More US midwest rain keeps brakes on ammonia

16 April 2008 22:48  [Source: ICIS news]

HOUSTON (ICIS news)--More rain is expected in the US midwest in the next couple of days, keeping the brakes on a fertilizer application season that has already got off to a slow start, market sources said on Wednesday.

With farmers already 30-60 days behind schedule in some areas, a cash-flow problem for distributors could be developing that might mean ammonia tanks in the supply chain do not get refilled quickly, said Henry Merschman of Iowa-based Merschman Fertilizer.

"It's a tough call, every year is different," Merschman said.

The delay in spring farm work has backed up the ammonia market, with the lack of storage being the roadblock for sellers.

"It doesn't matter if you drop the prices, if the tanks are full already," said another distributor, who predicted that there would be a prompt refill of tanks as farmers try to make up for lost time.

The slow start to the season has contributed to soaring grains prices on futures markets this week.

The US Department of Agriculture (USDA) reported on Monday that only 2% of the 2008 US corn crop had been planted as of 13 April, well behind the five-year average of 7%.

The weather outlook points to further delays, with 70-80% chance of rain on Thursday and Friday in Iowa, the state that is the centre of US corn production.

On Wednesday, the government's National Weather Service (NWS) issued a forecast for 22-26 April that predicted the greatest chances for heavy rains were in the lower Mississippi valley, "where they certainly do not need the moisture".

Further ahead, the NWS outlook for April 24-30 also sees more rain chances.

"Daily weather maps show one or more rain-makers again tracking across the plains and...continuing the wet pattern over the midwest and Mississippi
valley," the outlook said.

For more on fertilizers visit ICIS chemical intelligence

By: Stephen Burns
+1 713 525 2653

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