Posted on 09/07/2021 8:16:07 PM PDT by blam
Spot prices for nitrogen fertilizer on the US Gulf Coast skyrocketed to a near-decade high on a report the world’s largest nitrogen manufacturing plant declared force majeure.
CF Industries Holdings Inc. in Donaldsonville, Louisiana, closed its massive complex ahead of Hurricane Ida. The complex has 19 plants, including six ammonia and five urea facilities, producing nitrogen-based products for agricultural and industrial markets.
According to the letter seen by Bloomberg, CF Industries said, “due to these circumstances, CF Industries Sales, LLC has declared an event of force majeure affecting the production and shipment of product from the CF Donaldsonville, LA nitrogen complex.”
The letter was dated Sept. 3, and at that time, the facility remained closed. This stoked fears of production declines at a time when supplies are already tight.
As a result of the force majeure, US Gulf urea nitrogen fertilizer spot prices spiked 16.5%, according to Green Markets data.
Other major nitrogen fertilizer benchmarks remained mixed on the weekly change.
Scotiabank commodity analyst Ben Isaacson told clients that nitrogen fertilizer prices on the Gulf Coast are surging due to “uncertainty surrounding the restart of CF’s Donaldsonville plant.” He added there is increasing concern that other surrounding plants are down due to lack of electricity and possible storm damage.
Before Ida, there was surging demand for US fertilizer as soaring commodity prices allowed farmers to expand crop production, boosting demand for nutrients essential to producing food.
A recent Rabobank commodity note explained farmers are expanding plantings and dispensing more fertilizer on fields to increase crop yields. The Dutch bank warned, higher prices will curb purchases of fertilizers.
Besides fertilizer, Ida has disrupted crude oil production and critical infrastructure for exports. There are also fuel shortages across New Orleans and Baton Rouge, Louisiana, and power outages remain widespread.
Force Majeure
Force majeure is a common clause in contracts which essentially frees both parties from liability or obligation when an extraordinary event or circumstance beyond the control of the parties, such as a war, strike, riot, crime, epidemic or sudden legal changes prevents one or both parties from fulfilling their obligations under the contract.
Thank you for the definition. :)
And this was certainly a righteous declaration of Force Majeure.
PING!
“...producing nitrogen-based products for agricultural and industrial markets.”
Since it’s September, I don’t think this will affect US ag production much, but Brazil, Argentina, and Australia might have problems.
I imagine the biggest price rise will be industrial plastics.
Also DEF (diesel exhaust fluid) for newer commercial trucks
Agree. In recent years fertilizer prices have been low due to abundant natural gas as a result of fracking. Thank you President Trump!
Agfax.com.
DRY
Date Range DAP MAP POTASH UREA
Jul 27-31 2020 410 429 358 355
Aug 24-28 2020 430 435 352 355
Sep 21-25 2020 434 453 338 361
Oct 19-23 2020 446 476 332 359
Nov 16-20 2020 455 488 336 358
Dec 14-18 2020 466 522 360 361
Jan 11-15 2021 486 551 373 373
Feb 8-12 2021 588 642 398 453
Mar 8-12 2021 615 690 423 483
Apr 5-9 2021 618 699 431 504
May 3-7 2021 634 705 436 514
May 31-Jun 4 2021 652 712 443 524
Jun 28-Jul 2 2021 677 721 476 542
Jul 26-30 2021 695 753 549 554
$495/short ton? On articles chart.
Short ton prices exploding? Geez, just buy long tons then. You’re welcome.
Interesting. These guys are big boys for sure, but we have 9 or 10 more fertilizer producers in America that are as big or bigger players. This seems to be manipulated fear porn.
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.