US fertilizer market tepid amid severe winter conditions, but spring prospects stay positive

HOUSTON (ICIS)–In the US, the domestic fertilizer market is again showing tepid inclinations as barge and terminal demand is retreated, as there is renewed severe winter weather and corn prices have declined far enough to create more hesitancy from farmers on additional nutrient commitments.

Within the New Orleans (Nola) urea market, participants are finding barge interests are again diminished to start this week’s trading with part of the lag due to the national holiday on Monday, but with little fresh interest emerging.

There were a fair number of bids seen for January and February shipments, but sellers are seen as separately pulling back right now. The last barges concluded for shipping this month were done between $315-316/short ton FOB (free on board) on 12 January with the boost in values owing some of their lift to the recent India tender.

For now, the market is awaiting spring demand to build further but that will have to likely wait a bit longer because after a mostly moderate winter, weather has turned difficult, with weather systems across the US having brought extreme cold as well as snow and ice across many states.

This is keeping farmers halted on any activity for spring, which has caused additional demand to momentarily sag.

For the urea ammonium nitrate (UAN) market, a slower pace of movement has unfolded to start the year, with it likely staying reduced until the start of plantings as most farming activities are paused for a few more weeks because of the ongoing weather.

Currently, UAN values on barges and terminal volumes are not fluctuating like other nitrogen products have experienced, and there remains solid market expectations of a robust spring upcoming.

The only fundamental change during January is that future crop prices have come under renewed pressure, which could impact upcoming nutrient buying, while at the same time prices for the forward months on other fertilizer products have lifted.

There are some thoughts that UAN consumption could gain an advantage if those factors persist as supply is well-positioned, additional availability remains favorable and prices have shown stability.

The possibility of lower crops prices could cause some growers to become more conservative on expenditures and look for lower-cost nutrient options with UAN a viable choice in many areas.

With the weather pressures, most ammonia activity has stayed reduced for several weeks following a robust post-harvest application run, which to some is an early indicator that corn will gain a sizeable share of the plantings in the coming weeks.

Despite the lag in fresh movement, overall ammonia values are holding stable against the backdrop of expectations of a good season ahead.

If market conditions stay, it is possible ammonia could benefit from prices on other products climbing higher with supply well-positioned and offering growers a more positive crop ratio for the coming year.

Looking at phosphates, the market is seeing that demand has recently been steady even after an active post-harvest period and there are some expectations that spring buying will initially be strong despite the significant restocking.

Though for now, demand could dip over the rest of January until the cold temperatures and further snow leave, but overall values are showing solid strength ahead of the arrival of spring.

Potash is another market that has been stable even during the winter downturn, with values steady amid projections that upcoming crop needs will be a tad stronger. This is based mostly on anticipations that there will be an uptick in acreage, especially for corn.

Expectations are producers will run at rates like 2023 with producer Nutrien having recently unveiled its winter refill offerings at $385/short ton from Midwest terminals.

The Canadian major is taking orders at the set price for Q1 delivery until 19 January, and at a $30/short ton increase for Q2 arrival.

Nutrien said there has been a positive initial response as it is seeing customers optimistic about a strong spring application season.

After seeing challenges for potash flow due to production and logistic impediments last year, it appears as if those issues have been resolved except for the low water levels on the US river system, especially the vital Mississippi river.

Recent rainfall has been viewed as beneficial for lifting some of the river water levels and has been positive for upcoming sowings, especially within the states that have faced drought.

Those areas need an adequate soil moisture recharge from either snow melting soon or the rain yet to come, as these two factors could both total plantings and subsequent fertilizer consumption.

Moist ground will also lead to more runoff into the river systems in the coming weeks, which would help alleviate some of the issues with navigation including longer transit and reduced load size.

For now, market participants are watching what is hoped to be the strongest hit of winter pass quickly with a relatively firm sentiment of a strong season left intact, and that as the US moves closer to the prime stretch of March-April that demand will be significant.

Although the last corn crop production came in higher than projected at 15.3 billion bushels, there are strong views in both agriculture and fertilizer markets that sowings could climb even further this spring even with future prices having dropped below $5.00/bushel recently.

Acreage decisions should begin to be finalized over the next few weeks which will help propel the market forward as further nutrient decisions will then follow.