Power of Distribution
Distribution is a major reason behind any company’s success or failure. Devising the best strategy to reach your target customers is paramount. I found the recent Bangkok Post article very thought-provoking on Temu’s strategy in Thailand.
https://www.bangkokpost.com/business/general/2841612/upsetting-the-apple-cart
Fertilizer distribution varies in each country depending on the regulatory environment, arable land, infrastructure, population, the geographic size and location and the availability of raw materials. Many factors in distribution will contribute to the cost and availability of fertilizers at the retail level including the heavy and bulky nature of the product.
Quality, service and brand are also important, but none of that matters if the product isn’t readily accessible and affordable. Could a Temu type strategy work in the fertilizer industry? Good question.
Q3 Fertilizer Review
DAP prices remain firm and uncorrelated with Urea
and MOP price declines
Urea prices were stable ending the quarter up 1.4% on a bounce from the latest Indian tender.
DAP remained firm increasing 11% for the quarter and 35% year over year on limited supply.
MOP drifted weaker and is forming a bottom.
The Thai Government’s 29.5 billion Baht rice program was put on hold and will be studied further before implementation.
Thai Baht strengthened 11% from 36.8 to 32.8 THB/USD in the 3rd quarter. This will help reduce import prices in the fourth quarter.
The flooding in Chiang Rai, Lampang and Phitsanulok in the North; Nong Khai and Nakhon Phanom in the Northeast; and Ayutthaya in the Central Plain has curtailed fertilizer demand.
The conflict in the Middle East and Ukraine continues to add uncertainty to the supply chain.
Global container freight rates have eased a bit from the second quarter and bulk freight rates have been relatively stable,
China continued to restrict Urea exports and did not export in the 3rd quarter.
Natural Gas disruptions in Egypt have stabilized from the 2nd quarter.
Agricultural commodities posted a strong recovery from July and August weakness. Palm Oil prices are at roughly $950 USD/ton, a level not seen since April.
The regional Asian fertilizer conference is being held 8-10 October in Hong Kong
UREA
Urea ended the quarter around the $385 CFR level up 1.4% for the quarter and down 2.5% year over year. Local wholesale prices ended the quarter at 12,900-13,100 Baht per metric ton in bulk ex-warehouse.
Urea prices drifted lower in July and August on lackluster demand as the market waited for another Indian tender. On 29 August, NLF tendered for 1.13m tons of urea for shipment ending October. Winning offers were $340 CFR West Coast and $349.88 East Coast representing an average decline of $14 per ton from the tender in July.
A subsequent tender was issued 19 September with shipments by 20th November. Price and quantities will be announced on 3 October and could set the price direction in the fourth quarter. India’s expected demand is 2-2.5m tons as inventories are seasonally low and good rains in the monsoon season have kept demand firm.
Thailand urea imports from Malaysia were down 39% on increased supply from Brunei, Indonesia and Oman. China did not export urea in the 3rd quarter instead keeping for domestic consumption and is unlikely to export in the 4th quarter.
DAP
DAP prices increased in the 2nd quarter 11% to $635-640 CFR. Year over year, DAP prices have increased 35%. Local wholesale prices traded around 22,500-23,000 Baht per metric ton at the end of the quarter.
DAP began the quarter at $575 CFR and continued firm on tight supply and limited demand from India. India bought at $550 CFR in first half July and ended the quarter buying in the $630’s CFR level. India delayed purchases in the hopes of price declines as the current subsidy makes buying at these levels unprofitable for importers. Production of DAP (down 15%), import (48%) and sales (11%) were all down in the second quarter respectively. India, Pakistan and Bangladesh eventually were forced to buy at higher price levels as their inventories drew down.
CIQ inspections in China are now taking up to 4 weeks for export approval. DAP prices are expected to remain stable to firm even as demand is typically weak in the fourth quarter in SE Asia.
MOP
Granular MOP prices were mostly stable around the $320-$330 CFR level. Year over year, MOP prices were down 13%. Local wholesale prices ended the quarter at 12,100 – 12,300 Baht per metric ton down about 800 Baht per ton for the quarter. ICL increased their standard grade contract price with an India importer $6 pmt to $285 CFR. This may indicate a market bottom.
Uralkali appears set to enter the Thai market directly and sell both wholesale and retail in their brand. Along with MOP from Laos, this will put further pressure on retail MOP prices.
