Europe: In February, the price spread for Nitrogen fertilizer was rebalanced in a crucial way. Urea prices had dropped sharply in recent months, making dry bulk Nitrogen more affordable. This resetting of prices was necessary due to a weak global urea market at the start of 2021 and decreased Natural gas prices in Europe. Europe has become a swing producer in the nitrogen market over the last year and this decrease in prices has allowed them to be competitive in the global industry.

In February, the U.S. fertilizer market saw a downward correction in anhydrous Ammonia prices, as had been expected ahead of time. This was accompanied by discounted offers in both urea and UAN markets. The dropping prices of other Nitrogen fertilizers and lower natural gas costs in Europe were cited as the cause for the downward adjustments in offer levels. Over the past year, Europe has become a swing producer in the global Ammonia market.

Prices for fertilizer in the Midwest Corn Belt recently dropped from winter-fill offers of $950 to $1,100 per short ton (t) free-on-board (FOB) down to only $795 to $840.

February saw a significant decline in factory-offered prices of Ammonia from production facilities in the eastern Oklahoma area, dropping from $870 to $885 FOB (Free on Board) ex-plant to $625 to $665 FOB. The largest and quickest adjustments were seen in this region, as U.S. building ammonia supplies seemed most evident here.

Going forward, U.S. Ammonia prices are expected to remain stable or softer for the short term, with further dips possible ahead of the increased spring preplant applications.

A recently announced settlement between Yara and Mosaic for $590 per metric ton (mt) cost-and-freight (CFR -- or sales price with shipping costs included) Tampa for March shipments has set a new, lower benchmark since July of 2021. This comes amidst poor Ammonia demand on both sides of the Atlantic, lower comparative gas prices in Europe and a lagging start to the nitrate market this year.

Ammonia prices in the Baltic Sea and Black Sea took a steep dive between January and February, according to recent assessments. The Baltic Sea was assessed nominally at $585/mt FOB, a decrease from $730 to $775 during the month prior. In the Black Sea, Ammonia pricing fell from $770 to $780 in January to just $625/mt CFR last month.

The fertilizer season has gotten off to a chaotic start with little clarity on nitrates fertilizer requirements. As such, the Ammonia market in and around Europe has come to a standstill.

The U.S. urea market was notably weak last month, with little developing spring Nitrogen demand to shore up prices that had decreased in response to the overall softening international market. Additionally, a large influx of imports from abroad has eased earlier worries surrounding spring inventories. In the short-term, global Ammonia will likely remain lacklustre due to muted demand and weakening prices across the board.

At the end of February, granular urea barges at the trading hub in New Orleans (NOLA) had decreased significantly from the month prior. Prices were assessed at $310 to $335/t FOB, down from $340 to $390. The announcement of India's latest tender brought a glimmer of hope near the end of the month; however, this was not enough to make up for earlier losses resulting in an overall decline of almost $100.