US February ammonia contract may rise $35-45/tonne

25 January 2011 16:21  [Source: ICIS news]

HOUSTON (ICIS)--High demand and production shortages will likely result in a higher price for US benchmark Tampa ammonia, a source said on Tuesday.

Negotiations for the February Tampa ammonia contract between Yara and its clients Mosaic and CF Industries were ongoing this week, and market watchers suggested the price could settle $35-45/tonne (€26-33/tonne) higher than the $475/tonne CFR (cost and freight) Tampa January contract.

High demand this spring in the US for ammonia and other nitrogen fertilizers is anticipated as analysts predict that surging commodity prices could prompt the planting of up to 10m additional acres (4m ha) this year in crops such as corn, wheat, soybeans and cotton.

Meanwhile, ammonia supply to the US Gulf has been strained by a nearly month-long outage of a 525,000 tonne/year Yara ammonia plant in Trinidad.

Sources indicated that Yara’s Tringen 1 plant in Point Lisas could be back in production by the end of this week.

Yara would probably like to settle at $525/tonne based on recent sales of ammonia in Yuzhny, Ukraine, of $460/tonne FOB (free on board), a source said.

But buyers Mosaic and CF were likely pursuing a figure closer to $500/tonne.

A consensus among market watchers was that the February Tampa contract would settle in the range of $510-520/tonne CFR.

A settlement for February was expected to be reached by the end of this week.

($1 = €0.73)

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By: Frank Zaworski
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