Nyiri

Slide1 : 82nd ANNUAL SOUTHWEST FERTILIZER CONFERENCE & Grade Hearing Nutrients for Life Food, Fiber, Fuel


Slide2 : Food & Feed


Slide3 : Fiber


Slide4 : Fuel


Slide5 : Fuel - Bioenergy


Slide6 : 82nd ANNUAL SOUTHWEST FERTILIZER CONFERENCE & Grade Hearing Tuesday, July 31, 2007 Economic Perspective Outlook for the U.S. Fertilizer Markets Ken Nyiri Principal Consultant British Sulphur Consultants Wake Forest, North Carolina


Slide7 : Outline for Economic Perspective Paper


Slide8 : Weather (US & Global) – too wet, too dry, early frost, mild winter, hard winter? Outline for Economic Perspective Paper


Slide9 : Weather (US & Global) – too wet, too dry, early frost, mild winter, hard winter? Energy Costs (US & Global) – prices could go up or could go down, could stay flat? Outline for Economic Perspective Paper


Slide10 : Weather (US & Global) – too wet, too dry, early frost, mild winter, hard winter? Energy Costs (US & Global) – prices could go up or could go down, could stay flat? Supply Disruptions (US or Global) – energy costs, floods, hurricanes, military, managed, logistics? Outline for Economic Perspective Paper


Slide11 : Weather (US & Global) – too wet, too dry, early frost, mild winter, hard winter? Energy Costs (US & Global) – prices could go up or could go down, could stay flat? Supply Disruptions (US or Global) – energy costs, floods, hurricanes, military, managed, logistics? Logistics (US & Global) – ocean freight costs, rail & barge freight costs (availability)? Outline for Economic Perspective Paper


Slide12 : Weather (US & Global) – too wet, too dry, early frost, mild winter, hard winter? Energy Costs (US & Global) – prices could go up or could go down, could stay flat? Supply Disruptions (US or Global) – energy costs, floods, hurricanes, military, managed, logistics? Logistics (US & Global) – ocean freight costs, rail & barge freight costs (availability)? Market Prices (US & Global) – higher or lower crop, fertilizer and other costs, buyer resistance, opportunity? Outline for Economic Perspective Paper


Slide13 : Weather (US & Global) – too wet, too dry, early frost, mild winter, hard winter? Energy Costs (US & Global) – prices could go up or could go down, could stay flat? Supply Disruptions (US or Global) – energy costs, floods, hurricanes, military, managed, logistics? Logistics (US & Global) – ocean freight costs, rail & barge freight costs (availability)? Market Prices (US & Global) – higher or lower crop, fertilizer and other costs, buyer resistance, opportunity? Market Risks – Legislative Issues – Environmental Issues US & Global Supply & Demand - Industry Profitability? Outline for Economic Perspective Paper


Slide14 : Weather (US & Global) – too wet, too dry, early frost, mild winter, hard winter? Energy Costs (US & Global) – prices could go up or could go down, could stay flat? Supply Disruptions (US or Global) – energy costs, floods, hurricanes, military, managed, logistics? Logistics (US & Global) – ocean freight costs, rail & barge freight costs (availability)? Market Prices (US & Global) – higher or lower crop, fertilizer and other costs, buyer resistance, opportunity? Market Risks – Legislative Issues – Environmental Issues US & Global Supply & Demand - Industry Profitability? Outline for Economic Perspective Paper China?


Slide15 : Weather (US & Global) – too wet, too dry, early frost, mild winter, hard winter? Energy Costs (US & Global) – prices could go up or could go down, could stay flat? Supply Disruptions (US or Global) – energy costs, floods, hurricanes, military, managed, logistics? Logistics (US & Global) – ocean freight costs, rail & barge freight costs (availability)? Market Prices (US & Global) – higher or lower crop, fertilizer and other costs, buyer resistance, opportunity? Market Risks – Legislative Issues – Environmental Issues US & Global Supply & Demand - Industry Profitability? Outline for Economic Perspective Paper India? China?


