01/14/2025 Mid-Day Fertilizer Market Update
There is only one week of the year where I will willingly walk away from work and that is marathon weekend at Disney in Orlando.
…every year, I take that week off and the markets go nuts!!!!
International
- Obviously, the big news of the last week for global urea was the announcement of a fresh purchase tender by RCF
- Looking to secure 1.5M tons…again
- 1.0M tons west coast
- 500K tons east coast
- Offers due on January 23rd
- This was highly expected by the market following the absolute failure of the previous tender
- However, it will lend even more support to a market that was already bullish
- Looking to secure 1.5M tons…again
- So, while India will set the new pattern, it doesn’t really change anything from our perspective
- Chinese exports are still seen as meager to non-existent
- That is 10% of the global export supply just gone
- European production is still seen as 75% of normal
- That is 3+M tons of supply missing
- That also adds 3+M tons of demand to the global S&D
- Iranian production continues to appear to be offline with their own troubles
- They are similar in size to normal Chinese exports
- That is another 10% of the global export market gone
- Chinese exports are still seen as meager to non-existent
- All, this is huge and frankly I’m surprised we haven’t seen values higher than they already are
- I still maintain that the current S&D is worse than it was in early 2022
- The biggest difference is that the market is wearier with poor farmer conditions
- I’m still playing catch up but I believe the most recent Egyptian urea sale was around $430
- Again, remember that the highest Q3/Q4 ’24 price was $407 (going off memory)
- We have blown thru the number and looks like they will be targeting ever higher
- As long as buyers continue to pull the trigger, why wouldn’t they?
- Paper trades today
- January Brazil Urea at $385 (up $6.5 from yesterday’s settlement)
- January Middle East Urea at $378 (up $4.5 from yesterday’s settlement)
- February Egypt Urea at $415 (down $5 from yesterday’s settlement)
North America
- So, I think we are in a bad nitrogen spot…not impossible, but a bad spot
- First, nitrogen demand continues to rise
- We had recently increased our U.S. corn acreage to 92.5M
- One of the first conversations when arriving to the office this morning was with Arlan Suderman
- He has raised his number to 93.5M…and is hearing 95 – 96M is being pondered by some
- Sounds like some fairly wide ranging seed companies are reporting really solid corn seed sales at the expense of beans
- It is too early to make a definitive call on where the acreage will be
- But the trend right now is high corn acres with speculation of really high corn acres
- Second, imports are in a decently bad spot
- Urea imports are only 980K thru November vs our previous forecast of 5.1 to 5.2M needed (that number will rise with higher corn acres)
- UAN imports are only 617K vs exports at 975K
- One could say “well, all those exports are going to Canada
- Nope…
- Australia – 28%
- France – 26%
- Argentina – 11%
- Belgium – 10%
- UK – 8%
- Canada doesn’t break the top 5 destinations based on the data we have…
- NH3 is NH3…but more corn in the east will press the Midwest S&D that much more
- Fortunately, the fall run was decent around 1.9M tons applied
- But if we start talking 95 – 96M (I’m not there), that is going to push logistics
- Third, NOLA urea is STILL a solid discount to global replacement
- March NOLA urea traded $372 this morning
- Middle East futures continue to trade around mid-$370s
- That means NOLA is still a discount by a couple dollars
- However, my question continues to be if the world is so tight, why would it consider N.A. as a destination at any sort of a discount?
- And, if $372 NOLA is still a slight discount, will we see it push to a $20+ premium to call on tons?
- Again, we could be looking at NOLA urea starting with a 4 very soon…
- None of this is highly surprising unfortunately
- It looked like it was more a matter of when, not if
- I also still have my worries about phosphate going higher…especially if corn acres increase
- But we haven’t seen that much price movement with the focus being on nitrogen
- Paper trades today
- March NOLA Urea at $370-$371-$372-$374-$374 (up $.5 from yesterday’s settlement)
- March NOLA Urea at $370-$371-$372-$374-$374 (up $.5 from yesterday’s settlement)
- Physical trades today
- March NOLA Urea at $372 (up $8 from last traded on 01/09/25
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