The NFiles: Nebraska NH3 Leads Gains

Posted on 03/09/2017 10:12 AM

NH3eNCR"

  • Anhydrous is $114.72 below year-ago pricing -- higher $1.41/st this week at $605.52.
  • Urea is $83.66 below the same time last year -- higher 90 cents/st this week to $376.56.
  • UAN28% is $58.81 below year-ago -- higher 90 cents/st this week to $280.71.
  • UAN32% is priced $60.45 below last year -- higher $3.29/st this week at $312.17.

Nitrogen prices were all higher this week, but as we mentioned in an earlier article, gains across our survey region were mild considering the time of year. Nebraska accounts for the biggest increase in our survey,however with NH3 firming in the Husker state by $32.22. But that still pegs Nebraska anhydrous below our regional average by about twelve bucks at $593.08.Michigan urea firmed $8.79 to $350.88, but here again, well below the regional average urea price which is $376.56 this week.

UANMichigan led gains in UAN solutions with a $5.92 uptick in the per ton price of 28% as most states were less than a dollar lower. Currently, UAN solutions pose the greatest threat to the upside as corn will soon emerge in earnest and sidedress activity will prolong spring demand.

Fertilizer producers are preparing to release quarterly results this week and while some manufacturers have struggled to maintain profitability, those with a bigger nitrogen footprint will likely fare better since nitrogen demand is a certainty year-on-year. Manufacturers that post major quarterly losses may begin to curtail production as a cost saving measure which could support nitrogen price increases later this year.

So far our outlook for a summer swoon in the nitrogen segment is unchanged, but production fundamentals may force us to reevaluated the situation.

December 2016 corn closed at $3.95 on Friday, April 29. That places expected new-crop revenue (eNCR) per acre based on Dec '16 futures at $621.97 with the eNCR15/NH3 spread at -16.45 with expected new-crop revenue at a premium to one ton of anhydrous ammonia. The spread widened 22.12 points on the week.

This week, the average cash corn price built-in to nitrogen prices is $3.52 1/4 per bushel.

Nitrogen pricing by pound of N 5/4/15

Anhydrous $N/lb

Urea $N/lb
UAN28 $N/lb
UAN32 $N/lb
Midwest Average
$0.37 1/2
$0.41 1/2
$0.50
$0.48 1/4
Year-ago
$0.44
$0.51
$0.60 1/2
$0.58 1/4

 

The Margins -- UAN28% is overpriced compared to anhydrous by 1/2 cent; UAN32% solution is 3/4 cent above NH3 on price. Urea is 1 cent below anhydrous by the pound of N this week.

Nitrogen
Expected Margin
Current Price by the Pound of N
Actual Margin This Week
Outstanding Spread
Anhydrous Ammonia (NH3)
0
37 1/2 cents
0
0
Urea
NH3 5 cents
41 1/2 cents
4 cents
-1 cent
UAN28%
NH3 12 cents
50 cents
12 1/2 cents
1/2 cent
UAN32%
NH3 10 cents
48 1/4 cents
10 3/4 cents
3/4 cent

 

Spreads

 

 

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