Tag Archives: Fertilizer

While global potash (K) fertilizer prices have been at their highest levels in the last three years due to cutbacks in supply, the outlook for the market is for more capacity than new demand. Potash producers with smaller, higher-cost production facilities will likely come under heavy cost pressure.

Humphrey Knight, Potash Analyst for CRU International Ltd. in London, told attendees of the 2018 Fertilizer Outlook and Technology Conference recently in Jacksonville, Florida, that things really began to change in the potash market since about mid-2016. This is when potash became more affordable and thus led to record 2017 global demand.

GLOBAL K INCREASING

Global potash imports in 2016 totaled 61.4 million metric tons (mmt), then jumped to 66.6 mmt for 2017 imports. The U.S. even increased its imports, to just under 10 mmt, with a strong second half of 2017, he said.

Knight said, of that nearly 10 mmt in 2017, 7.7 mmt was imported from Canada, which is about a 12% increase year-on-year from there. Another 1.9 mmt was imported from overseas (mainly Russia, Belarus and Israel), which was a 44% year-on-year increase.

U.S. potash demand in 2018 is shaping up similar to 2017 with more demand for potash.

Knight said U.S. potash applications on corn increased by 24%, while soybean application climbed 18% from 2012 to 2017.

“Fall application pushed 2017 demand to a record high, with 2018 demand currently following closely,” Knight said.

Potash demand growth is set to steadily increase over the next five years across the world, Knight said. Global demand in 2018 should be around 66.8 mmt, and by 2023, demand could be closer to 76.8 mmt. This would be a compound annual growth rate of 2.8% per year during this time period.

The global growth in demand is mainly thanks to two different regions of the world: Asia and Latin America.

CHINESE POTASH NEEDS

Knight said China produces enough potash to meet about half of its domestic demand, while the other half is imported. While nitrogen and phosphorus fertilizer production in the country faces scrutiny from increasing environmental regulations, these issues do not affect the Chinese potash production because they get it from underground mines.

Despite this, the country’s domestic capacity appears to have reached a limit, about 16 mmt in 2017. CRU is no longer aware of any further investment in new or expanded potash capacity in China, he said.

“Because of this, imports are becoming more important in China,” Knight said.

Chinese farmers are applying more potash to improve the quality of crops in the country, especially fruit and vegetables. Nitrogen and phosphorus are generally over-applied in the nation while potash is under-applied, he said.

Other than China, southeastern Asia oil palm areas (Malaysia and Indonesia) are expected to expand potash usage.

Latin America is also increasing potash demand as the region expands mainly in soybean production. Lower-yielding soybean areas provide potential upside to the potash market, he said.

SEVERAL SUPPLY ISSUES

On the supply side, Knight said, potash producers have attempted to limit supply since about 2013, when companies in Canada enacted voluntary idling of facilities. However, from that time until 2017, the lower capacity really did not improve potash’s global price until 2017.

In 2017, Canadian producers have maintained supply discipline. Canada, as well as the rest of the world, have had operating rates close to their customer demand, which ends up being positive news for prices, he explained.

In addition, new capacity projects across the world have been slow to start. Knight said Russia could see another 7 mmt of production as two facilities increase capacity.

A facility in Saskatchewan, Canada, started production in June 2017, but had some issues with product quality early. This plant is expected to produce 1.4 mmt to 1.5 mmt in 2018, with no exports from it to the U.S. expected until 2019, he said.

The slowness of new production can be traced directly to increasing site costs, which have been rising since 2016.

Knight said site costs have been highest in Russia and Belarus. The recovery of the Russian ruble versus the U.S. dollar, as well as 30% higher energy and labor costs, have increased site costs by 23%.

“Margins are very tight at these locations,” he said.

Canada’s site costs increased by 12%, thanks to higher energy and labor costs, but at least these facilities have capacity increasingly concentrated in lower-cost mines, he said.

