Market update – granular urea 

The table below shows price changes in Dutch and US natural gas, fertilizers and crops compared to previous blog.  


Source: Refinitiv Datastream 

 

The last two weeks the price of granular urea has fallen from 424.39 to 336.21 USD/ ton. In addition, a decrease in the Henry Hub gas price to 1.72 from 1.84 USD/ MMBtu has occurred during the period. It is not that dramatic, since the Henry Hub price has had this volatility around 1.7 $/MMBtu the last three months. With cheaper urea production, demand should increase according to the fundamentals.  We believe that the market is approaching the floor of the falling urea price.

 

According to ADM Agri the DAP market has been weak the past two weeks.

 

 

Supply side

 

Rumours from China, presented by both ADM-Agri and TDN-Finance, said that due to high domestic prices in China, exports may be suspended. This is not confirmed, but if they are true, it will support the weak international fertilizer prices.

Producers in Europa are now the marginal producers and has according to TDN-Finance a 50 dollar/ton lower marginal cost, compared to China. This can incentive China to stay out of the market.

 

 

Demand side

 

One of the most important news the past two weeks was the soft offer for import of urea from India, and buying 340 000 tons, instead of 700 000 tons. This volume must be sold to other participants.

The planting season in wheat is well under way, and concerns stated by ADM-Agri for dry weather forecasts have supported the prices in the US. On the other hand, this will not change the weak farmer economy.

 

Summing up

To sum up, gas is stable around 1.7 $/MMBtu. In addition to lower export of Chinese urea, it can represent an end to soft markets we had this spring. The geopolitical situation in the Middle-East may also have impact on the fertilizer market if it escalates further.

 

Sources:

-          ADM-agri. (2024). Market report, Thursday 18 April 2024. Access from:  https://www.adm-agri.co.uk/reports-news-events/market-reports/ (read 21.04.2024)

-          TDN-finans. (2024). KOMMENTAR: OLJE- OG SHIPPINGAKSJER TYNGER OSLO BØRS, YARA STIGER. Access from: https://www.nordnet.no/market/news/99559510-b018-4b14-bfff-dd2f30918a23?isNnxNews=true (read 21.04.2024)

-          TDN-finans. (2024). GJØDSEL: MARKEDENE PÅVIRKET AV SKUFFENDE INDIA-ANBUD DENNE UKEN. Access from https://www.nordnet.no/market/news/4f4012e2-c30b-4ed4-8b9a-19b640da7a89?isNnxNews=true (read 21.04.2024).

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