The NFiles: Oversupply to Continue to Weigh on N Prices

Posted on 03/09/2017 10:12 AM

 

  • Anhydrous is $170.68 below year-ago pricing -- lower $2.17/st this week at $477.71.
  • Urea is $105.09 below the same time last year -- higher 28 cents/st this week to $310.31.
  • UAN28% is $71.00 below year-ago -- lower $1.69/st this week to $227.09.
  • UAN32% is priced $80.50 below last year -- lower 9 cents/st this week at $246.52.

InputsMonitor.com"Anhydrous ammonia was our downside leader falling $2.17 regionally. South Dakota led declines, softening $15.56 followed by North Dakota which fell $7.96. Other declines were less than $2.00. Four states were unchanged as Nebraska was our only gainer, firming $4.06.

Urea firmed 28 cents by the short ton led by a $5.49 hike in North Dakota as Michigan firmed $2.14. Five of the twelve states we survey were unchanged as declines were limited to Wisconsin, down $6.65 as Nebraska fell $1.29.

UAN28% fell $1.69, led by Wisconsin which softened $11.07 and Kansas fell $1.98. Four states were unchanged as Michigan firmed $7.38 and Minnesota added $2.82.

UAN32% fell just 9 cents by the short ton. Nebraska fell $2.01 and Kansas slid 91 cents. Nine states were unchanged as gains were limited to a $1.78 firmer price in Iowa.

InputsMonitor.comSince anhydrous ammonia is underpriced compared to the rest of the nitrogen segment, another week of declines next week seems certain. The entire segment remains priced well below expected new-crop revenue and sources continue to forward the notion that the global oversupply will continue through 2017.

Currently, market fundamentals point to post-harvest price softness into the first of the year.

December 2017 corn closed at $3.87 on Friday, November 4. That places expected new-crop revenue (eNCR) per acre based on Dec '17 futures at $608.52 with the eNCR15/NH3 spread at -130.81 with anhydrous ammonia at a discount to expected new-crop revenue. The spread narrowed 2.87 points on the week.

Nitrogen pricing by pound of N 11/11/15

Anhydrous $N/lb

Urea $N/lb
UAN28 $N/lb
UAN32 $N/lb
Midwest Average
$0.29 1/2
$0.34
$0.39 3/4
$0.38 1/2
Year-ago
$0.39 3/4
$0.46 1/2
$0.53 3/4
$0.51 1/4

 

The Margins -- UAN32% is underpriced by 1 cent compared to NH3. Urea is 1/2 cent below anhydrous ammonia; UAN28% solution is priced 1 3/4 cent below NH3.

Nitrogen
Expected Margin
Current Price by the Pound of N
Actual Margin This Week
Outstanding Spread
Anhydrous Ammonia (NH3)
0
29 1/2 cents
0
0
Urea
NH3 5 cents
34 cents
4 1/2 cents
-1/2 cent
UAN28%
NH3 12 cents
39 3/4 cents
10 1/4 cents
-1 3/4 cent
UAN32%
NH3 10 cents
38 1/2 cents
9 cents
-1 cent

 

InputsMonitor.com

 

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