The NFiles: UAN32 & Urea Firm Slightly

Posted on 03/09/2017 10:12 AM

 

  • Anhydrous is $173.68 below year-ago pricing -- lower $3.00/st this week at $474.71.
  • Urea is $103.39 below the same time last year -- higher 67 cents/st this week to $310.98.
  • UAN28% is $70.07 below year-ago -- lower $1.06/st this week to $226.03.
  • UAN32% is priced $80.77 below last year -- higher 22 cents/st this week at $246.74.

InputsMonitor.com"Anhydrous ammonia led nitrogen declines this week, as we had expected. Nebraska threw in a $36.23 decline as Kansas fell $2.93. Other declines were very mild as four of the states in our survey are unchanged. Minnesota led gains firming $4.80 as Missouri rounded out gains, adding just $1.06.

UAN28% fell $1.06 regionally, led by three states. Ohio is down $15.32, Wisconsin dropped $11.07 and Michigan fell 92 cents per short ton. Three states were unchanged as Minnesota added $1.15 to lead gains. Illinois firmed 94 cents and North Dakota gained 64 cents.

UAN32% firmed on the week led by Kansas, up $3.69 and Indiana firming $1.87. Six states were unchanged as Minnesota led declines, falling $2.93 as Nebraska shucked 72 cents and Iowa softened 20 cents.

InputsMonitor.comUrea firmed 67 cents regionally led by gains in South Dakota, up $6.25 and Ohio up $4.54. Only Wisconsin was unchanged as Nebraska dropped $4.83 and Iowa fell $2.00.

Soil temperatures are falling to levels acceptable for anhydrous applications, although if warm weather persists, the risk of N loss will remain. That may pull some demand from the market and pressure prices on the basis of price discovery. But if retailers recognize weak demand as being related more to soil temperatures and warm weather than resistance to price.

The urea market is abuzz with chatter about rising Chinese export values based on Chinese manufacturers attempting to rebalance supplies and rising feedstock prices. We maintain incoming domestic urea production will offset higher Chinese export prices although it may take a few months for U.S. manufacturers to fill coffers with domestic product. We expect spring prices to resemble today's price closely.

InputsMonitor.comDespite higher urea and UAN32% prices this week, we maintain our hand-to-mouth strategy, and recommend growers get in touch with preferred suppliers to check in on supplies. Anhydrous and urea may firm near-term for reasons of their own, but we expect lower prices through winter 2016-17.

December 2017 corn closed at $3.78 on Friday, November 11. That places expected new-crop revenue (eNCR) per acre based on Dec '17 futures at $598.61 with the eNCR15/NH3 spread at -123.90 with anhydrous ammonia at a discount to expected new-crop revenue. The spread narrowed 6.91 points on the week.

Nitrogen pricing by pound of N 11/17/15

Anhydrous $N/lb

Urea $N/lb
UAN28 $N/lb
UAN32 $N/lb
Midwest Average
$0.29 1/4
$0.34
$0.40 1/4
$0.38 1/2
Year-ago
$0.39 3/4
$0.46 1/2
$0.53
$0.51 1/4

 

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

Nitrogen
Expected Margin
Current Price by the Pound of N
Actual Margin This Week
Outstanding Spread
Anhydrous Ammonia (NH3)
0
29 1/4 cents
0
0
Urea
NH3 5 cents
34 cents
4 3/4 cents
-1/4 cent
UAN28%
NH3 12 cents
40 1/4 cents
11 cents
-1 cent
UAN32%
NH3 10 cents
38 1/2 cents
9 1/4 cents
-3/4 cent

 

InputsMonitor.com

 

 

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