OREANDA-NEWS. The US ammonia market transitions to the second half of 2016 amid uncertainty as new production in the US Gulf coast and Corn Belt threatens to pressure prices.

Three major variables have led market participants to anticipate softer values for the second half of 2016: new production expansions coming on line, tumbling corn prices and delayed farmer demand.

CF Industries' expansions at Port Neal, Iowa, and Donaldsonville, Louisiana, as well as OCI Partners' Wever, Iowa, and Dyno Nobel's Waggaman, Louisiana, plants will add an additional 3.82mn st/yr of gross ammonia capacity. The new Donaldsonville and Waggaman plants are expected to be producing in the third quarter, followed by Wever and Port Neal.

Traders and suppliers spent the summer on the sidelines assessing how downstream consumers will react to those new supplies. US ammonia prices in the east and west Corn Belt have fallen by 33pc and 35pc year-over-year, respectively, and remain at their lowest levels since Argus began assessing the region in 2012, through a combination of weak grain prices and new domestic capacity.

Prices for corn also appear to remain under pressure because of an expected bumper crop. December futures prices tumbled to a one-year low in early August at $3.29/bushel. With farmer profits squeezed by lower crop values, ammonia suppliers are fighting hand-to-mouth buying habits. Fall prepay sales have been lower than normal, creating the potential for in-season prompt demand for fall post-harvest applications.

Farmers have adopted a just-in-time buying mentality because of the weak corn price trend. This has kept many distributors from taking forward positions, and has left domestic ammonia prices flat as a result of uncertainty.