There is still a large disconnect between SOP and MOP prices. With SOP exports restricted from China, supply of granular is very tight in S.E. Asia. SOP has come down $20-30, but still trades around $650 - $660 CFR from Vietnam/Taiwan.
MOP prices should remain stable as dealers try to maintain their current prices and the CPO price remains strong.
A fun look at inflation
Are today’s inflation-adjusted prices affordable?
Tickets to the 1975 World Series Game – Game 6: Price $7.50
This game is always mentioned as one of the greatest games in World Series History.
Four-Day Pass to the 1985 Masters: Price $75
Bernhard Langer won and all Top 10 finishers are in the PGA Hall of Fame.
Tickets to the 1991 World Series: Price: $45.
Most Braves fans prefer to remember 1995.
Standard Grade Muriate of Potash (MOP), FOB Vancouver in USD.
February Price Levels:
1988 ($88pmt)
1998 ($125pmt)
2008 ($375pmt)
2018 ($230pmt)
2024 ($240pmt)
Source: Argus Media.
Excluding the extreme events in 2008, Covid-19 and the geopolitical disruptions in 2021-2022, MOP has increased about 3.5% per year, generally in line with inflation. If all the other events above had a similar 3.5% inflationary increase, prices might still be very reasonable for the average fan:
A World Series ticket at Fenway Park today would cost approximately : $52
A Four-Day Pass to the 2024 Masters : $287
A World Series ticket to see the Braves win in 2024 : $140
Conclusion: Potash at $240 seems quite affordable.
Separating the Noise from the Song?
Separating the Noise in Commodities
A friend sent the attached graphic, and it made me think of all the noise in the commodity industry and how it affects fertilizer prices. How do you separate what is important when buying fertilizer?
“And you may ask yourself, ‘How do I work this?’ “
Annual standard-grade MOP contracts are settled with China and India
Egyptian gas shortages and Indonesian ammonium sulphate tenders
India’s latest Urea/DAP tender/demand. Right amount? Right price?
China. Imports vs Exports vs Domestic Consumption
Exorbitant container freight costs
Product quality and consistency issues
Production rates and turnarounds
In-season vs Out-of-season
World Supply vs World Demand
Crop Price Volatility. Corn vs Beans
Natural Gas, Ammonia and Oil Prices
Floods, fires, monsoons and droughts
Wars, sanctions, tariffs and global supply chain disruptions
Interest rates, exchange rates and financing issues
“And you may ask yourself, ‘Am I right, am I wrong?’’”
In many ways, predicting fertilizer prices is like predicting the flow of water, it goes where it wants to go, to the path of least resistance until there is sufficient pushback.
“And you may ask yourself, ‘Well, how did I get here?’“
Fertilizer prices will rise until they can rise no more. They will decline until the downward trend is finished. The water doesn’t care why the dam broke. It is always perfectly explainable after the fact, but very dangerous to fight the trend. Complexity is a certainty.
So where are prices headed now?
Quotations: ‘Once in a Lifetime’ by Talking Heads
Q2 Fertilizer Review
Q2 Fertilizer Review
Urea and DAP prices were very volatile during the quarter, while MOP prices were mostly stable.
The conflict in the Gaza Strip continues to cause cargo delays and alter trade routes.
The conflict between Ukraine and Russia continues to affect world freight and insurance markets and MOP trade routes.
Global container freight congestion has caused freight rates to increase 2-3x in the quarter. Container freights from China to Thailand have hit two-year highs. $1,500 per TEU from North China and $900-1000 per TEU from Central China.
China continues to halt Urea exports at least until August.
Natural Gas disruptions in Egypt have created supply disruptions in the Arab Gulf.
Agricultural commodities including Corn, Wheat, Soybeans and Palm Oil had a weak 2nd quarter. Wheat dropped 18% in June.
UREA
Urea ended the quarter around the $380 CFR level up 3.8% for the quarter and up 17% for the year.
Urea prices started the quarter with an Indian tender commitment of 724,000 tons at $347.70 - $339 per ton CFR. The tender was subsequently reduced to 340,000 tons which exacerbated the downtrend that would continue for the next 45 days, reaching $320 CFR in mid-May.
The market reversed after Egyptian producers cut output due to worries about national gas supplies. Urea prices finished the quarter up $60 per ton as Egypt was forced to close all Urea plants.
