The NFiles | Fall Nitrogen Considerations

Posted on 09/20/2018 12:13 PM

 

  • Anhydrous is $53.57 above year-ago pricing -- down 60 cents/st this week at $492.60.
  • Urea is $53.47 above the same time last year -- off $3.75/st this week at $376.34.
  • UAN28% is $14.72 above year-ago -- lower $2.69/st this week at $238.99.
  • UAN32% is priced $14.10 above last year -- higher $5.50/st this week at $260.61.

Urea led declines in the nitrogen segment as Iowa fell $35.70 and Illinois dropped $12.40. Three states werenh3 unchanged as Indiana firmed $14.71 and North Dakota gained $13.92 per short ton.

UAN28% was lower on a $26.88 price cut in Ohio as Indiana fell $7.27. Five states were unchanged as Nebraska firmed $9.48 and Michigan added $6.70.

Anhydrous ammonia was slightly lower on the week with Iowa off $9.72 and Ohio falling $8.96. Three states were unchanged as Nebraska firmed $14.31 and North Dakota added $8.70.

UAN32% was the sole gainer in the nitrogen segment with Indiana firming $13.73 and Iowa up $4.73. Eight states were unchanged a Missouri was the only state to post a decline, down $6.19 on the week.

On average, nitrogen prices reported to your Inputs Monitor are 10.3% above year-ago. Urea has risen the most UAN28aggressively on the year, up 16.6% with UAN32% posting a mild, 5.7% gain over the period. While there have been reports of sharply higher year-on-year nitrogen prices in some areas, our survey does not show increases of the same magnitude.

That suggests there are better prices to be found if farmers are willing to look for them. An increase in fertilizer prices ahead of harvest is nothing new. But with corn prices testing lows, it will not be easy to convince farmers to apply fall nitrogen. Part of the reason for that is the risk of winter N loss. The other part is farmers' willingness to wait out the current corn price weakness in hopes of better prices during the winter months that would justify an increase in corn acreage and the subsequent increased need for nitrogen.

As far as acreage goes, however, soybeans aren't really offering much of an alternative. With the corn/soybean price ratio hovering below 2.5, both crops will be considered in roughly equal measure this spring as farmers ureaweigh the lesser of two evils.

There is also the weather forecast calling for a wet harvest in many areas of the Midwest which would put post harvest nitrogen applications at risk.

There are a number of factors lining up against fall nitrogen demand. That suggests the possibility of a mild supply overhang after the first of the year. We will look for opportunities to book spring nitrogen shortly after the first of the year. Should you decide to apply fall nitrogen, we advise you shop around to find the best local price available. Check in with your crop district on the map on profarmer.com to see how the bids you have been given stack up against the price data we have collected.

December 2019 corn closed at $3.90 on Friday September 14. That places expected new-crop revenue (eNCR) per acre based on Dec '19 futures at $631.45 with the eNCR18/NH3 spread at -138.85 with anhydrous ammonia priced at a discount to expected new-crop revenue. The spread narrowed 10.99 points on the week.


Nitrogen pricing by pound of N 9/5/18

Anhydrous $N/lb

Urea $N/lb
UAN28 $N/lb
UAN32 $N/lb
Midwest Average
$0.30 1/4
$0.41 1/2
$0.42 1/4
$0.41
Year-ago
$0.27
$0.36 1/4
$0.40
$0.38 1/2

The Margins by lb/N -- UAN28% is at a parity with NH3. UAN32% posts a 3/4 cent premium and urea is at an 6 1/4 cent premium to anhydrous ammonia when considered by the pound of N.


Nitrogen
Expected Margin
Current Price by the Pound of N
Actual Margin This Week
Outstanding Spread
Anhydrous Ammonia (NH3)
0
30 1/4 cents
0
0
Urea
NH3 +5 cents
41 1/2 cents
+11 1/4 cents
+6 1/4 cents
UAN28%
NH3 +12 cents
42 1/4 cents
+12 cents
0
UAN32%
NH3 +10 cents
41 cents
+10 3/4 cents
+3/4 cent

nitrogen indices chart

 

 

 

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