fertilizer outlook€¦ · fertilizer outlook fluid fertilizer market & technology workshop . 2...

Wayne Welter

December 2014

Fertilizer Outlook Fluid Fertilizer Market & Technology Workshop

2

Who is Simplot

2

Fluid Fertilizer

Nutrients Farms, feedlots, and ranches

Turf, industrial and

feed markets

Retail Food Production

Plant & Animal

Sciences

3 Fluid Fertilizer

• Global Business

• Fertilizer Demand Drivers

• N, P and K

• Musings About 2015

4 Fluid Fertilizer

• Global Business

• Fertilizer Demand Drivers

• N, P and K

• Musings About 2015

5 Fluid Fertilizer

World Fertilizer Trade Flows

………It’s a global business

6 Fluid Fertilizer

Global Nutrient Demand

Source: IFA

98.3 102.5 104.3 107.9 108.8 112.2 114.3

33.9 37.5 40.5 41.4 41.1 41.7 42.6

23.2 23.6

27.4 28.0 28.7

30.2 31.0

0

20

40

60

80

100

120

140

160

180

200

2008/09 2009/10 2010/11 2011/12 2012/13-e 2013/14-f 2014/15-f

Nu

trie

nt

Ton

ne

s (m

illio

ns)

Nitrogen (N) Phosphate (P2O5) Potash (K2O)

7 Fluid Fertilizer

2014 narratives

Weather

Logistics

China Goes West

Record

Production

Geopolitical

Unrest

8 Fluid Fertilizer

• Global Business

• Fertilizer Demand Drivers

• N, P and K

• Musings About 2015

9

9

Fluid Fertilizer

Marketing Year

Source: USDA

14.4 billion bushels of corn

4.0 billion bushels of soybeans

10

Price Trends Reflect Supply Expectations

10

Fluid Fertilizer

Daily Nearby Futures

Source: Trading Charts

$0

$2

$4

$6

$8

$10

$12

$14

$16

$18

$20

$/B

ush

el

Corn Soybeans Wheat

Bounced off the bottom

11

Acres Planted – The Big Three

11

Fluid Fertilizer

Source: USDA, Doane

86.0 86.4 88.2 91.9 97.2 95.3 90.9 89.5

75.7 77.5 77.4 75.0 75.0 76.5 84.2 86.0

63.2 59.2 53.6 54.4 55.7 56.2 56.8 57.3

0

50

100

150

200

250

2008 2009 2010 2011 2012 2013 2014F 2015F

Acr

es P

lan

ted

Corn Acres Planted Soybean Acres Planted Wheat Acres Planted

12

Weather

12

Fluid Fertilizer

13 Fluid Fertilizer

• Global Business

• Fertilizer Demand Drivers

• N, P and K

• Musings About 2015

14

U.S. Ag Fertilizer Historical Consumption

14

Fluid Fertilizer

Source: TFI, Simplot

12.6 11.5 12.2 12.8 13.5 13.0 12.8 12.5

4.2

3.1 4.2

4.3 4.4 4.4 4.4 4.1

4.7

3.1

4.5 4.6

4.6 5.1 4.9 4.4

0

5

10

15

20

25

Nu

trie

nt

Ton

s (M

illio

ns)

Nitrogen (N) Phosphate (P2O5) Potash (K2O)

15 Fluid Fertilizer

16

Nitrogen Pricing Trends

16

Fluid Fertilizer

Source: CRU

$0

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$500

$600

$700

$800

Amm cfr Tampa Urea NOLA Granular UAN fob NOLA

17

Nitrogen Imports

17

Fluid Fertilizer

Fertilizer Year

Source: TFI, Simplot

5.5 6.4

5.8 5.9

4.7 4.5

2.8

3.0 3.0

3.7

3.4 3.1

0.5

1.1 1.1

1.2

0.9 0.9

0

2

4

6

8

10

12

2010 2011 2012 2013 2014 2015F

Nu

trie

nt

Ton

s (m

illio

ns)