The quarter ended with Indian Potash Limited (IPL) issuing a tender closing on 8 July with offers valid until 18 July for delivery up to 27 August. Purchase estimates are in the 500,000-1,000,000 tons range. India has approximately 10.5m tons in stock and consumes about 36m tons per year.
There is still uncertainty about whether China will export urea in the 3rd quarter or keep for domestic consumption.
DAP
DAP prices declined slightly in the 2nd quarter 2.6% to $570-$575 CFR. Year over year, DAP prices have increased 25%.
DAP began the quarter softening to around the $530 CFR level but firmed to end the quarter with strong demand in S.E. Asia. India and Pakistan have low phosphate inventories compared to last year, but India is reluctant to pay the current CFR prices. The breakeven cost for Indian DAP importers is around $510 CFR based on the subsidies and maximum retail price (MRP). Demand for high P2O5 NPK grades in India may increase due to the high price of DAP.
In Thailand, cargo from Phosagro, OCP, Maaden and various Chinese producers arrived for the main season. DAP was reportedly purchased around the $575 CFR level for end-July shipment. CIQ inspections in China are now taking 2-4 weeks.
The DAP price is expected to remain stable throughout the third quarter with Indian demand and overall affordability expected to pressure the price downwards. The pending Bangladesh tender, with expected prices of $600 FOB, however, may push the price higher still.
MOP
Granular MOP prices were mostly stable declining slightly to $320-$330 CFR. Year over year, MOP prices are down 13%.
Granular prices were supported by steady in-season demand from Brazil, but standard MOP prices continued to drift lower as the markets wait for new standard MOP contracts for India and China. The new contracts are expected to be priced at the $280 CFR level. The contracts should stimulate MOP demand and set a floor on prices.
There is still a large disconnect between SOP and MOP prices. With SOP exports restricted from China, supply is very tight in S.E. Asia. SOP is being offered in Thailand at $685 - $695 CFR partially due to higher freights. The $365 per ton premium is significantly higher than the traditional average price difference of $200 per ton.
Rice Fertilizer Program Approved
As reported on 26 June in the Bangkok Post, the Government has approved a budget of 29.9 billion Baht (USD $808 million) to reduce the cost of chemical and organic fertilizer for rice farmers. There are 8 fertilizer formulas included in the program including: Urea, 20-8-20, 16-20-0, and 16-8-8.
The program is targeted for the major or first rice crop grown in the third and fourth quarters. According to the Office of Agriculture (OAE) economics, Thailand harvests approximately 9.5 million hectares of land for the major rice crop with an average fertilizer application of 250-500kg per hectare.
Thailand consistently ranks as one of the top 5 rice exporters in the world and the government expects the program to increase this season’s rice production.
https://www.bangkokpost.com/business/general/2817700/cabinet-allocates-b29-9bn-for-fertiliser-scheme
The Changing MOP Market
The order is rapidly fadin'
And the first one now
Will later be last
For the times they are a-changin'
Bob Dylan
The Muriate of Potash (MOP) market has changed a lot in Thailand over the last 15 years. MOP contracts in the past have been limited to a select group of well-financed, major importers in any one country.
In 2013, the Uralkali and Belaruskali (BPC) coalition separated. The period briefly opened the market for new importers and changed MOP purchasing patterns.
Around 2017, SQM limited MOP production from Chili to focus on the more profitable lithium and potassium nitrate markets.
Belarusian authorities diverted a plane in May 2021 en route to Lithuania carrying journalist Roman Protasevich to Minsk. The incident had wide-reaching implications and led to sanctions against Belarus from many countries.
Soon thereafter, Lithuania terminated the railway transport agreement with BPC thus denying access to the port at Klaipeda. With exports restricted, BPC was forced to alter trade routes.
In February of 2022, the conflict between Russia and Ukraine commenced. Restrictions and sanctions soon followed on Russian potash. MOP trade flows were again disrupted.
In May of 2022, MOP was hitting new highs not seen since 2008. Prices reached $1,100 per metric ton CFR on supply tightness and port congestion from the aftermath of Covid-19.
Since October 2023, Dead Sea Works (DSW) and Arab Potash Corporation (APC) have had Red Sea transit routes disrupted by the conflict in Gaza. Cargoes diverted around the Cape of Good Hope have further increased logistics costs and port congestion worldwide.
As of 17 June 2024, the threat of unionized port workers at the Port of Vancouver currently looms over Canada’s largest port.
The Rise of Laos
One of the big stories in MOP is the emergence and growth of Laos. China has made substantial investments in Lao Kayuan and Sino-Agri Potash over the last 5 years. Both plants are in Khammouane province.
