Fertilizer Prices Report

16. February. 2010

PRILLED UREA:

A correction in FSU prices has occurred as traders with limited February positions to sell have been forced to liquidate in Turkey and Brazil. A short sale in Brazil reflects sub $285pt fob Yuzhnyy. The downturn in prices is expected to be short lived.

Urea has taken a knock this week with the US market slow and the lack of positive tender news from India unsettling traders and the short-term price outlook. With liquidity squeezed, Turkish buyers have been able to secure prompt urea ex- Yuzhnyy at $292pt fob equivalent. Those with tonnage still to buy claim offers at $285pt fob. In Brazil meanwhile, a cargo has been sold at $280-285pt fob Yuzhnyy equivalent, sub-$280pt fob Baltic.

The reduction in prices is very much a trader-driven phenomenon. Producers, and particularly those in Ukraine, are sold out into early March and are still maintaining price ideas above $295pt fob for March. However, there is no appetite among traders to consider going long at this stage and at such a price.

GRANULAR UREA:

The market internationally is stable. Cold weather in Europe is making it difficult for traders to turn an immediate profit on Egyptian positions and product will likely move into store. Middle East prices are steady due to contract commitments while a spot cargo has been placed in Thailand around $315pt fob.

Granular prices are also stalled. As yet traders who have booked tonnage at $335pt fob Egypt cannot make these prices work in Europe. Cold weather is delaying activity and buyers feel in no rush while uncertainty over application timing and the Euro/Dollar rate prevails. The USA is also dogged by cold weather and while all agree that the market is not long, there is no rush evident from dealers/farmers to secure product for spring application. Thus, barge prices in Nola are flat with sellers seeking over $320ps ton fob prompt and buyers $3-5ps ton lower. Asia is also slow with the Chinese New Year bringing business to a halt.

Despite the current nervousness pervading the market, it does not appear that a period of continuous decline is about to ensue. Substantial demand has still to be covered in Europe, Turkey and the Americas for March while in Asia there is still the chance of an Indian tender being announced. Thus, while some FSU producers may need to accept lower prices in the short term, the current bout of price weakness may be just a correction from the relative overheating in late January/early February.

UAN:

US prices are picking up but have yet to reach levels that would support Russian and Ukrainian netbacks over $205pt fob. The French market is stable at Euros 165pt FCA Rouen with business slow in part due to the extremely cold weather across northern Europe.