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TRANSCRIPT
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
$100
$200
$300
$400
$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
$0
$100
$200
$300
$400
$500
$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
0
100
200
300
400
500
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
0
20
40
60
80
100
120
140
160
180
200
0 2 4 6 8
To
tal
Nu
trie
nt
Use (
ton
nes)
World Poulation (billions)
Nutrient Use and World Population
Mill
ions
Forecasted 2021 total
nutrient use
Source: IFA, FAO, Simplot
Thank You