As Argus Media recently reported, Sino-Agri Potash will increase their capacity from 2 million tons per year to 5 million tons by 2025/26 and eventually 10 million tons per year. Lao Kaiyuan currently has a capacity of 1 million tons and plans to double that by the end of 2025. Deliveries to China have grown massively to 1.7m tons in 2023 from just 127,800 tons in 2020. (Argus Media, Insight Paper, May 2024, Laotian MOP supply boom: Key challenges and the need for a new Laos MOP price assessment).
Sino-Agri Potash Plant. MV Cheng Ji Hai. 1st Granular MOP Vessel from Laos to Thailand.
There are also three ongoing projects near the Laos capital of Vientiane which are funded with Chinese investment: Sino Hydro Mining (2.5m mt/year), Ruiyuan Richfield Sylvine Sole (500k mt/year) and Zangee Mining (2.0m mt/year).
In July 2023, we imported MOP from the first bulk vessel sent from Laos to Thailand, a 4,500 ton coaster from Cua Lo Port, Vietnam. Argus reported in May 2024 that Sino-Agri sent their first bulk vessel from Vietnam to Europe and this month sold their first bulk cargo (27,000 tons) of granular MOP to Brazil.
Two undeveloped MOP projects in Thailand (Chaiyaphum and Udon Thani) are currently being reviewed. Reuters recently reported that China’s SDIC (the largest SOP producer in the World) is looking to acquire 49% of the MOP mine in Udon Thani, Thailand.
With increasing supply from Laos, Eurochem and BHP’s Jansen project, there will be heightened competition, especially for importers that resell to smaller bulk blenders and manufacturers. Small plants in Malaysia will compact inexpensive Russian and Belarusian standard-grade MOP and export to Thailand via container. International traders will compete for MOP allocation from new manufacturers to the Southeast Asia markets.
The Sulphate of Potash (SOP) market will continue to grow in areas where soils accumulate too much chloride and growers learn more about chloride-sensitive crops. Agricultural byproducts, locally sourced high-quality minerals, and bio-waste projects that produce fertilizers with considerable soluble K2O content and low Chlorides will all compete as a K2O source.
For MOP times are certainly ‘a-changin’.
If MOP contains 60% K2O, what is the other 40%?
Canpotex Granular MOP
We are frequently asked this question. The chemical name for Muriate of Potash (MOP) is Potassium Chloride (KCl). However, the Chloride content is never listed on fertilizer bags.
If the chemical purity were 100%, the Potassium (K) would be 52.4% (63.1% K2O) and the Chloride (Cl) would be 47.6%.
However, the simple answer is approximately:
50% Potassium (as K) [ 50% K is equivalent to 60.2% K2O ]
48% Chloride (as Cl)
2% Magnesium (Mg), Calcium (Ca), Sodium (Na), Sulfates (SO4) and insolubles such as clay.
The logical next questions: Are Chlorides helpful or harmful to plants and soils and why isn’t the Chloride content listed on the bag?
Stayed tuned.
IFA 2024: A Glimmer of Hope
IFA 2024 Conference
The recent IFA fertilizer conference in Singapore offered a welcome change from the past two years of declining fertilizer prices. There was a positive and upbeat mood among attendees, suggesting a potential turning point for the industry.
Here are some key takeaways:
Prices for Potash (MOP) may have reached their bottom, with new contracts in India and China potentially setting a floor.
While demand remains sluggish, there are early signs of a pick-up, particularly in Southeast Asia where good rains are anticipated.
Uncertainty surrounding China's export policies remains a concern.
The issue of freight costs continues to be a challenge, with port congestion, high fees, and unpredictable cancellations adding to difficulties.
Despite these uncertainties, prices have firmed across the board since the conference. Urea is up $30 per ton, DAP $15 per ton, Ammonium Sulphate $10 per ton and MOP has been mostly stable to flat.
This cautious optimism suggests a possible recovery in the latter half of 2024.
Durian & Boron – How Much and When?
Always a great surprise for everyone in the office when a customer sends freshly harvested Durian. At retail prices of up to 1,000 Baht per kg, Durian can be very fruitful for the farmer as well.
A lot of farmers ask, how much boron should I use and when should I apply? It can be a complex answer without doing a complete soil test.
