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11/20/2019

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Call Notes:

Phosphates

• Corrected over $100/tn from 2018 to 2019 into 2020. Production cost for phosphate are$265, Nola has traded at $245.
• Spread between Phosphates vs grain is the largest that it has been in a long time.
• Prices could go down, but you need to consider locking in margin, not only for nearby but looking forward to 2020.
• To sustain prices, there will have to be larger production shut downs.
• Recommendation: You should have your needs bot. Consider tons for fall 2020.
• Market will most likely be flat into Q4/Q1 with no massive correction.

Urea

• Traders and exporters prefer cash to inventory. The current market has enabled domestic producers opportunities to have supply.
• Overall this is a nitrogen equation, not just urea. The market needs to balance out.
• Long ammonia in Canada, low likelihood that tons will move to the ground.
• Need ammonia to balance out nitrogen equation.
• Midwest delivered prices will most likely be proud walking into the spring season, spring Logistics will be a concern.
• Northern states may feel a lack of resupply on ammonia and may have to manage a carry market in UAN.
• Urea will stay flat. Recommendation is to have 60% coverage in the next 30 days. (Yes, there may be downside but in a short window.)

Potash

• No massive price discount although the market is oversupplied; producers will likely protect their values.
• Importers will keep a balanced hand.
• Potential for a 10-15$ move lower – but remember it is an oligopoly market.
• Logistics will be a concern moving into spring.
• Fall freight has not been a big concern but moving into Mar/April will be rough.