Argentina: Urea rose more than 10% in the local market and price volatility is a cause for concern
Although the Argentine agricultural sector is experiencing a seasonal decline in demand and international prices have fallen, producers have a new concern, which is the increase recorded in February.
In this scenario, the value of urea will play a fundamental role for many producers who invest in applied technology, betting on good returns, such as those recorded in the last campaign. According to data provided by the consultancy AZ Group, its value has risen considerably between January and February, around 11%, reaching a withdrawal price of US$ 545 per ton.
Imported fertilizers
The data reflected in the report indicate that 2024 will end with a new period of recovery in fertilizer import volumes. Although the total volume (2.60 Mt) slightly exceeds the accumulated volume for 2023 (2.59 Mt), the recovery trend that began after the lows of 2022 continues.
Not only the total volume of imports is relevant, but also the variation in the composition of the aggregates. Imports of nitrogen fertilizers show a year-on-year increase of 20% compared to 2023, while this increase was almost offset by a 16% decrease in imports of phosphorus fertilizers.
Phosphates
According to data published by INDEC and published by the consultancy, 0.2 thousand tons of MAP and 97 tons of DAP were imported in January. The insignificant volume maintains the supply restriction of the last quarter. The prices of MAP to be withdrawn from the port reach 817 u$s/t, without major changes. The theoretical import parity is estimated at 777 u$s/t.
In the international market, there were cuts
During the month of February, international urea prices showed a relative decline. FOB Middle East is at US$355/t, down US$23/t compared to January values. Meanwhile, CFR Brazil showed a decline of US$19/t, standing at US$362/t.
However, prices in the US Gulf rose by US$46/t to US$398/t.
The factors that are causing the decline include the delay in the Indian tender for February, which will be postponed to March with a volume of around 350,000 t, and the drop in gas prices in Europe, which is stimulating local production.
Added to these factors is the news of a possible resolution to the conflict between Russia and Ukraine, where Europe is anticipating purchases in anticipation of the possibility of increases in Russian export tariffs.
The market also expects China to resume exports between March and April. Despite the potential in a framework of seasonal demand recovery and inventory reduction in India, the bearish sentiment persists.
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