Good soil levels of available Boron are between 1.00 – 2.0 ppm and are deficient below 0.70 ppm. Due to the toxic nature of Boron and the fact that it is very mobile in the soil, raising soil levels of Boron can be tricky.
For mature durian trees (over 5 years) we recommend 1.6 - 2.4 kg per rai per year (80 - 120 g per tree) of Granubor® or Fertibor®, both of which contain 15% water soluble boron. Apply at the post-harvest and vegetative phases before flowering.
We also recommend using 200 grams of Solubor® (20.5% B) per rai as a foliar application up to four times during the growing season at the post-harvest, vegetative, and flowering stages. Solubor can be mixed and applied at the same time as your insecticide/fungicide.
“Even though soil and leaf tissue analysis usually show no B deficiency, fruit trees often have difficulty in transporting enough B to new flower buds,” says Dr. Timothy Righetti. “B is especially immobile in most plant tissues and will not readily move from other parts of the tree to the buds when it is needed for pollen tube growth, pollen production and other reproductive functions.”
“Under cool or otherwise poor growing conditions, flowers can deteriorate before fertilization is complete,” says Righetti. “Foliar B enhances fruit set in these situations by accelerating the fertilization process.” (‘Fruit tree foliar nutrient sprays’, RTM, U.S. Borax)
Some General Tips About Boron:
Many fertilizers and soil amendments contain boron and are a great way to ensure even distribution in the field. Be sure to ask about the B content as it may not be listed on the label.
Boron rates of application may need to be adjusted if you are applying with Lime or Dolomite.
Boron rates will vary based on the age of the tree. Fruit-bearing trees will require more boron.
Annual applications of boron are required as B is very mobile in the soil and immobile in the plant. Deficiencies will show up in new leaves and affect fruit quality, shape, and yield.
While Calcium puts the starch into the leaves, boron takes the starch out of the leaves and puts it into the fruit improving quality and size.
Good levels of organic matter and microbial activity will help with boron availability. Excess potassium in the soil will tie up boron.
Never use more than the recommended amount of Boron. Always consult your local agronomist for more information.
Q1 Fertilizer Review
Urea, DAP and MOP prices were mixed at the close of the 1st quarter but are expected to soften until more demand comes at the start of the seasons in S.E. Asia.
Conflict in the Middle East between Israel and Hamas in the Gaza Strip continues to cause cargo delays and freight increases from the Red Sea.
Lack of sufficient rainfall due to El Niño continues to slow traffic through the Panama Canal although the situation is improving.
Conflict between Ukraine and Russia continues to affect world freight and insurance markets.
China’s decision on 9 November 2023 to halt exports has been lifted for DAP as of 15 March 2024. NPK exports are expected to resume 1 May and Urea exports in June. SOP exports remain restricted.
The Thai Baht / US Dollar exchange rate weakened ending the quarter 35.8 – 36.5 Baht / USD range.
UREA
Urea ended the quarter at $372 CFR, up 4.2% for the quarter and 10% year over year. Local wholesale prices ended the quarter at 14,300 Baht in bulk per metric ton ex-warehouse.
The quarter began with India tendering for 647,000 tons of urea at $329.40 CFR (East Coast) and $316.80 CFR (West Coast). Although lower than the 1.0 – 1.5 million tons expected to be tendered, this sparked a rally in urea sending prices as high as $415 CFR Thailand in February.
After a strong January and February, prices declined in March and have broken through key long-term support on the downside. Offers at the end of the quarter into Thailand were at the $370’s level.
The quarter ended with India issuing another tender on 27 March. 760k tons were purchased in the $339 - $348 per ton CFR range. Local production of urea in India continues to increase (2.49 million tons in March) and 31.3 million tons from April 2023 to March 2024 (up 9.8%). This is reducing the quantity and frequency of Indian urea tenders.
Pertronas’ (Malaysia) Bintulu and Gurun granular Urea plants will come online to begin the 2nd quarter after one month of maintenance.
Urea is expected to weaken into the 2nd quarter.
DAP
DAP prices declined slightly in the 1st quarter to $616 CFR. Year over year, DAP prices have increased 3%. Local wholesale prices traded at around 23,000 Baht per metric ton at the end of the quarter.
China announced on 15 March, exports could resume with a 7-day CIQ inspection. Cargo from China for April and May has mostly been booked. The supply of DAP in Thailand remains tight but should loosen in May and June with fresh cargoes from China.