Slide16 : Weather (US & Global) – too wet, too dry, early frost, mild winter, hard winter? Energy Costs (US & Global) – prices could go up or could go down, could stay flat? Supply Disruptions (US or Global) – energy costs, floods, hurricanes, military, managed, logistics? Logistics (US & Global) – ocean freight costs, rail & barge freight costs (availability)? Market Prices (US & Global) – higher or lower crop, fertilizer and other costs, buyer resistance, opportunity? Market Risks – Legislative Issues – Environmental Issues US & Global Supply & Demand - Industry Profitability? Outline for Economic Perspective Paper India? China? Latin America ?


Slide17 : Weather (US & Global) – too wet, too dry, early frost, mild winter, hard winter? Energy Costs (US & Global) – prices could go up or could go down, could stay flat? Supply Disruptions (US or Global) – energy costs, floods, hurricanes, military, managed, logistics? Logistics (US & Global) – ocean freight costs, rail & barge freight costs (availability)? Market Prices (US & Global) – higher or lower crop, fertilizer and other costs, buyer resistance, opportunity? Market Risks – Legislative Issues – Environmental Issues US & Global Supply & Demand - Industry Profitability? Outline for Economic Perspective Paper India? China? Latin America ? Middle East ?


Slide18 : Weather (US & Global) – too wet, too dry, early frost, mild winter, hard winter? Energy Costs (US & Global) – prices could go up or could go down, could stay flat? Supply Disruptions (US or Global) – energy costs, floods, hurricanes, military, managed, logistics? Logistics (US & Global) – ocean freight costs, rail & barge freight costs (availability)? Market Prices (US & Global) – higher or lower crop, fertilizer and other costs, buyer resistance, opportunity? Market Risks – Legislative Issues – Environmental Issues US & Global Supply & Demand - Industry Profitability? Outline for Economic Perspective Paper India? China? Latin America ? Middle East ? New Projects?


Slide19 : Weather (US & Global) – too wet, too dry, early frost, mild winter, hard winter? Energy Costs (US & Global) – prices could go up or could go down, could stay flat? Supply Disruptions (US or Global) – energy costs, floods, hurricanes, military, managed, logistics? Logistics (US & Global) – ocean freight costs, rail & barge freight costs (availability)? Market Prices (US & Global) – higher or lower crop, fertilizer and other costs, buyer resistance, opportunity? Market Risks – Legislative Issues – Environmental Issues US & Global Supply & Demand - Industry Profitability? Outline for Economic Perspective Paper India? China? Latin America ? Middle East ? Subsidies ? New Projects?


Slide20 : Weather (US & Global) – too wet, too dry, early frost, mild winter, hard winter? Energy Costs (US & Global) – prices could go up or could go down, could stay flat? Supply Disruptions (US or Global) – energy costs, floods, hurricanes, military, managed, logistics? Logistics (US & Global) – ocean freight costs, rail & barge freight costs (availability)? Market Prices (US & Global) – higher or lower crop, fertilizer and other costs, buyer resistance, opportunity? Market Risks – Legislative Issues – Environmental Issues US & Global Supply & Demand - Industry Profitability? Outline for Economic Perspective Paper India? China? Latin America ? Middle East ? Tariffs ? Subsidies ? New Projects?


Slide21 : Weather (US & Global) – too wet, too dry, early frost, mild winter, hard winter? Energy Costs (US & Global) – prices could go up or could go down, could stay flat? Supply Disruptions (US or Global) – energy costs, floods, hurricanes, military, managed, logistics? Logistics (US & Global) – ocean freight costs, rail & barge freight costs (availability)? Market Prices (US & Global) – higher or lower crop, fertilizer and other costs, buyer resistance, opportunity? Market Risks – Legislative Issues – Environmental Issues US & Global Supply & Demand - Industry Profitability? Outline for Economic Perspective Paper India? China? Latin America ? Middle East ? Tariffs ? Subsidies ? Farm Bill ? New Projects?


