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

Crop InputsPlatform Specialty Products To Acquire Arysta LifeScience
October 20, 2014
Once the acquisition is complete, Platform Specialty Products will combine Arysta LifeScience with previously acquired companies Agriphar and Chemtura Crop Solutions. Read More
MicronutrientsMicronutrients Going Macro
September 9, 2014
Between 2014’s fantastic growing conditions and a heightened awareness on plant nutrition, the major players in micronutrients are gearing up for another big year. Read More
FertilizerFall Fertility 2014: Forecasting Fertilizer Use
September 7, 2014
Great crops this year have tapped the soil, and fall work is definitely called for, but how challenging will that get? Read More
FungicidesSudden Death Syndrome, Brown Stem Rot Reported In Indiana Soybeans
September 3, 2014
Farmers and retailers should be watching for symptoms of these two diseases over the next few weeks as they are best managed through preventative methods. Read More

Top 100 Articles

CropLife 100CHS: Driving Momentum To Help Farmer-Owners Grow
December 11, 2014
CHS Inc., the nation’s leading farmer-owned cooperative and a global energy, grains and foods company, must capture new opportunities to Read More
CropLife 100BRANDT, Verdesian Ink Distribution Agreement
December 9, 2014
The agreement grants BRANDT the exclusive right to sell and market Verdesian’s patented Steric chemistry in the Turf and Ornamental and eastern U.S. ag markets under the BRANDT Reaction product line name. Read More
CropLife 100CropLife 100: The Colors Of Custom Application
December 5, 2014
Although many color spray rigs are in the yards of the nation’s top ag retailers, the majority of them still come in only a few shades. Read More
CropLife 100Pinnacle Invests In Meridian Agriculture Distribution
December 4, 2014
Meridian will provide retailers with supplier-branded products and numerous opportunities to differentiate themselves from their competitors. Read More
CropLife 100CropLife 100: Entering A New Seed Era
December 4, 2014
The seed category has been re-vitalized during the past few years, and more good news (and varieties) are headed the industry’s way in 2015. Read More
CropLife 100CropLife 100: The Depressed State Of Fertilizer
December 3, 2014
Following downright giddy growth earlier this decade, fertilizer sales have fallen back down to earth the past two years. Read More

Latest News

Seed/BiotechKaren Arthur Joins AgriThority As Seed Treatment Produc…
December 19, 2014
Prior to joining AgriThority, Arthur directed research and development programs, overseeing laboratory and field research, to build the Valent U.S.A. seed treatment portfolio. Read More
EquipmentJohn Deere To Sell Crop Insurance Business
December 19, 2014
Deere & Co. has reached a definitive agreement to sell its crop insurance business, subject to regulatory approval, to Farmers Mutual Hail Insurance Co. of Iowa. Read More
Crop InputsNufarm Fills Regulatory VP Position
December 18, 2014
Nufarm announced today that Rob Schwehr has been promoted to the position of Vice President of Innovation & Regulatory Affairs for Nufarm Americas. Read More
Seed/BiotechReport: China Approves Viptera Corn, U.S. Officials Awa…
December 17, 2014
Chinese authorities have informed some agriculture industry officials the government has approved U.S. imports of a type of genetically modified corn developed by Syngenta. Read More
FertilizerMonty’s Plant Food Brings In New Sales Rep
December 16, 2014
Monty's Plant Food Company has hired Warren Kearns as its newest Sales Representative for the South Carolina area. Read More
EquipmentHagie Wins 2014 CropLife IRON Product Of The Year Award
December 15, 2014
The self-propelled sprayer maker has a hit on its hands with the new STS Series model. Read More
Syngenta
Seed/BiotechSyngenta Sees China Approving Contentious GMO Corn Soon
December 15, 2014
Syngenta will make an announcement when it receives official documentation from China that Agrisure Viptera corn, known as MIR 162, has been cleared for import. Read More
Crop InputsVerdesian Life Sciences Names Vice President Of Communi…
December 15, 2014
Amy Bugg will oversee the execution of all promotional strategies for the corporate brand and the complete product portfolio. Read More
StewardshipFarmers, Retailers Attend 4R Certification 4U Workshop
December 15, 2014
More than 160 farmers and ag retailer attended the “4R Certification 4U” workshop December 12 to learn more about the 4Rs of nutrient stewardship, water quality research in the area and cost-sharing opportunities. Read More
Matt Hopkins10 Best New Agriculture Apps For 2015
December 15, 2014
These new agriculture apps are certain to help ag professionals do their jobs more efficiently in 2015 and beyond. Read More
ManagementARA Learnings, Retail Buying Intentions: Welcome To Cro…
December 12, 2014
This informal video program puts news and events effecting retailers into context, and features Editors Paul Schrimpf and Eric Sfiligoj. Read More
Seed/BiotechMonsanto Herbicide-Tolerant Technology Closer To Commer…
December 12, 2014
The final EIS moves Monsanto one step closer to the introduction of Bollgard II XtendFlex cotton and Roundup Ready 2 Xtend soybeans, paving the way to provide access to dicamba-tolerant soybeans and cotton. Read More
Seed/BiotechUSDA Issues Final Environmental Impact Statement On Her…
December 12, 2014
The USDA Animal and Plant Health Inspection Service (APHIS) is issuing a final environmental impact statement on varieties of cotton and soybeans that have been genetically engineered for resistance to several herbicides, including the one known as dicamba. Read More
CropLife 100CHS: Driving Momentum To Help Farmer-Owners Grow
December 11, 2014
CHS Inc., the nation’s leading farmer-owned cooperative and a global energy, grains and foods company, must capture new opportunities to Read More
LegislationARA Applauds CFATS Passage Prior To Holiday Adjournment
December 11, 2014
The streamlined bill provides a four-year authorization of the CFATS program and guidance to DHS on key issues of chemical facility security Read More
Seed/BiotechBayer CropScience’s ILeVO Approved By EPA
December 11, 2014
EPA has approved ILeVO, the only seed treatment that protects the root system against infections caused by the Sudden Death Syndrome fungus and has activity against dangerous nematodes. Read More
Biologicals in Emerging Markets Map.
Crop InputsBiocontrols Could Quadruple By 2025; Will Regulators Pl…
December 11, 2014
The European experience with GMOs offers caution — and a promise — for biologicals. Read More
Crop InputsBASF Donates $75,000 To Feeding America
December 10, 2014
The donation will support Feeding America’s National Produce Program, an initiative that helps with planning, transportation and logistics to ensure fresh produce deliveries to the 200 member food banks around the country. Read More