*Urea markets cool ahead of MMTC tender
This week saw intl urea markets drift lower as expectations of price levels in MMTC’s upcoming tender were scaled back due to Chinese export appetite. As a result, AG paper traded down to $260 for the October and November contracts and was offered into the mid $260s for September. Meanwhile Brazil paper values also tumbled, following news of physical business sub $270 cfr at the end of last week. However, Tuesday saw buyers re-enter the market on news the ongoing port congestion in China may restrict export availability for Indian business, with local suppliers raising their offers. Consequently October AG urea found new conviction at the $267 level Tuesday, trading there multiple times, whilst buying interest perked up accordingly basis price differentials on other urea contracts. At time of writing, we continue to await the results of the tender for clarity on the next price direction.
*Tropical storm Laura and Marco closing in on the US Gulf
As storm Francis hits the UK bringing a wet spell here at FIS HQ, hurricane season is in full swing in the US gulf. Tropical storms Laura and Marco, having already wreaked havoc across the Caribbean, are due to hit the US on Wednesday back to back. Traders are keeping an eye on the sky and one on the screen, with the impending storms offering support of sorts to domestic barge prices in Nola fertiliser markets. Risk of port loading delays/closures could create a short squeeze for producers who have committed tonnes for sale. To those in the affected areas – we hope you stay safe and dry.
*The Nola DAP futures market remains liquid… and volatile
Over the past week, we continue to see relative liquidity in the Nola DAP futures market with supportive underlying physical market fundamentals. Barges for DAP physical product continue to trade at $360, in line with where they traded last week. Phosphate barges in NOLA are expected to remain tight through September, with only a few cargos headed this way and much demand yet to be satisfied. However, the futures market has bounced around over the past week on decent trading volumes. Monday this week saw bids get to an all-time high for the September contract at $360, but on Tuesday futures traded all the way back down to $354, nearly $10 from where value was at the end of the day prior. This decline in futures price can be attributed to a couple of factors, but mostly traders who have much margin in these September contracts and are looking to take profits off the table, isolating them from settlement risk.