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Dry conditions to limit Australia’s spot urea demand

12 Jun 2018 11:34 (+01:00 GMT)
Dry conditions to limit Australia's spot urea demand

Singapore, 12 June (Argus) — Drought conditions in parts of Queensland and New South Wales (NSW) will limit spot urea import cargoes into Australia this application season.

A severe lack of rainfall has occurred in northern NSW and Queensland, which has affected the progress of winter crops such as wheat. Some farmers have shifted away from water-heavy crops like canola, which will cut overall fertilizer demand.

There is as a result less need for spot urea imports during the topdressing period running through the remainder of the second and the third quarters, which are traditionally busy buying phases. Contract cargoes from the Middle East and Malaysia continue to arrive and will be sufficient to meet most forecast requirements. Some importers are trying to delay contract arrivals so existing stocks can be worked down.

Current spot granular urea offers at $285-290/t cfr east coast are attracting minimal interest. Some west coast buyers have been offered diverted cargoes from the east coast amid the reduced regional demand.

But rainfall has been adequate in South Australia and Victoria and phosphate fertilizers are still moving out of stores in parts of the east coast because of the later rains this year. Rainfall across much of Western Australia has also been ample, with expectations for above average grain yields and firm nitrogen demand. Australian urea consumption will possibly be down compared with a year earlier but will not collapse.

A record 2.3mn t of urea were imported during 2016, supported by extended nitrogen topdressing amid ample rainfall. Last year saw firm import at close to 2.2mn t.

January-April urea imports this year totalled around 560,000t, largely in line with recent years, according to GTIS data. But the dry weather conditions during the second quarter will possibly see a deficit develop in future import data.