FocusUS ferts market fails to support export price

15 September 2008 15:55  [Source: ICIS news]

By Mike Nash

LONDON (ICIS news)--The US domestic fertilizer market continues to slow with inventories full and application yet to get underway for the autumn season, putting downwards pressure on export prices of US product, sources said on Monday.

Traders said this week offers had fallen again to $880/short ton FOB (free on board) Nola (New Orleans) but there was little interest.

Late last week, one trader was offering three diammonium phosphate (DAP) barges at a little over $1,000/short ton FOB Nola, a fall of $80/short ton on DAP prices at the beginning of August.

Even offers at this level were generating little interest, said traders, who surmised that a bid at $950/short ton would probably secure the cargoes, with business confirmed at this level on Monday by a US trader.

“The psychology of the market has changed, there’s no question about that,” said one US producer.

“But the fundamentals are still strong – crop prices are high and stocks are low."

Some traders were reported to be liquidating barge positions with the end of the financial year approaching.

At current domestic prices of $880/short ton, this would equate to an equivalent DAP export price of around $980/tonne FOB Tampa at present, $70-80/tonne less than last recorded sales at $1,150-1,160/tonne FOB.

However, the only currently active import market at present is India, where CFR numbers have tumbled $200/tonne in the last two weeks to $1,072/tonne on lacklustre demand both in the US and Latin America.

While a sale today to India would net back around $1,000/tonne FOB at best (based on ocean freight at $65-70/tonne from the US to India), there was no evidence that this had so far been tested.

Rumours of a sale of US DAP to India netting back to $1,010/tonne FOB without margin were earlier denied by Indian buyers.

A spokesperson at US export organisation Phosphate Chemicals Export Association (PhosChem) said it was not prepared to contemplate sales at this level, and its strategy was to wait until some demand returned in Latin America and the US domestic market.

The consensus was that US exporters still had some time before lower prices would be offered, given the high level of existing commitments to India through September and into October.

It was hoped that, by this time, some demand may have returned in Latin America.

“What we need to see is an emptying of the pipeline at the dealer level, so farmer offtake needs to improve,” the source added.

Once that happened, dealer demand for imported DAP would increase, the source added.

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By: Mike Nash
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