production rate outlooks
- Paper trades today
- January Brazil Urea @ $353 (last traded $342 on 11/26))
- January Egypt Urea @ $377.5 (up $2.5 from yesterday's settlement)
North America
- Started hearing that Mosaic has rolled out their winter fill program earlier than many expected
- With fall season still rolling on, many believed that they would wait until much closer to the end of the year…or the beginning of 2025
- This would give them ample time to meet just in time demand with current pricing
- That belief came from the POV that winter fill programs would be at least slightly discounted
- …it was not
- From what we have gathered, the program is $570 DAP & $610 MAP NOLA
- The DAP price is largely in line with where price ideas have been recently
- MAP is slightly higher than some recently traded barges, but a discount to what had been normal ($630’s)
- Honestly, this is not surprising
- U.S. is still struggling with imports (Russia/Morocco/China still blocked)
- Fall season has been much better than it looked in early November
- Likely going into 2025 with relatively low inventory levels…and a short calendar before spring begins
- Also, demand is still solid given the big yields out there
- So how does it shape up?
- First, if this holds in Jan/Feb, it will match and/or be the highest value to corn we have ever seen
- $570 DAP vs $4.38 Dec ’25 corn = 130 ratio
- 2008 and 2022 both saw worse values…but those were more spring/summer/early fall
- 2022 started at 130, but quickly fell off before recovering in spring
- Second, DAP at $570 is still solid vs the world
- Look at the 2nd chart below
- NOLA DAP in the $570’s is not the highest DAP price in the world
- In fact, it is a decent discount vs Brazil and India values
- Third, farmers are going to be upset but ultimately, they need it
- One of the biggest feedback points of harvest was “yields were bigger than expected”
- That does not mean everyone was trend line, but it was better than they thought it was going to be
- 2025 forecast for farmers still looks rough
- That means they need to maximize their yields to “grow their way out of the bad times”
- …you cannot do that in soil deficient of phosphate
- At the end of the day, phosphate is horribly priced…but it is only one of so many inputs that go into raising a crop
- Hard to spend the fortune to raise the crop, leave a single input short and then hurt the overall yield
- First, if this holds in Jan/Feb, it will match and/or be the highest value to corn we have ever seen
- Ultimately, I struggle with what the options are and if you believe demand will be there, hard to say no to it
- We should not see an influx of imports to compete, tariff’s have taken care of that
- Global values are still high / N.A. values are middle of the road in comparison
- Inventories are drawn down and March is 2.5 months away
- Easier call for those in the Cornbelt vs those on the fringes as those economics are more rough/demand more questionable
- Paper trades today
- No trades observed
- Physical trades today
- March NOLA Urea at $340
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