FocusUS urea firming again after soft patch

14 March 2008 17:22  [Source: ICIS news]

By Carl Roache

LONDON (ICIS news)--After months of weakness, US granular urea prices have started to show some strength, supported by the onset of the application season, traders said on Friday.

The muted US market has started to show signs of a recovery after improved weather conditions in the southwest allowed urea application to properly start.

As a result, buying has restarted, especially from warehouses.

“Bad weather in the southwest meant we could not get going on wheat,” explained one trader.

“But the weather has improved and demand is now better.”

At the end of last week, prompt urea barge prices were primarily talked within the range $360-370/short ton FOB (free on board) Nola (New Orleans).

Barges were now on offer at $365-375/short ton FOB Nola, and major US producer Koch has raised its prices for granular urea by $10/short ton out of two terminals in the midwest, to $400/short ton at Inola and $410/short ton at Enid.

“It is stronger,” said a trader. “There is not much buying at the moment on the barge level, but lots of buying out of the warehouse.”

With the Mississippi river set to reopen this weekend, urea could start to move to the corn areas, the source said.

Although urea buyers in the corn areas did not need product until April, the reopening of the river was expected to stimulate buying further.

International urea prices have also strengthened in the last week, which traders said would influence the US market.

Black Sea prices rose around $40/tonne this week to the mid-$390s/tonne FOB, with Brazil, Nigeria, and European markets all buying for April.

Taking into account major buying from India and substantial imminent offtake from Egypt, the vigour in urea globally is evident.

The revival in US prices comes after a period of falling values. US urea imports in January increased by more than 400,000 short tons compared with a year earlier.

The substantial rise in imports meant there has been an ample supply of urea barges in the US Gulf since January.

This was a driving force in the weaker values apparent since the start of the year.

Plentiful supply coincided with a weakening of buying interest caused by continued poor weather conditions.

Cold, wet weather meant the onset of the winter wheat season was delayed for several weeks, and is only now really starting.

These factors pushed values down to around $360/short ton FOB Nola at the start of March from more than $420/short ton FOB Nola at the start of the year.

For more on fertilizers visit ICIS chemical intelligence
By: Carl Roache
+44 20 8652 3214

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