The Phosphate And Potash Outlook For 2014

After declining steadily during the last two years, phosphate prices are staging a powerful and earlier-than-expected rally while potash prices appear to have found a bottom and are beginning to turn up in some regions.

In the case of phosphate, the price run-up during what typically is a seasonally slow period has surprised most market observers. The spot price of DAP loaded on a barge at New Orleans (NOLA) had spiked to about $425 per ton in mid-January, a 33% or $105 increase since the end of November. NOLA SWAP contracts for February, March and April were bid at $435 to $445 per ton in mid-January, indicating that prices likely would trade at these higher levels into the spring application season.

Several factors typically combine to move markets by this much in such a short time. In this case, the combination of continued positive demand prospects, a lean distribution pipeline and several small planned and unplanned production outages has tightened the market and changed sentiment overnight.

Some Positive Signs

Despite somewhat less robust drivers, demand prospects continue to look positive. Global shipments of the leading phosphate products are forecast to climb to a record 64-66 million tons in 2014, up from our estimate of slightly more than 63 million in 2013.

The demand outlook in the Americas remains outstanding. In Brazil, shipments continue to set new records. We estimate that total plant nutrient shipments increased to 30.9 million tons last year, up 5% from 2012. Shipments are projected to increase to around 32 million tons in 2014. Imports of the leading phosphate products including MicroEssentials jumped to nearly 5.1 million tons in 2013, an increase of 36% or 1.4 million from 2012 and more than double the volume of just five years ago. Imports are projected to stay at or near this lofty level in 2014.

In North America, shipments of the leading phosphate products climbed to a modern era record of 10.1 million tons in 2012-13. We estimate that shipments will remain at elevated levels of 9.8 million tons in 2013-14 and 9.9 million in 2014-15. Shipments during the 2013 fall application season were off about 9% from the 2012 record due to the later harvest, but movement exceeded the seven-year Olympic average by 10%. We project that shipments this spring will rank as the second highest in the modern era and exceed the seven-year Olympic average by 7%.

Channel inventories in many countries were pulled down to relatively low levels during the slow price burn of the last two years. India provides the best example. Our Delhi team estimates that destocking of wholesale and retail inventories likely will total about 2.3 million tons for the fertilizer year that ends March 31, 2014. As a result, we project that Indian DAP imports will rebound from an estimated 3.6 million tons this year to 5 to 6 million tons in 2014-15. This raises the likelihood that recent price increases will hold into the second half of 2014 because Indian buyers are not expected in the market until the second quarter.

On the supply side of the ledger, the cumulative impact of several small planned and unplanned outages has reduced nearby availability. For example, we took down the large No. 5 DAP granulation plant at our Riverview, FL, complex for an extended turnaround at the end of November (or during what we expected to be a seasonally slow period). Modifications will enable this unit to produce DAP, MAP or MicroEssentials once it is back online in March. The Ma’aden facility in Saudi Arabia also continues to ramp up at a slower-than-expected pace. And planned or unplanned outages in Australia, Mexico and Tunisia have reduced supplies.

Looking At Potash

In the case of potash, prices appear to have found a bottom and are beginning to turn up in some regions. Now the question is will potash prices follow the same dynamic as nitrogen and phosphate?

Potash
Potash prices appear to have found a bottom and are beginning to turn up in some regions.

The price of blend grade MOP at a Midwest warehouse has dropped to the current spring fill price of $350 per ton, a decline of more than 40% or $240 from a peak of around $590 during the last half of 2011. The price of blend grade MOP delivered to a Brazilian port declined to a low of about $310 per tonne in December — a drop of 45% or $250 from the peak in March 2012. Brazilian spot prices had turned up to about $320 per tonne in mid-January with offers for February loads indicated in the $350 per tonne range.

We continue to forecast that demand will increase significantly this year in response to lower prices as well as a need to restock thin distribution pipelines in some countries. In particular, we project that global MOP shipments will jump to a record 57 to 59 million tons in 2014, up from about 54 million in 2013.

The “Big Six” are expected to lead the rebound this year. North America, Brazil, China, India, Indonesia and Malaysia combined account for roughly two-thirds of world MOP shipments. Each region is expected to register a gain this year. India is noteworthy with MOP imports projected to increase from about 3.2 million tons in 2013-14 to 4 to 4.5 million tons in 2014-15. Brazil is expected to extend its streak of record imports again this year with MOP imports of roughly 8 million tons, up from 7.7 million in 2013.