Traders are shorting DAP tenders for May into India with products from Saudi Arabia, Morocco, and Russia. This, in turn, should drive down Chinese prices. DAP prices have broken through long-term support levels on the downside.
DAP is expected to weaken significantly in the 2nd quarter.
MOP
Granular MOP prices declined 8% in the 1st quarter to around the $335 CFR level and declined 40% year over year. Local wholesale prices ended the quarter at 12,900 – 13,200 Baht per metric ton.
The MOP market was quiet in the first quarter but is expected to pick up with the start of the season after the Songkran holiday 12-16 April.
Although standard MOP continues to weaken in Indonesia and Malaysia, the Thai MOP market is stable with import prices in the $320-$335 CFR level. The new Indian standard MOP contract is expected to settle in April, which should set a price floor.
Thai Highlands Sustainable Agriculture
Thai Highlands Sustainable Agriculture
Learning from the Royal Project Model
Recently, we had the privilege of attending a five-day workshop on sustainable agriculture practices organized by The Royal Project Foundation Learning Institute, Highland Research and Development Institute (HRDI), and the Thailand International Cooperation Agency (TICA). The workshop focused on the Royal Project Model (RPF Model), initiated by His Majesty King Bhumibol Adulyadej The Great in 1969 to eliminate opium cultivation and improve the lives of highland communities while promoting conservation.
Using the RPF Model, the HRDI has continued the remarkable success of the Royal Project, eliminating opium cultivation, increasing income and community development, and protecting land and water resources. Opium cultivation has been reduced from 17,920 hectares of planted area in 1966 to less than 17 hectares in 2022.
The workshop delved into key practices like optimal crop selection, water and soil management, greenhouse technology, and pest control. These practices are taught in six Northern Thai provinces and through 39 Research and Development Centers.
I was particularly impressed by the regenerative agriculture concepts that small-scale farmers can immediately use in the field.
A BIG thank you to all the organizers of a great workshop. Please explore the HRDI website to learn more about the incredible work they do every day. https://www.hrdi.or.th/en/Home
Q4 Fertilizer Review
Q4 Fertilizer Review
At the close of 2023, prices for Urea, DAP, and MOP are substantially lower than at the start of the year. In the fourth quarter, Urea and MOP prices have stabilized at lower levels. Fertilizer affordability to crop prices are currently favourable for farmers. India’s rice export ban has helped support Thai rice prices.
Container and bulk freight continued their ascent in the 4th quarter due to geopolitical risk. Freights have risen to 18-month highs.
The conflict in the Middle East between Israel and Hamas in the Gaza Strip has created turmoil in the Red Sea. The Houthi rebels have been attacking vessels in the Red Sea and are targeting vessels from Israel as they transit through the Bag al-Mandeb Straight. This could affect MOP vessels from Israel and Jordan transiting to Asia. 12% of all global trade transits through the Red Sea.
The lack of sufficient rainfall due to El Niño is forcing the Panama Canal Authority to reduce the number of vessels by 40% that can transit through the canal. 40% of all U.S. container traffic travels through the Panama Canal. This is affecting global shipping routes to and from North America.
The conflict between Ukraine and Russia continues to affect world freight and insurance markets.
El Niño and depleted water levels in the major dams remain a concern in Thailand.
The Asia regional fertilizer conference was held in Bangkok from 11 - 13 October at the Mandarin Oriental Hotel. The most impactful news affecting the Thai fertilizer industry in the fourth quarter was China’s 9 November decision by the National Development and Reform Commission (NDRC) to immediately suspend all CIQ inspections which effectively halted all exports of Urea, DAP, SOP and compound, finished fertilizers. The move was made to stabilize domestic Chinese prices, discourage speculation, and ensure sufficient levels for domestic supply. The export ban is expected to last through the first quarter of 2024, but details are unclear.
The Thai Baht / US Dollar exchange rate has strengthened in the fourth quarter with speculation that the U.S. Federal Reserve will lower interest rates in 2024. The exchange rate ended the quarter 34.8 – 35.1 Baht / USD range.
UREA
Urea ended the quarter at $358 CFR, down 14% for the quarter and 26% year over year. Local wholesale prices ended the quarter at 13,800 Baht in bulk per metric ton ex-warehouse.
India is producing record amounts of monthly urea reducing import tender demand. In 2023, imports have decreased by approximately 3 million tons.
India announced a tender of 1.0 – 1.5 million tons on 4 January for shipment up to 29 February. With China effectively out of the export market, prices should stabilize in S.E. Asia.
