Analysis: Early northern planting saps urea stocks

OREANDA-NEWS. April 30, 2015. An early start to planting in one of the US' key urea consumption regions has contributed to a regional shortage and rising warehouse prices, which has also boosted prices for barges along the Mississippi river and at New Orleans.

Twin Cities prompt-loading urea offers moved to as high as \\$400/st fot this week with some suppliers facing empty bins. Around the time of river open, when a high volume of barges arrived to replenish warehouse stocks upriver following winter, offers were as low as \\$325/st fot Twin Cities. Warehouse prices in that region have not been above \\$400/st since late-summer 2014.

Upper Mississippi inventory levels have dropped in part because of rapid planting and fieldwork there, allowed by a recent bout of dry weather. North Dakota, South Dakota, Minnesota, and Wisconsin are all either rated abnormally dry or in moderate drought, according to the US Department of Agriculture's (USDA) 21 April US Drought Monitor.

Minnesota's corn planted acreage leaped 26 percentage points to 38pc for the week ended 26 April, according to the USDA's latest [Crop Progress report]( http://direct.argusmedia.com/newsandanalysis/article/1029710). That is more than triple the corn planting at this time last year and nearly double the five-year average.

North Dakota, South Dakota, and Wisconsin are all in line with or ahead of last year's planting progress and the five-year averages. Although there has been some switching to soybeans throughout the Midwest, the current level of planting progress would suggest urea consumption is ahead of schedule.

Based on the two planting seasons since Argus established urea warehouse assessments, the current \\$75/st spread between Twin Cities offers and prompt-loading barge prices is at elevated, but historically comparable levels. The maximum differential for those values was \\$68/st and \\$110/st in the spring of 2013 and 2014, respectively.

Minnesota, the Dakotas, and Wisconsin account for about 40pc of the US' agricultural urea consumption, according to data from the Association of American Plant Food Control Officials (AAPFCO). For now, the pace of planting for the region is offsetting an overall slow start for the US and what, until April, appeared to be an oversupplied urea market.