In North America, we project that MOP shipments will total more than 9.92 million tons in 2013-14 and then inch up to 9.97 million in 2014-15. Shipments last fall were off about 5% from the modern era record set a year earlier, but movement was up 4% from the seven-year Olympic average. We project that shipments during the upcoming spring application season will roughly equal movement a year ago and the seven-year Olympic average.

Distributors are expected to remain reluctant and take priced positions until a trigger event convinces them that not only the bottom is in but there is significant upside risk. Several potential developments could trigger a change in sentiment including the settlement of first-half China contracts, realization of higher prices in Brazil, an uptick in agricultural commodity prices and the creation of a new export organization by Russian and Belarussian producers.

North American producers continue to carry high inventories. MOP stocks at on- and off-site warehouses totaled 2.99 million tons on December 31, down about 5% from a year earlier but 25% greater than the seven-year Olympic average for this date. If our global demand forecasts are on target, North American producer inventories are projected to drop later in 2014.

Several uncertainties still overhang both markets. The most important, in my view, is the direction of agricultural commodity prices this year. The January 10 USDA reports surprised markets. The bump in corn prices in response to smaller-than-expected estimates of the U.S. crop and carry-out stocks was good news for crop input industries. However, the world produced a blockbuster crop in 2013-14 and global grain and oilseed inventories will increase significantly this year. Markets will closely watch the development of the Southern Hemisphere crop, the USDA’s March 31 Prospective Plantings report, China’s corn import appetite, biofuels policies, the Northern Hemisphere growing season and instincts of the large herd of speculative traders for future direction.

Leave a Reply

Crop Inputs Stories

Soybean field
FungicidesValent Launches New Seed Protection Fungicide For Soybeans
July 16, 2014
The INTEGO SUITE System contains the first new, novel seed protection fungicide chemistry registered in 30 years by the EPA for protection against Pythium and Phytophthora. Read More
InsecticidesEPA Grants Besiege Insecticide Additional Approvals
June 18, 2014
EPA has granted additional registration approvals for the use of Syngenta's Besiege insecticide on sorghum, cereal grains and peanuts. Read More
HerbicidesArysta Touts Burndown Herbicide For Brome Management In Wheat
June 4, 2014
Arysta LifeScience North America recommends PRE-PARE Burndown Herbicide for effective brome management in winter wheat. Read More
HerbicidesFall Herbicide Applications More Effectively Manage Resistant Italian Ryegrass
May 14, 2014
Field studies show that a fall application of certain herbicides before weed emergence, leads to more successful crop planting and weed control in spring. Read More

Trending Articles

Retail FacilitiesWaconia Manufacturing Builds Facility Designed For Speed, Efficiency
July 7, 2014
To make its new hub facility more efficient, Cooperative Elevator enlisted the aid of Waconia Manufacturing. Read More
EquipmentSummer Show Preview 2014: Superior Sprayers Take The Field
July 3, 2014
In this final installment of our coverage of the major categories of Big IRON that retailers can expect to test-drive at this summer’s events, here is a look at 19 sprayers. Read More
Scouting a soybean patch at Green Valley Ag.
EmployeesCropLife Compensation Survey: Battling Talent Drain
July 2, 2014
Retailers too often lose employees to companies outside of agriculture, while recruiting efforts are most often limited to competitors and other ag-focused organizations. Read More
HerbicidesDow AgroSciences Introduces SureStart II Herbicide
June 16, 2014
The enhanced formulation has improved viscosity and increased stability under heat and controls more than 60 high-anxiety grasses and broadleaf weeds found in corn fields. Read More
HerbicidesBASF Investing $270 Million To Expand U.S. Herbicide Production
June 11, 2014
BASF has invested more than $270 million to expand herbicide production capacities in the U.S., including more than 20 new products to be launched over next two years. Read More
EquipmentGPS: 25 Years And Still Growing
June 2, 2014
The evolution of global positioning systems applications in agriculture remains ongoing as the technology hits a notable milestone. Read More

