The NFiles: Nitrogen Lower Again

Posted on 03/09/2017 10:12 AM

 

  • Anhydrous is $142.45 below year-ago pricing -- lower $9.69/st this week at $517.99.
  • Urea is $108.14 below the same time last year -- lower $4.88/st this week to $324.09.
  • UAN28% is $64.58 below year-ago -- lower $6.26/st this week to $242.82.
  • UAN32% is priced $80.52 below last year -- lower $7.18/st this week at $267.34.

Nh3"Anhydrous ammonia was our downside leader in this week's nitrogen price survey. Indiana led the charge lower falling a corrective $66.28 per short ton as Minnesota dropped $38.36, and Iowa fell $14.56. The Dakotas, Ohio and Michigan were all unchanged on the week as Nebraska firmed $11.35 and Kansas added 37 cents per short ton. Eastern belt prices are still a bit high compared to the rest of the Midwest. We expect to see a slight premium on the Eastern Belt, but as Michigan is priced $92.01 above our regional average, Kansas is priced $100.55 below the regional average. Expect Michigan, Ohio and the "I" states to continue lower and better reflect the regional average in the coming weeks.

UANUAN solutions were lower this week with only Illinois 28% and Nebraska 32% firming. All others on both flavors of UAN were unchanged or lower this week. Wisconsin 32% was our UAN downside leader shucking $45.00 per short ton as Iowa 28% fell $24.06 and 32% softened $19.80 in the Hawkeye state. Indiana 28% fell $18.36 as Minnesota 32% dropped $11.50.

It was a similar situation with this week's urea price softness. Nebraska firmed $9.17 as Michigan added 65 cents and Kansas firmed just 9 cents per short ton. All other states were lower as led by declines in Wisconsin and Indiana, each down roughly 16 bucks and Ohio softer $11.80.

UreaWith so few states posting firmer prices this week, we will stay the course and let retail prices continue to come our way before booking for fall. Once the market confirms a hard floor, we will book aggressively, but will wait until after the first of the year to book nitrogen for spring as we expect prices to soften through the winter offseason, especially if corn prices remain depressed.

December 2017 corn closed at $3.76 on Friday, September 16. That places expected new-crop revenue (eNCR) per acre based on Dec '17 futures at $590.03 with the eNCR15/NH3 spread at -62.35 with anhydrous ammonia at a discount to expected new-crop revenue. The spread narrowed 8.40 points on the week.

This week, the average cash corn price built-in to nitrogen prices is $3.07 per bushel.

Nitrogen pricing by pound of N 9/20/15

Anhydrous $N/lb

Urea $N/lb
UAN28 $N/lb
UAN32 $N/lb
Midwest Average
$0.31 3/4
$0.36 1/2
$0.43 1/2
$0.41 3/4
Year-ago
$0.40
$0.48 1/4
$0.54 3/4
$0.54 1/4

 

The Margins -- UAN32% is at parity with anhydrous ammonia; UAN28% solution is 1/4 cent below NH3 on price. Urea is also 1/4 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
31 3/4 cents
0
0
Urea
NH3 5 cents
36 1/2 cents
4 3/4 cents
-1/4 cent
UAN28%
NH3 12 cents
43 1/2 cents
11 3/4 cents
-1/4 cent
UAN32%
NH3 10 cents
41 3/4 cents
10 cents
0

 

Indixes

 

 

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