AMMONIA

World ammonia market prices continued to firm through September, ending on a spot sale at Yuzhnyy at $588 fob (free on board -- seller fulfills his obligation to deliver when the goods have passed over the ship's rail at the named port of shipment) for October. Production losses due to scheduled turnarounds as well as unexpected outages at numerous ammonia units in Europe, North Africa, Russia, Ukraine and southeast Asia/Oceania kept the market very tight through the month. Greater availability is anticipated from Russian ammonia export suppliers in October, so prices could at least stop going up in the short term.

In the domestic market, ammonia prices softened slightly in Oklahoma as wheat belt demand is far less than normal due to drought. Prices in Corn Belt terminals moved higher toward month's end to around $800 ston, reflecting fall prepay numbers. (All prices in this column wholesale.) Despite decreases in corn prices at month's end, corn prices are still at levels allowing profitability at normal application rates. We expect domestic ammonia prices to run firm but flat in the short term.

UREA

World urea market prices moved slightly higher through September. Some traders are refusing to buy in to current Yuzhnyy levels (prills at $505 to $512 mton fob), but producers there are comfortable and under no pressure to sell. There are still some October positions to be sold. Granular prices firmed as prices to the U.S. from Middle East suppliers moved from around $500 mton fob to $525 to $533 at month's end. South American demand is moderately active and India continues to buy. At month's end there were several loose positions from Indonesia, the Middle East and possibly China. For the short term, we expect world urea prices to run flat with an undertone of softness.

In the domestic market, NOLA (New Orleans) granular barge prices traded flat through the month. After a small rally early in the last week of the month, NOLA barge prices tumbled back to the previous week's level of $510. Looking at the number of import urea cargoes headed this way (6 to 7), many arriving well after river close, we expect domestic urea prices at NOLA could come under some downward pressure in the medium term.

UAN

Demand for UAN is quite different regionally this year. Corn Belt demand is strong as wholesalers/dealers refill tanks after strong demand last spring emptied the system. Demand in the wheat belt remains devastatingly low due to extreme drought. Prices for competing forms of N remain strong, supported by high crop prices and strong world market prices. NOLA UAN barge prices moved up around $10 by month's-end trading at $350 to $355 (32%) fob. For the short term we look for domestic UAN prices to run firm but flat.

DAP

After a mid-month run higher to $660 mton fob, Tampa DAP market prices in the second half of the month moved lower with business crossing in the $630 to $635 area. Importers in Brazil and Argentina are still largely on the sidelines and have covered the vast majority of their projected requirements for the year. Traders have already cut offers for Moroccan MAP to $700 to $705 mton cfr (cost and freight -- seller must pay the costs and freight to bring the goods to the port of destination) to find homes for some of their longs in Argentina, but importers are confident prices will be further reduced given the number of cargoes en route or planned for shipment to the region. The end of the peak third-quarter shipping season is looming and buyers are sensing further price weakness. At month's end, Central American buyers were presented offers for U.S. DAP in the low $640s fob but are countering in the mid $630s fob. We look for world DAP market prices to run steady to slightly lower in the short term.

Some minor strength in NOLA DAP barge prices appeared mid-month with trades crossing at $597 ston. Late in the month, prices dropped to just under $590. Dealers remain reluctant to buy absent farmer cash in hand. High crop prices support farmer ability to pay the high numbers, but lower yields could squeeze farmer income and discourage aggressive application rates. We expect domestic DAP prices to run flat with undertone of softness in the short term.

POTASH

Prices at most terminals through September continued flat to slightly higher despite light demand for fall fill. NOLA barge prices moved within a $530 to $540 range, ending the month at the high end. Given the continuing lack of competition, we look for potash prices to move up further.

(CZ/AG)

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