The NFiles: Nitrogen Resumes Downtrend

Posted on 03/09/2017 10:12 AM

NH3"

  • Anhydrous is $134.80 below year-ago pricing -- lower $11.60/st this week at $567.35.
  • Urea is $112.78 below the same time last year -- lower $4.42/st this week to $352.41.
  • UAN28% is $54.46 below year-ago -- higher $1.21/st this week to $275.44.
  • UAN32% is priced $61.70 below last year -- lower $1.55/st this week at $299.51.

This week Pro Farmer held its annual Leading Edge Conference in Des Moines. I have compiled some important points from my presentation and written up some thoughts based on conversations with farmers and attendees. Click here to read my post.

UreaAnhydrous ammonia was our downside leader this week, falling $11.60. South Dakota led the charge downward softening 60 bucks on the week. Kansas fell $41.81 as Missouri fell $27.72 and Minnesota is down $17.79. Gains were limited to a $1.51 price hike in Illinois and $1.34 higher price tag by the short ton in Nebraska. Indiana, Wisconsin and Ohio are all unchanged on the week although all three of those states are priced above expected new-crop revenue per acre so we expect them to come down in the next few weeks. Overall, price action like this week's, after spring applications strongly suggests Midwestern NH3 supplies are robust.

Urea was down as well, falling $4.42 regionally. Kansas and Minnesota were neck and neck on the way down, each falling just over $15.00 per short ton as Michigan shucked $9.72. In fact, all states posted a softer urea price this week save for two... Indiana is unchanged although slightly above our regional average at $366.20, and Michigan is up just $1.78 on the week.

UANUAN solutions were mixed with 28% up $1.21 regionally and 32% down $1.55. 28% was led higher by price firmness in Missouri to the tune of $17.89 per short ton as Illinois supported 32% by adding $4.58. Kansas 32% is down $11.20 as declines in 28% were mild. We expect UAN to post declines in the coming weeks.

December 2017 corn closed at $3.81 on Friday, July 15. That places expected new-crop revenue (eNCR) per acre based on Dec '17 futures at $598.43 with the eNCR15/NH3 spread at -31.08 with anhydrous ammonia at a discount to expected new-crop revenue. The spread firmed 4.87 points on the week.

This week, the average cash corn price built-in to nitrogen prices is $3.38 1/4 per bushel.

Nitrogen pricing by pound of N 7/21/15

Anhydrous $N/lb

Urea $N/lb
UAN28 $N/lb
UAN32 $N/lb
Midwest Average
$0.34 3/4
$0.39 1/4
$0.49
$0.47
Year-ago
$0.43
$0.51 1/2
$0.59
$0.56 1/4

 

The Margins -- UAN28% is overpriced compared to anhydrous by 2 1/4 cents; UAN32% solution is also 2 1/4 cents above NH3 on price. Urea is 1/2 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
34 3/4 cents
0
0
Urea
NH3 5 cents
39 1/4 cents
4 1/2 cents
-1/2 cent
UAN28%
NH3 12 cents
49 cents
14 1/4 cents
2 1/4 cents
UAN32%
NH3 10 cents
47 cents
12 1/4 cents
2 1/4 cent

 

Indexes

 

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