US flooding pushes urea market higher, softens potash prices

20 May 2011 16:33  [Source: ICIS news]

By Lauren Williamson

LONDON (ICIS)--The worst flooding to hit the US in 70 years has prompted quick rises in the urea fertilizer market but has had the opposite effect on potash, market sources said on Friday.

The closure of several river freight terminals and river ports has made shipment and distribution of goods difficult and – in some cases – impossible, as with the total closure of the Arkansas River and the part closures occurring along the Mississippi.

“You can’t move anything up river,” said one US-based fertilizer trader and distributor. “You can’t get up the Arkansas [River] and terminals are running out of product, so anything already upriver or in the locks is worth more money.”

Barge prices for urea climbed to $392-406/short ton (€274-285/short ton) FOB (free on board) Nola (New Orleans) this week, around $15/short ton higher than the week ending 13 May. Firming international prices also supported the rise.

The water levels of the Mississippi and Arkansas rivers have seen a slow but powerful rise in recent weeks, according to the US Army Corps of Engineers. The Arkansas River is expected to reopen next week.

For potash, the market has reacted more moderately to the flooding. Yet even though most potash imports are secured from Canada and distributed via rail and truck, the weather has taken a toll.

“It does not take much supply imbalance for a feeling of over supply to creep into the market,” one potash trader explained.

Prices for muriate of potash (MOP) this week ranged between $535-545/short ton FOB Mississippi River Terminal, maintaining the same price range of recent weeks, though the high end of the range dipped by about $5/short ton. But prices may see some minor – and temporary – softening over the next month, market sources said

Farmers have had diminished requirements for fertilizer because the wetter-than-normal weather has delayed fertilizer applications. As a result, many crops have not been planted according to schedule. For sugar beets, only 33% of the crop has been planted, as opposed to 99% which was planted this time last year, according to the USDA.

Looking further ahead, this unused fertilizer for this season may be reserved and used for the next, potentially decreasing future sales.

The floods have also ruined crops that were nearly ready for harvest. Some wheat farmers lost large portions of their expected crop yields after the US Army Corps of Engineers opened floodgates to help relieve water levels. Though the water levels have crested, the government expects them to remain high for some time.

($1 = €0.70)

Carl Roach contributed to this story

For more information on fertilizers, visit ICIS Pricing Fertilizers

By: Lauren Williamson
+44 (0) 20 8652 3214

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