US UAN barge interest fades as terminals grab all the attention

HOUSTON (ICIS)–Demand for US urea ammonium nitrate (UAN) is building as farmers move quickly to sow their acreage over the rest of May.

Widespread flooding and ensuing river transportation issues is squarely on the terminals inland, with buying set to increase as more plantings advance.

This shuffle away from the New Orleans (Nola) barge market has been building since end of April as the poor river logistics and a very slow pace of crop plantings has been steadily adding extra weight across the nitrogen complex.

Terminals are the only route now for the movement of UAN, owing to the “mess” currently seen down river in Nola, a trader said. Because of this, warehouse prices have been firming, while barges activity is non-existent.

“Nobody is in for new UAN barge business until fill, but there are some big paper positions on UAN,” said a trader.

The jump in UAN values at terminals, while barge prices languish, has left UAN priced in a two-tier category.

UAN out of the terminals is at a high of $240/tonne ex-tank, while barges in Nola are at a low of $170/short ton FOB (free on board).

Meanwhile, urea volumes are running low, so with the window for optimal plantings and crop inputs growing shorter, farmers are starting to switch to UAN.

Given its greater availability inland, demand for UAN has intensified since it is clear barges will not make it up-river in time for the season.

Voicing its view on the matter, a buyer said: “Barge [activity] is over in my opinion, who would buy a barge today? Everyone is waiting on prior late purchases, why pay up now for something that won’t make it?”

Producer CF Industries lifted terminal prices to $230/short ton ex-tank along the river outlets but business has also been concluded at lower levels. Higher values are also seen on the Illinois River.

Meanwhile, there appears to be participants eager to sell below the CF number in order to clear their position.

“I would agree that this is not driving anyone to take additional length at the dealer level right now. Until we see more favourable weather, I would expect dealers and farmers to be on the sidelines with UAN,” a trader said.

On the East Coast, market activity continues to feel the weight of poor weather and a slow start to a full period of spring activity.

While still feeling some weight of an uneven market, which has fought its way through a delayed spring full of weather issues and logistical obstacles, it is clear UAN will be a particularly sought after for side-dressing volumes.

But this might not be the case resulting in a struggle for the UAN market as the month progresses.

“No matter what you want there is no way to move it,” said a seller. “You have got everything so delayed so there is not much you can do.”

“The corn planting is behind and UAN is the side-dress for that. Typically by now we would be running hard on side-dress in Cincinnati and we are not. So now maybe we get going on side-dressing at the second week of June.”