*Urea markets surge to start 2021*
Urea futures markets were led higher by significant trading activity in Nola urea to start the year. The bull run was based on strong domestic fundamentals – grain economics and strong prepay demand – as well as the return of participants to the market after a wind down throughout December and the holiday break. The liquidity and volumes have continued on as the month has progressed, in a positive sign for the futures market. Nola urea futures have gained over $60 this month in the nearby, trading $260 on the last trading day of the year for February, up to a high of $324 last week for the contract. Values seem to be pulling back slightly this week as sellers get a bit more willing to chase and lock in profits, although the outlook remains positive.
International markets meanwhile have also rocketed higher, with physical prices continuing the momentum they finished 2020 in both origin and destination markets. Supply has been tight globally, whilst Europe, US and Latam demand has picked up, and a potential Indian tender looms on the horizon within Q1. Nearby values on AG, Egypt and Brazil urea futures have all traded over $50/mt higher than where they closed at the end of the year. Outlook and sentiment remains positive throughout Q1, with the question seemingly how much higher and for how much longer, can this run continue.
*Phosphates join the bandwagon*
Values on Nola DAP futures, and global phosphate prices for that matter, have also ridden the bull run in 2021 of fertiliser prices. Values have continued to firm up this past week and since the beginning of the year after faltering slightly in late 2020. As of Tuesday this week, values on Nola DAP futures traded well into the 420s and were well supported after the most recent trades. February futures reached a high of 425, whilst March traded as high as 427. Values across Q1 are now up nearly $40/t since the beginning of the year. Traders still remain bullish in Nola basis a few catalysts, but the majority talking points in the market are how the US is behind on imports for the fertilizer year, expected good demand economics given where grain prices are, along with values in the international market firming up (e.g. Brazil). The trend seems to continue to be up for the immediate future.