CBH Fertiliser Q1 Business Update

CBH has enjoyed a solid start to 2021 with sales ahead of forecasts, and grower collections in February and early March also ahead of where we expected.

Our warehouses in Kwinana and Geraldton are stocked with all fertiliser required for seeding, plus a healthy supply of early urea and sulphate for those already looking ahead in the season. Looking ahead, we've seen a rapid increase in global freight markets driven by demand for multiple commodities to be shipped coming out of COVID-19.

This has forced rates up by 70 - 120 per cent which will likely put some pressure on available vessels during May to July. Our recommendation to growers is that they collect their contracted product at their earliest convenience to be on the safe side for season 2021.

Finally, we've recently upgraded our fertiliser booking system which now operates within LoadNet, allowing greater visibility and flexibility for staff to book trucks across multiple sites. Later this year we plan to release a ‘self-service’ function within LoadNet allowing transporters to make online fertiliser bookings on behalf of growers.

Until then please direct all fertiliser booking enquiries to the Grower Service Centre on 1800 199 083.

Market Update

Phosphates:

• The US International Trade Commission will leave duties in place against Russia and Morocco for five years.
• This leaves the US as a premium market and Russian and Moroccan product needing to find alternate markets.
• The Chinese domestic market is finally coming to an end which should start to free up exports and pricing from May onwards.
• India and Pakistan are next to market which will no doubt keep prices relatively firm at a global level.
• Local WA supply is mostly in warehouse and we don’t expect any issues with growers collecting against contracts.
• Expect local AUD prices to remain elevated for the remainder of 2021 season with a weaker tone from July onwards.

Nitrogen:

• India tendered for another 1 million metric tonnes urea for April shipment which will provide market direction.
• China is likely to provide a major chunk of this demand as their production rates have increased post their domestic season.
• Freight rates on some legs are up 120 per cent in the last 4-6 weeks (Arab Gulf freight to WA: December 2020 - $USD30 per tonne, March 2021 – USD$65 per tonne).
• General demand is strong across the US, Asia and Australia with vessel availability now the area of concern.
• Expect local AUD prices to remain elevated through until June at least as freight rates dominate the end price.

Potash:

• Global FOB prices remain flat however the sharp increase in freight has pushed CFR (Cost and Freight) prices higher.
• The global potash market typically trades at a CFR basis where sellers deliver goods to the buyers port.
• Demand remains firm generally with freight impacting some imports into key markets. MOP imports into Australia in January rose by 40 per cent year-on-year as growers push for higher application.
• Expect local AUD prices to remain flat to firm then increasing the second half of 2021.