P&KToday: India Pegs Uralkali Discount

April 3, 2014 07:03 AM
 

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Potash prices have not moved much in the past few weeks as North American inventories are currently high. This week potash adds $4.29 to the regional average price per ton with five of twelve states in our survey unchanged on the week. Most states that did move added roughly ten dollars per ton. We expect steady pricing through spring as Canadian supplies are strong.

Uralkali reports this week that India has tendered potash for the coming year at its lowest price in 7 years at $322.00/tonne. That is 25% below last year's agreed price but remains $27.00/tonne above China's price. The discount is limited by small volumes tendered at a time, but the industry believes Canpotex will match that price in the coming weeks. Demand in India accounts for roughly 10% of the global supply, but the current subsidy policy is pricing potash out of reach for many Indian growers leaving room for speculation on how much potash India will import.

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Continuing weakness in the Indian rupee will limit Indian purchases and the potash subsidy has been cut by 20%, suggesting the NPK imbalance will remain in place in India for the coming year. I have long suspected that once India adopts a more balanced nutrient strategy, their demand will double and give India more weight in global trade. Volumes this year are projected at 3.5 million tonnes, steady to slightly lower than the year before. That number will likely double when India learns to balance their spoil profile, but volumes will remain steady until the rupee gathers some strength, and the subsidy policy favors agronomic balance.

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Phosphate has been in our headlines for upside risk for the last few weeks, and little has changed with the exception of the confirmation of a $120.00 boost in wholesale ammonia pricing into Tampa. Current retail prices are $70.00 below year ago suggesting P has upside room to run, and with new production feedstock ammonia prices pegged up $120, it will not be long before phosphate trims the year-over gap even farther.

India is making headlines here too, reporting this week Zuari Agro Chemicals, a subsidiary of India's Adventz Group, will invest $950 million to fund an integrated diammonium phosphate production facility in the UAE. India has been noted as a price mover on phosphate, but, as with potash, I believe volumes will increase significantly as P becomes affordable to end-users. The introduction of a local production facility may suppress import volumes in the near-term, but if Indian farmers can access affordable phosphate, the benefits from adequate phosphorous and improved yield performance may increase P demand.

Meanwhile, North American inventories, production and exports continue to lag. Price recovery will follow demand and given that many growers in the northern plains were run out of the field by the early onset of winter, spring demand could be high, especially if growers anticipate weather delays due to rain or cool soil temperatures. We expect steady to slightly higher prices near-term.

DAP lower, MAP and potash higher. index

  • DAP $72.45 below year-ago pricing --     down $1.81/st on the week to $568.96/st.
  • MAP $67.40 below year-ago -- up $2.39/st this week to $588.10/st.
  • Potash $112.53 below-year ago --               up $4.29/st this week to $467.55/st.
  • December 2014 corn futures opened 13 1/4 cents higher this morning than our last P&KToday at $4.97 1/2. The national average corn basis firmed 1 1/2 cents from last week to stand 2 1/4 cents under May futures. The national average cash corn price firmed 10 cents from last week to $4.93 3/4.

 

By the Pound --

DAP is unchanged at 59 1/2 cents/lbP2O5; MAP is up 1/4 cent to 55 1/4 cents/lbP2O5; Potash up 1/4 cent on the week to 38 1/2 cents/lbK2O.

The following is an updated table of P&K pricing by the pound as reported to your Inputs Monitor for the week ended March 28, 2014.

P&K pricing by pound -- 4/3/2014

DAP $P/lb

MAP $P/lb
Potash $K/lb
Iowa
$0.56
$0.56
$0.39
Illinois
$0.60
$0.52
$0.38
Indiana
$0.61
$0.56
$0.39
Wisconsin
$0.56
$0.55
$0.35
Minnesota
$0.57
$0.55
$0.38
South Dakota
$0.62
$0.56
$0.39
North Dakota
$0.59
$0.57
$0.38
Nebraska
$0.59
$0.54
$0.43
Missouri
$0.63
$0.57
$0.39
Kansas
$0.61
$0.55
$0.40
Ohio
$0.60
$0.56
$0.38
Michigan
$0.59
$0.55
$0.36
Average
$0.59 1/2
$0.55 1/4
$0.38 1/2
Year-ago
$0.68
$0.61
$0.48

 


 

 

 

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