Slide22 : U.S. Monthly Corn Prices CBOT: 4000 = $4.00/bushel $4 Corn $3 Corn $2 Corn


Slide23 : U.S. Daily Corn Prices CBOT: 4000 = $4.00/bushel $4 Corn


Slide24 : CORN - HOW SWEET IS IT?


Slide25 : CORN ACREAGE IS GROWING Millions of Planted Acres


Slide26 : SOYBEANS - OUCH!


Slide27 : SOYBEAN ACREAGE DECLINES Millions of Planted Acres


Slide29 : 2006/07 2007/08f Change Planted (millions) 78.3 92.9 14.6 Harvested (millions) 70.6 85.4 14.8 Yield (bushels/acre) 149 154 4.4 Production (billion) 10.5 13.1 2.6 Share Feed & Residual 5.8 5.7 45% Food & Industrial 1.4 1.4 12% Ethanol 2.1 3.4 27% Export 2.1 2.1 16% Total Use 11.4 12.6 100% Ending Stocks 1.1 1.6 Farm Price $3.05 $3.00 Source: Doane Agricultural Services Corn Supply & Demand Balance


Slide30 : 2006/07 2007/08f 2008/09f Change Planted (millions) 78.3 92.9 90.8 - 2.1 Harvested (millions) 70.6 85.4 83.1 - 2.3 Yield (bushels/acre) 149 154 156 2.7 Production (billion) 10.5 13.1 13.0 - 0.1 Share Feed & Residual 5.8 5.7 5.4 41% Food & Industrial 1.4 1.4 1.4 11% Ethanol 2.1 3.4 4.4 33% Export 2.1 2.1 2.1 16% Total Use 11.4 12.6 13.3 100% Ending Stocks 1.1 1.6 1.3 Farm Price $3.05 $3.00 $3.25 Source: Doane Agricultural Services Corn Supply & Demand Balance


Slide31 : Agriculture Outlook – 2007/08 Ethanol continues to Grow & Dominate Outlook Corn acres down from this years level Some switching back to Soybeans Longer-term, Corn acreage could reach 94 million acres by 2012


Slide32 : U.S. Nitrogen By Major Product Fertilizer Year 2006/07 (Millions of short tons of products) Production Imports Exports Demand Ammonia 9.9 8.2 0.2 7.9 Urea 3.1 6.3 0.3 9.1 UAN 10.2 2.4 * * 12.5 AN 2.7 1.1 0.2 3.6 AS 3.1 0.4 1.2 2.5 DAP/MAP 14.4 0.2 7.7 7.1 Total Nitrogen 8.1 10.8 2.0 17.0 Change + 3% - 5% - 24% + 3% Includes both fertilizers & non-fertilizers and excludes converted ammonia


Slide33 : 27% 60% U.S. Nitrogen Production & Imports Imports 57%


Slide34 : U.S. Urea Imports 2005/06 2006/07(e) Change Share Canada 1,805 2,000 195 31 % Kuwait 937 585 ( 352 ) 9 % Qatar 477 519 42 8 % Saudi Arabia 716 507 ( 209 ) 8 % Trinidad 445 476 31 7 % China 109 448 339 7 % Venezuela 349 445 96 7 % Egypt 116 396 280 6 % Libya 129 314 185 5 % Bahrain 337 313 ( 24 ) 5 % All Others 1,287 397 ( 890 ) 6 % Total 6,707 6,400 ( 307 ) 100 % (Thousands of Tons of 46% Urea )


Slide35 : U.S. Urea Imports 2005/06 2006/07(e) Change Share Canada 1,805 2,000 195 31 % Kuwait 937 585 ( 352 ) 9 % Qatar 477 519 42 8 % Saudi Arabia 716 507 ( 209 ) 8 % Trinidad 445 476 31 7 % China 109 448 339 7 % Venezuela 349 445 96 7 % Egypt 116 396 280 6 % Libya 129 314 185 5 % Bahrain 337 313 ( 24 ) 5 % All Others 1,287 397 ( 890 ) 6 % Total 6,707 6,400 ( 307 ) 100 % (Thousands of Tons of 46% Urea ) Middle East 2,634 41 %


