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North American Urea Inventories A late start to spring planting in North America was likely the main contributing factor to a build in urea, DAP/MAP and potash inventories in April. The Fertilizer Institute (TFI) reported that North American urea inventories increased by 5% in April 2011 relative to March 2011, to a level 11% higher than the five-year average. Inventories were 51% above the historically low levels of April 2010.

US DAP/MAP Inventories U.S. DAP/MAP increased 4% in April 2011 relative to March 2011. Inventories were 6% higher than the five-year average and 41% above the low inventories in April 2010.

North American Potash Inventories North American potash inventories were 10% above April 2010 levels, but remain 12% below the five-year average.

Benchmark Urea Prices Global urea prices have increased significantly since the beginning of April. The rise in prices has been driven by a number of factors, including strong demand in Europe and South America and India absorbing a large volume of mainly Iranian urea. There has also been uncertainty surrounding the availability of Chinese urea exports in the low export tax period beginning July 1 due to the newly imposed sliding scale export tax. The current understanding is that export taxes will increase above 7% at prices above approximately $340/tonne FOB, meaning the export tax would be significantly higher at current global prices.

Benchmark Phosphate Prices North American and global phosphate prices have been flat to slightly lower in the past month. India has contracted additional DAP volumes through the end of September, but the total contracted volumes have been lower than expected. Similar to urea, the new sliding scale export tax on Chinese DAP/MAP exports has created uncertainty with respect to available export supply from China when the export tax is reduced on June 1.

Benchmark Potash Prices Both North American domestic and international potash prices have increased in the past month.

Corn Prices Similar to most commodities, crop prices have been highly volatile over the past few weeks. Average cash corn prices in February, March and April surpassed the 2008 record. Weather will become a key driver of the corn crop going forward. Corn planting began the year at the slowest pace in 15 years, but the pace has improved over the past couple of weeks, particularly in the western Corn Belt. The eastern Corn Belt needs dry weather to complete corn planting in the coming weeks.

Soybean Prices U.S. cash soybean prices have declined slightly over the past month. The USDA reduced its projection of 2010/11 U.S. soybean exports in its May forecast due to increased export competition from South America.

Wheat Prices Wheat prices have declined since April despite several weather-related concerns. The U.S. Southern Plains are very dry and as a result, U.S. winter wheat ratings are the lowest they have been since 1996. At the opposite extreme, cool and wet weather has led to significant delays in planting the spring wheat crop in Western Canada and the Northern Plains.

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Canola Prices Canola prices have declined in May along with Soybean complex. Statistics Canada is projecting a record planted area of canola in Western Canada in 2011 and despite a late start, favorable weather over the past couple of weeks has removed some of the risk premium in the market.

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Crop Margins Cash margins have followed spot prices lower for all crops listed relative to their very high levels a month ago.

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Natural Gas Prices Gas prices are relatively flat compared to April levels. Some Ukrainian nitrogen producers now have access to lower-priced natural gas, which is believed to be approximately $7/MMBtu delivered to the plant.

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