NH3 Urea NSOL Other

18

Plant Type Confidence Gross ammonia Net ammonia Gross urea CAPEX* Start up

CHS Spiritwood Greenfield Medium 775 ? 3.0 2018

RenTech Nitrogen Debottleneck In Process 332 225 185 0.1 2014

Dyno, Waggaman Greenfield High 750 100 -- 0.8 2016

Agrium Redwater Debottleneck Delayed 55 -- 170 0.2 2015

Mosaic Faustina Brownfield Medium 720 720 -- 0.7 2016

CF Donaldsonville Brownfield High 1,090 184 1,200 2.1 2015

OCI Iowa Greenfield In Process 726 303 730 1.8 2016

Agrium Borger Debottleneck High 490 -- 640 0.5 2016

Incitec Pivot Brownfield Medium 800 .9 2016

CF Port Neal II Brownfield In Process 750 81 1,200 1.7 2016

Koch - Enid Brownfield High -500 1,000 1.0 2016

Yara Belle Plaine II Brownfield Low 750 46 1,300 0.7 2017

Eurochem Greenfield Low ? ? ? 1.5 2018

*US$ billions

*Note, Net ammonia has been estimated for some plants

North American Nitrogen Projects

18

TFI Outlook 2014

Source: Blue Johnson, CRU, Simplot

19

North American Nitrogen Capacity Expansion

19

Fluid Fertilizer

Source: IFA, CRU, Blue Johnson, Simplot

5,000

7,000

9,000

11,000

13,000

15,000

17,000

19,000

21,000

23,000

25,000

2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

Tho

usa

nd

Nu

trie

nt

Ton

s

Current Production Restart/Debottleneck Brownfield Greenfield N. America Demand

20

Nitrogen – Key Takeaways

20

Fluid Fertilizer

Global Watch Russia, Ukraine and China

Corn prices – economics will influence demand

Timing of Imports – matching supply with demand Domestic

Local Logistics – Can you get the product when you need it

Grower deferral – increased uncertainty defers decision-making

Gas disruptions in Trinidad

21 Fluid Fertilizer

22

Phosphate Pricing Trends

22

Fluid Fertilizer

Source: CRU

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$600

DAP NOLA DAP Tampa (s.ton)

23

Phosphate Imports

23

Fluid Fertilizer

Fertilizer Year

Source: TFI

-

200

400

600

800

1,000

1,200

1,400

2008 2009 2010 2011 2012 2013 2014

Pro

du

ct T

on

s Th

ou

san

ds

DAP MAP

A new normal for imports

24

Domestic Phosphate Production

24

Fluid Fertilizer

Source: TFI

2.6 2.6 2.3 2.9 2.8 2.6

3.7 3.6 3.6

2.8

2.4 2.3

-

1

2

3

4

5

6

7

2010 2011 2012 2013 2014 2015 e

DA

P/M

AP

P2

O5

To

ns

Domestic Export

Mill

ion

s

25

India - finally revising the NBS…..

25

Fluid Fertilizer

Source: IFA

India accounts for 15-20% of global phosphate demand

26

India - finally revising the NBS…..

26

Fluid Fertilizer

3.6 3.8 3.7 3.7 3.6

6.4 6.2

3.5 3.8 4.6

0

2

4

6

8

10

12

2011 2012 2013 2014F 2015F

DA

P P

rod

uct

To

nn

es

M

illio

ns

Production Imports Sales to Farmers

Source: CRU, Simplot

27

Phosphate – Key Takeaways

27

Fluid Fertilizer

Global Chinese exports – will they continue to come west

Corn prices – economics will influence application rates

Supply – imports offset decline of U.S. production Domestic

Local Logistics – Can you get the product when you need it

Mining the soil – what are the economics of your growers

South America – low grain prices pinch demand

28 Fluid Fertilizer

29

Potash Pricing Trends

29

Fluid Fertilizer

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600

Vancouver New Orleans

Source: CRU

Uralkali quits BPC

30

Uralkali Loses Production

30

Fluid Fertilizer

31

Potash – Key Takeaways

31

Fluid Fertilizer

Global Uralkali Production – Could take 2 million tonnes out of supply

Corn prices – economics will influence application rates

Canada – Managing supply via low operating rates Domestic

Local Logistics – Can you get the product when you need it

Mining the soil – what are the economics of your growers

32 Fluid Fertilizer

• Global Business

• Fertilizer Demand Drivers

• N, P and K

• Musings About 2015

33 Fluid Fertilizer

2015 narratives

Strong U.S. Dollar Government

Policies

Commodity

Prices

Source: CRU

Logistics

34

Global agricultural P2O5 demand driver

34

Fluid Fertilizer

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0 2 4 6 8

To

tal

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trie

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Use (

ton

nes)

World Poulation (billions)

Nutrient Use and World Population

Mill

ions

Forecasted 2021 total

nutrient use

Source: IFA, FAO, Simplot

Thank You