Market Overview
Urea prices strengthened in some regions during a relatively quiet trading day as markets await India’s major tender next week. In the US market (NOLA), prices rose following a new tariff threat by President Trump targeting Russian fertilizers.
However, this market calm raises questions: Is the market truly stagnant or on the verge of another surge? Suppliers’ concerns over buyers’ “purchasing power” have hindered definitive price increases in recent months.
The ratio between urea prices (Brazil CFR delivery) and US corn futures has dropped to its lowest level in over three years. According to the latest USDA report, US spring crop conditions remain robust—though the percentage of corn rated “good to excellent” dipped from 74% to 73% last week, it still sits 10% above the five-year average. This weak corn-to-urea price ratio has stalled the Brazilian market, discouraging buyers from committing to large volumes.
India’s new tender is imminent, with importer IPL aiming to secure 2 million tonnes of urea. The shipping window is tight, forcing India to compete with buyers like Brazil and the US. Suppliers must also allocate ~700,000 tonnes remaining from India’s previous tender finalized just two weeks ago.
Meanwhile, potential US tariffs on Russian urea (linked to Trump’s 10-day ultimatum for Russia to make peace with Ukraine) could unsettle American buyers and complicate trade flows in coming months. Dutch TTF gas prices rose 4% to €34.20/MWh, adding cost pressure.
Asia-Pacific Market Developments
China:
- Domestic prilled urea in Shandong reached ¥1,740/tonne ($258 FOB). Export activity remains sluggish, with offers up to $440 FOB but lower bids heard at $400–420 FOB.
- Standard ammonium sulfate held steady at ¥1,090–1,100/tonne ($167–169 FOB), though export demand is weak.
India:
- 17 vessels (total 675,000 tonnes) have been nominated under RCF’s July 7 tender:
- 266,000 tonnes from the Middle East
- 135,000 tonnes from Russia’s Baltic port
- 124,000 tonnes expected from Indonesia
- 700,000 tonnes remain unallocated. Monsoon rainfall reached 456.4 cm since June (+7% vs long-term average).
Europe, Russia, Middle East & Africa
Egypt: No fresh deals reported. Granular urea FOB Europe prices unchanged.
Black Sea: Granular urea with export duties offered at $455 FOB Europe, but no confirmed sales.
Italy:
- Bagged granular urea at €470–485 FCA.
- Yara exclusively offers CAN 27 at €300 FCA; prilled CAN 27 lacks demand.
Ireland:
- Bagged granular urea €525–540 delivered.
- CAN 27 around €410, but summer demand is minimal.
UK: Granular urea offered at £430/tonne FCA for July/August delivery, £420 for post-August shipments.
Germany: Granular urea €450 FCA, but market is stagnant with no firm bids. Domestic CAN at €320 CIF.
Ukraine:
- Domestic urea UAH 29,000/tonne CPT
- Ammonium nitrate UAH 26,000/tonne (both down UAH 500 weekly).
Morocco: Russian prilled urea offered at $485 CFR Jorf Lasfar (<10,000t); ammonium nitrate at $380 CFR (no deals).
South Africa: High inventories dampen spot import demand. Russian CAN 27 bids at ~$310 CFR, but buyers counter below $300.
Americas
Brazil:
- Granular urea $475–485 CFR. Buyer interest rising but no confirmed deals; bids up to $500 CFR heard.
- August-loading ammonium sulfate offers fell to low $190s CFR vs. floating cargoes at $195–215 CFR.
USA (NOLA):
- Urea up $10.75/short ton to $460–461.50, highest since May 12, driven by domestic shortages and potential Russian sanctions (effective August 8).
- UAN 32 prices flat in Cincinnati. A 15% EU import tariff may later raise ammonium sulfate costs from Belgium/Germany.
Corn-to-Urea Price Ratio Analysis
The ratio of US corn futures to urea CFR prices hit 0.323:1—the lowest since April 2022. A lower ratio makes urea less economical for farmers. This compares to:
- 0.328:1 on June 23
- 2024 average: 0.477:1
Key Takeaways
- India’s Tender: 2M-tonne demand intensifies global competition.
- US Tariff Threat: Sanctions on Russian urea from August 8 could disrupt trade.
- Cost Pressures: Rising European gas prices (+4% at TTF) squeeze margins.
- Farmer Economics: Weak corn-to-urea ratio curbs fertilizer purchases in key markets.
Market Outlook: Volatility expected near-term from India’s tender and geopolitical risks, with potential demand recovery post-harvest if corn prices adjust.
(Note: All currency conversions and units standardized for clarity. “Prilled” and “granular” urea distinctions preserved as industry terms.)
