By Logan Garcia
With a disappointing fall application season having concluded, which followed an equally poor spring, phosphate and potash supplies weighed heavily in the U.S., and both fertilizers saw falling prices as a result. Nitrogen fertilizers did not fare much better, however, with UAN particularly weak against a much more affordable source of N in urea. Ammonia was mostly stable, with winter-fill programs announced and prices reset lower ahead of the new year.
The following is a recap of fertilizer price trends and market developments for December:
AMMONIA
Domestic: While December was overall a quiet month in the fertilizer business, there were a couple of notable developments in the ammonia market -- mainly the announcement of winter-fill deals. The January Tampa price would go on to be announced in early January after the Christmas and New Year's holidays.
Ammonia fill offers were released, with CF at $950 per short ton (t) for January through February lifting and $1,000 at its Verdigris, Oklahoma, ammonia facility.
Meanwhile, Koch posted prompt prices at $890 at Dodge City and $955 at Beatrice, Nebraska, with the latter offered at $1,000-$1,060 for spring prepay. Farther west, Midwestern ammonia fill was priced from Illinois to Ohio around $1,100, free on board (FOB -- or sales price without any transportation costs included).
The initial offers reflect a $200-$300/t discount on U.S. prices prior to the announcements and are similarly lower from 2021. In December 2021, Koch announced ammonia fill offers from $1,350-$1,375/t FOB in the Eastern Corn Belt and $1,315 for January and February pull from Enid, Oklahoma. CF followed suit with prices at its Oklahoma plants posted from $1,225-$1,250/t FCA across January through February, and March through June prepay.
In the short term, we expect U.S. ammonia prices to be relatively stable ahead of early spring when demand is expected to return for preplanting applications.
International: There was a change in tide in the ammonia market in December, which began with a significant, but widely anticipated, decrease for the Tampa ammonia supply contract between Yara and Mosaic.
In the last days of November, the two companies had settled at $1,030 per metric ton (mt) cost and freight (CFR -- or sales price with cost of delivery included) for December, a decrease of $120 from the $1,150 the parties previously agreed for November shipments.
To illustrate price direction in the international market, Black Sea ammonia prices ended the month at $915-$995/mt FOB, down from $970-$995 in November, while Baltic prices ended similarly lower in December at $872-$907 FOB versus $930-$950 in the month prior. The Black Sea price is still being assessed on a nominal basis, given the continued conflict in Eastern Europe, which is limiting trade in the region.
The lower Tampa settlement was anticipated by many in the market and did not surprise many. Later in the month, however, the European Union announced it had removed import duties on ammonia and urea arriving from all countries other than Russia and Belarus.
The temporary lifting of duties, which will be in place for six months until June 16, 2023, creates a level playing field for ammonia exporters. As a result of the above developments, the outlook regarding global ammonia is softer across the board for the short term.
UREA
Domestic: At the U.S. Gulf trading hub in New Orleans, Louisiana, (NOLA) granular urea barges were assessed at $450/t FOB to end 2022, down from $451-$485/t FOB at the beginning of the month, and some of the lowest NOLA barge trades since last spring.
Market activity had died down for several weeks leading up to Christmas on both the trading side as well as inland buying. Even futures markets, which typically see at least a little more activity over the physical market, were said to be nearly untraded for an entire day during the week before Christmas on the CME exchange.
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