Argus DAP index rises in June

The Argus DAP index has increased further this month, after firming slightly in May, with phosphates prices picking up in key markets.

The index, a weighted composite of DAP fob levels from the five largest export markets — the US, Russia, Saudi Arabia, China and Morocco — rose to 87.7 points at the end of this month, an increase of 0.78 points from May. The index firmed by 0.05 points in May, after a drop of 1.77 points in April (see chart).

DAP prices in India, the world's largest importer, have increased by an average of $5/t this month. And Indian DAP imports have continued apace, with 886,000t arriving in June and 892,000t scheduled for July.

Solid crop fundamentals and strong farmer DAP sales has supported imports. June DAP sales to consumers are expected to nearly double compared with last year, having reached 1.17mn t as of 28 June. Sales have consistently outstripped the previous year's volumes since November, with May levels more than doubling those for the month in 2019.

India's agricultural ministry has forecast the country's second-highest rice crop on record this kharif season, which runs from April to September, with a higher-than-average monsoon also projected.

Fob levels have firmed in China and Saudi Arabia, the major suppliers east of Suez, with availability tightening amid continued Indian imports and the award of the 600,000t Bangladesh DAP tender. But freight rates are rising, capping a notable uptick in fob levels. DAP demand in Asia-Pacific remains solid and the increased costs have largely been reflected in cfr levels.

West of Suez, phosphates demand has increased, with the run-up to Brazil's safra soybean application in September and continued Argentinian imports. Barter rates in Brazil — the ratio between crop prices and fertilizer inputs — are at four-year lows, highlighting the comparative affordability of phosphates. US producer Mosaic has sought to capitalise on the rising cfr levels in Latin America, with fob Tampa prices moving up by more than $10/t in June. DAP/MAP cfr levels in Argentina and Uruguay, Latin America's main DAP destination markets, have similarly risen by over $10/t this month.

Argus expects the DAP index's upward trend to continue next month, with availability limited for July-loading cargoes east of Suez, as suppliers focus on commitments under sales into India and Bangladesh.

By Harry Minihan

Argus DAP index