Slide36 : Urea Imports By Port of Entry (Fertilizer Year 2006/07(e) – 6.4 million tons of 46% urea) Source: USDC & BSC Estimates 70 61 2,837 485 464 1,644 187 28 127 14 81 258 82 60


Slide37 : Urea Imports Into India by Quarter (Million's short tons of Urea)


Slide42 : U.S. UAN Imports (Thousands of Tons of 32% UAN Solution )


Slide44 : Nitrogen Outlook - 2007/08 Global Nitrogen cycle has peaked and excess supply and declining prices are forecast for the next year. Global Import Demand Growing Modestly Excess Export Capacity Competition for US market would be aggressive High U.S. production Increase U.S. imports Pull nitrogen prices downward


Slide45 : U.S. Phosphate By Major Product Fertilizer Year 2006/07 (Millions of short tons of products) Production Imports Exports Demand Phos Acid 19.2 0.1 0.3 3.1 Super Acid 1.3 * * 0.2 1.1 DAP 9.0 * * 5.4 3.9 MAP 5.3 * * 2.3 3.2 TSP 0.5 * * * * 0.5 Feed & Industrial 1.0 * * * * 1.0 Total P2O5 10.4 0.2 4.0 6.6 Change - 4% - 9% + 3% Includes both fertilizers & non-fertilizers and excludes converted phos acid


Slide46 : U.S. Ammonium Phosphate Balance (millions of short tons of DAP & MAP) Fertilizer Years 2005 2006 2007(f) Change Production 16.8 15.0 14.3 ( 0.7 ) Imports 0.2 0.2 0.1 ( 0.1 ) Total Supply 17.0 15.2 14.4 ( 0.8 ) Domestic 7.2 6.6 7.1 0.5 Exports 9.7 8.5 7.7 ( 0.8) Total Demand 16.9 15.1 14.8 ( 0.3) Producer Stocks 1.1 1.3 0.9 ( 0.4 )


Slide48 : Midwest DAP Prices ($ per short ton fob midwestern US) $0 $50 $100 $150 $200 $250 $300 $350 $400 $450 $500 Jul-01 Oct-01 Jan-02 Apr-02 Jul-02 Oct-02 Jan-03 Apr-03 Jul-03 Oct-03 Jan-04 Apr-04 Jul-04 Oct-04 Jan-05 Apr-05 Jul-05 Oct-05 Jan-06 Apr-06 Jul-06 Oct-06 Jan-07 Apr-07 Jul-07 Oct-07 Jan-08 Apr-08


Phosphate Outlook – 2007/08 : Phosphate Outlook – 2007/08 Consolidation has help the large U.S. DAP manufacturers to balance production with demand. Domestic markets provide some relief but export market remains soft. Prices are searching for equilibrium & are expected to decline slightly from their recent high.


Slide51 : North American Potash Balance (millions of short tons of KCl) Fertilizer Years 2005 2006 2007(f) Change Production 20.1 17.2 19.7 2.5 Imports 1.0 0.9 1.0 0.1 Total Supply 21.1 18.1 20.7 2.6 Domestic 11.2 9.0 11.6 2.6 Exports 10.2 7.2 10.5 3.3 Total Demand 21.4 16.2 22.1 5.9 Producer Stocks 1.3 3.2 1.8 ( 1.4 )


Slide52 : 971 49 22 9,300 300 200 700 100


Slide53 : U.S. Published Potash Prices ($ per short ton cornbelt)


Slide55 : North American potash producers are in the “drivers” seat because of strong international demand and limited “spare” capacity. Expansions will be commissioned over the next few years bringing the market into better balance. New offshore potash mines will be limited and high cost. (Argentina, Thailand, Laos, Uzbekistan and China) Market should remain in balance 2008 if North American producers continue to show discipline. Potash Outlook – 2007/08