Knight said mines in Europe have site costs rising by 17% because of much higher energy costs. These mines tend to be smaller in size and also have falling grades of product, he said.

Future supply will arrive, but it will be later in the five-year window than once anticipated by the industry, he said. All additions from 2008 to 2017 were additions or expansion projects at existing facilities.

Going forward, however, most of the new potash supply will come from new facilities, Knight said. With these new plants set to come online in the coming years, about 16 mmt of new capacity could be seen, which will be a challenge for the industry.

“This is massive new supply for an industry which would have 16 mmt of new capacity and only about 10 mmt of demand,” Knight said.

Retail fertilizer prices tracked by DTN for the first week of November show the continued trend of higher prices.

Anhydrous prices increased 6%, or $29/ton, from last month, with retail prices averaging $517/ton. Prices are 27% higher than last year.

Anhydrous prices increased 6%, the most significant price move this week. The nitrogen fertilizer had an average price of $517/ton, up $29 per ton from the same time last month. It’s $108/ton higher than last year.

The seven remaining fertilizers were also higher, although less significantly.

Urea prices increased $14/ton from last month to $407/ton.

Both UAN28 and UAN32 prices gained $7/ton to $245/ton and $287/ton respectively.

The prices of MAP and 10-34-0 each rose $6/ton. MAP was $529/ton, while 10-34-0 was $458/ton.

At $506/ton, DAP prices increased $5/ton.

Retail potash prices, up $3/ton from last month, were $368/ton.

On a price per pound of nitrogen basis, the average urea price was at $0.44/lb.N, anhydrous $0.32/lb.N, UAN28 $0.44/lb.N and UAN32 $0.45/lb.N.

All eight of the major fertilizers are now higher compared to last year with prices showing significant gains in recent months. UAN32 is 6% higher; potash is 8% more expensive; both 10-34-0 and UAN28 are 14% higher; MAP is 15% more expensive; DAP is 17% higher; urea is 20% more expensive and anhydrous is now 27% higher compared to last year.

DTN collects roughly 1,700 retail fertilizer bids from 310 retailer locations weekly. Not all fertilizer prices change each week. Prices are subject to change at any time.

DTN Pro Grains subscribers can find current retail fertilizer price in the DTN Fertilizer Index on the Fertilizer page under Farm Business.

Retail fertilizer charts dating back to 2010 are available in the DTN fertilizer segment. The charts included cost of N/lb., DAP, MAP, potash, urea, 10-34-0, anhydrous, UAN28 and UAN32.

DRY
Date Range DAP MAP POTASH UREA
Nov 6-10 2017 434 459 341 338
Dec 4-8 2017 438 471 343 344
Jan 1-5 2018 452 490 345 350
Jan 29-Feb 2 2018 458 492 344 355
Feb 26-Mar 2 2018 461 497 346 361
Mar 26-30 2018 470 506 350 370
Apr 23-27 2018 485 504 353 367
May 21-25 2018 483 504 354 364
Jun 18-22 2018 485 505 354 364
Jul 16-20 2018 486 505 354 366
Aug 13-17 2018 487 508 356 363
Sep 10-14 2018 491 518 362 380
Oct 8-12 2018 501 523 365 393
Nov 5-9 2018 506 529 368 407
LIQUID
Date Range 10-34-0 ANHYD UAN28 UAN32
Nov 6-10 2017 403 409 216 272
Dec 4-8 2017 404 424 215 251
Jan 1-5 2018 409 474 219 256
Jan 29-Feb 2 2018 415 491 227 261
Feb 26-Mar 2 2018 416 496 233 279
Mar 26-30 2018 425 507 237 272
Apr 23-27 2018 431 507 241 277
May 21-25 2018 439 504 241 276
Jun 18-22 2018 440 503 242 277
Jul 16-20 2018 442 503 243 279
Aug 13-17 2018 446 481 233 271
Sep 10-14 2018 449 487 238 278
Oct 8-12 2018 452 488 238 280
Nov 5-9 2018 458 517 245 287