Latest News

ManagementFranken Presses White House On RFS Support
July 25, 2014
Al Franken and a group of Senate democrats recently met with senior White House official John Podesta to urge the administration to change its position on an EPA proposal. Read More
ManagementASA, FarmLink To Launch ‘Operation Benchmark̵…
July 25, 2014
The American Soybean Association (ASA) and FarmLink are teaming up to help farmers close the $11 billion gap between what they harvested in 2013 and what they could harvest annually. Read More
StewardshipNorthey: Farmers Commit $1.4 Million to Try New Water Q…
July 25, 2014
The practices that are eligible for funding include cover crops, no-till or strip till and using a nitrification inhibitor when applying fall fertilizer. Read More
Precision AgFarmers Learn How Changing World Will Impact Iowa
July 24, 2014
Technology and understanding global consumer demand for Iowa farm products brought hundreds of farmers and agribusiness leaders to Ames recently for the annual Iowa Farm Bureau Federation Economic Summit. Read More
HerbicidesPurdue: Late Season Weeds May Require Manual Removal
July 24, 2014
Hand-rouging and pulling late season weeds by hand may be the best way to remove them, more so than using a herbicide, a Purdue Extension weed scientist says. Read More
Soybean Field
InsecticidesTransform WG, Closer SC Insecticides Receive R&D 10…
July 23, 2014
Dow AgroSciences has received the award from R&D Magazine for Transform WG insecticide and Closer SC insecticide with Isoclast active. Read More
EquipmentKinze, Raven Team Up On 4900 Planter Monitor
July 23, 2014
Kinze Manufacturing announces a partnership with Raven Industries to develop a standalone monitor solution for the Kinze 4900 series planter. With this new Read More
LegislationNew Farm Bill Continues To Confuse As Growers Await USD…
July 23, 2014
The new five-year Farm Bill eliminates many of the direct payments previously payed to growers and could benefit from USDA clarification, reports a Toledo Blade columnist. Read More
EquipmentPrecisionAg.com Relaunches With Responsive Design For M…
July 22, 2014
PrecisionAg, the worldwide leader in precision agriculture information and analysis, announces the launch of its completely redesigned website, PrecisionAg.com. Read More
FungicidesEPA OKs Two Willowood Fungicides
July 21, 2014
The EPA has approved Willowood Azoxy 2SC and Willowood AzoxyProp Xtra. two widely used broad spectrum, preventative fungicides with systemic and curative properties. Read More
Precision AgFarmers Learning Fast As UAVs Take Off
July 17, 2014
Farmers and others interested in how UAVs can be used in agricultural applications were able to learn more about the technology during the recent Precision Aerial Ag Show. Read More
CropLife 100Bobby Knight, Richard Petty To Highlight Ag PhD Field D…
July 17, 2014
Attendees at the July 24 Ag PhD Field Day at Hefty Farms will learn about the latest agricultural technologies, and get a chance to meet legendary sports figures Bobby Knight and Richard Petty. Read More
WebinarsUpcoming Webinars
July 17, 2014
Register for one of our upcoming Webinars or access our archive of past Webinars to view recordings of presentations that may be of interest to you. Read More
A finished Willmar 16-ton side-shooting tender.
TendersNew Production Facility Helps Willmar
July 17, 2014
In 1963, a group of businessmen started Willmar. Today, a half-century later, the company is one of the ag industry’s longest-running brands. Read More
FertilizerCF Industries Sells Carbon Credits To Chevrolet, Donate…
July 17, 2014
CF Industries has completed the sale of a large block of carbon reduction credits to Chevrolet, and will donate the net proceeds of $600,000 to the National FFA Foundation. Read More
CropLife 100Grainland Cooperative, Minier Cooperative Grain To Merg…
July 17, 2014
The shareholders of Grainland Cooperative and Minier Cooperative Grain Co. approved a merger of company operations effective August 1, 2014. Read More
ManagementStudy: Drought Costing California Billions
July 17, 2014
A new study has found the drought has cost the state $2.2 billion, primarily in lost farm revenue and wages. Read More
FertilizerCF Industries Resumes Production At Oklahoma Nitrogen C…
July 17, 2014
The company had shut down production at the Woodward, OK, facility in April to address an issue in one of the site’s boilers. Read More