SW ’24: US fertilizer demand lacking as farm economics unsupportive

NASHVILLE (ICIS)–Unfavorable farming fundamentals, including weaker grain prices, high cost of credit, and weather issues will continue to hit demand for fertilizers, said market participants on the sidelines of the Southwestern fertilizer conference (14-18 July).

Grain prices have slumped to the lowest level since December 2020 as Tropical Storm Beryl was expected to bring rains to the Midwest. This could boost yields at a time when prices are already under downward pressure due to ample availability.

“The US farmer is in the worst shape that I have seen in my career, and this is concerning,” said a trader with over 15 years of experience.

Urea prices in the US are the cheapest in the world right now, as expected for this time of the year due to it being the offseason.

Some market players believe prices are low domestically to discourage more imports.

Importers may even look at re-exports to Brazil and Latin America if urea prices in New Orleans decline below $290-295/short ton FOB Nola.

The level of $290/short ton FOB Nola is equivalent to $360/tonne CFR (cost & freight).

For now, the urea level in Nola is in the mid $300s/short ton FOB Nola for July shipment.

The phosphates market is getting more attention than urea in the US given the lack of availability for monoammonium phosphate (MAP) due to countervailing duties (CVD) on product arriving from Russia and Morocco.

The lack of MAP availability is seeing prices trade at around $120/tonne premium to diammonium phosphate (DAP), when usually the premium is $20/tonne.

There is more demand for triple phosphate (TSP) as some players are forced to switch due to the lack of MAP supply.

The CVD rate for Russian producer PhosAgro is currently at 28.50%, while for Morocco the process is under review and could result in an increase in CVDs from 2.12% to 14.21% in October/November.

Thumbnail shows crops being grown at a farm. Image by Shutterstock.