India to tender again
Thursday saw the announcement of India’s next urea purchasing tender. It was inevitable and widely expected, but the usual rigmarole in the lead up was spared and the announcement largely caught the market by surprise. The purchasing tender issued by MMTC is for an unspecified quantity of urea for shipment by August 20th, with submissions to close this Friday. Expectations are that India will target 1mn+ tonnes, with fertiliser sales significantly ahead of last year amid record crop production forecasts. With a tight shipment window, which could hinder significant Chinese participation, the tender announcement sent a bullish sentiment through global urea prices.
Urea paper markets rally
Paper markets reacted immediately to the tender announcement with nearby contracts being bid up significantly across the board on both international and Nola urea markets, and sellers all but evaporating on the international side. All of the trading volume in futures on Thursday was in the Nola market, with 44kt clearing through the CME. Nola urea traded up over $10 across the curve out to the end of the year, with Q4 being valued at $220 late last week. The majority of this trading activity was rumoured to be short covering.
DAP to the moon
Despite the action on urea, Nola DAP futures take the cake with their continued rally this week, with 36kt trading on futures since the last Ferts in Focus report. Most attention has been on the Q3 timeframe with August and September trading multiple times up to $317 and $315 respectively, significantly up from the low $290s where Q3 was trading just a week prior. However, values seem to be capping out around this level for now, with selling pressure building this week.