Natural Gas prices have eased since the start of the quarter. Ammonia prices have softened to $525 CFR (from $575 CFR per metric at the end of the 3rd quarter).
Urea prices have stabilized but could again become volatile if there is a disruption in the ammonia or natural gas markets due to geopolitics or if India comes into the market and buys substantial quantities.
DAP
DAP prices rose slightly in the 4th quarter to $620 CFR mostly due to supply tightness in China. Year over year, DAP prices have decreased 14%. Local wholesale prices traded at around 23,100 Baht per metric ton at the end of the quarter.
China’s decision of 9 November to halt exports has caused problems for Thai bulk blenders. Inventories of DAP remain low and may cause production issues in the first quarter. Small quantities of DAP are being sent by train from Kunming, but supply remains sparse. Phosagro (Russia) and Sabic/Ma’aden (Saudi Arabia) are the only other viable options outside of China.
Both India and Pakistan have low DAP inventories. In late October, India reduced the DAP Nutrient Based Subsidy (NBS) by 31%. At current prices, importers will lose $70-$80 per ton creating reluctance among buyers. Many thought this would put pressure on the DAP prices. However, China’s decision to halt phosphate exports has kept the price stable to firm.
The supply of DAP in Thailand continues to remain tight as importers are only buying what they immediately need and have delayed larger purchases until the first quarter of next year and until the decision on China export policy is more clear. Local prices remain elevated. Prices are softening in North and South America but remain stable in Asia.
MOP
Granular MOP prices declined 3% in the 4th quarter to around the $370 CFR level. Prices have been declining since the peak in June 2022 at $1,125 per ton CFR. Most believe the market has stabilized and prices should remain stable through the first half of 2024. Local wholesale prices ended the quarter down 15% to 14,000 Baht ex-warehouse (from 16,400 Baht).
IPL (India) signed a new standard grade MOP contract at $319 CFR with 180 days credit. The Indian MOP subsidy was cut 85% to Rs1,427 per metric ton.
MOP Imports into Thailand from Jan-Oct were down 21% to 539,200 metric tons.
Palm Oil prices in South East Asia have stabilized and fresh fruit bunch prices are healthy at 7 Baht per kg.
Belarus exports have recovered and the price discount from other origins has closed. BPC will export 7 million tons in 2023. Their exports are expected to reach 10-12 million in 2024 largely supported by China.
Yemen’s Houthi rebels have been attacking vessels in the Red Sea. This may cause disruption and a change in routing for Dead Sea Works (Israel) MOP vessels. An Israeli MOP cargo for Thailand loaded at the end of December and is scheduled for a first half January arrival. It is unclear whether
Increased supply of granular MOP from Laos and Belarus has helped stabilize prices in Asia. Sino-KCL (Laos) is expected to commission their third 1 million ton per year production line by the end of the fourth quarter. The current capacity is three million tons per year with a target of five million tons by the end of 2027. The other active MOP producer in Laos, Lao Kaiyuan, currently has a one million-ton capacity (300,000 tons of granular).
Granular MOP prices should remain stable in Thailand going into the first quarter.
Trusted Brands
Chewachem and Rio Tinto Minerals were happy to support the Thai Fertilizer Producer and Trade Association’s (TFPTA) annual golf day. TFPTA plays a key role in working with the government, agricultural universities and the private sector to support Thai agriculture. The tournament raised 500,000 Baht in support of the Agriculture Faculty at Kasetsart University.
For high quality Boron fertilizers -- think 20 Mule Team Borax™. For longer drives, greater accuracy on approaches and superior feel around the greens -- think Titleist.
Welcome
Like a seedling - ready to grow and excited about the future.
Chewa (ชีวา) in Thai means “Life”.
Chewachem was named for the important role of chemical fertilizers in sustaining life through agriculture. As the population continues to grow and arable land declines, maintaining and improving crop yields is extremely important. The role of fertilizers in food production is critical to sustaining our food supply. With approximately 20 million hectares of planted area, Thailand is one of the world’s most important agricultural markets.
Thailand imports over 5 million tons of chemical fertilizers annually. There are 13 essential nutrients for plant growth. Chewachem supplies many of these nutrients to manufacturers and dealers across the country.
We’re happy you chose to learn more about Chewachem. Please drop us a note - we would love to hear from you.
Thanchanok (Air) Suwaprasert, Managing Director