The NFiles: Urea Ticks Higher

Posted on 03/09/2017 10:12 AM

NH3"

  • Anhydrous is $138.56 below year-ago pricing -- lower $7.63/st this week at $530.58.
  • Urea is $116.35 below the same time last year -- higher 7 cents/st this week to $330.24.
  • UAN28% is $66.94 below year-ago -- lower $5.73/st this week to $246.34.
  • UAN32% is priced $81.54 below last year -- lower $3.36/st this week at $276.03.

Anhydrous ammonia was under pressure on the week from sharp declines in Ohio and Nebraska, down $43.15 and $20.62 respectively. Kansas, Iowa and Illinois each posted moderate declines as well. In fact, no state posted a higher NH3 price in this week's survey and half of our Midwestern states were unchanged.

UANUAN was more of a mixed bag of price action. Declines were led by Kansas 32% which fell $31.20 on the week as Kansas 28% declined $28.50 per short ton and Ohio 28% fell $25.89. Gains were led by Minnesota 28% which firmed $15.41. Gains in 32% were mild and sparse.

Urea firmed slightly this week although no state posted double digit gains or declines. Nebraska led urea lower falling $8.44 along with South Dakota and Minnesota, each down about 5 bucks. Kansas led gains firming $7.18 followed closely by Iowa which firmed $6.77 and Missouri up $4.46.

Perspective -- While its not quite correct to say we feel no "urgency" to book fall nitrogen, we are willing to stay patient, knowing full well that harvest has the potential to set a hard floor under nitrogen prices. With no states higher on NH3 this week, we view upside risk as minimal for another week or so. Our greatest concern is for urea which has seen Chinese exports slow by 25% year-on-year. Possibly offsetting the upside risk is domestic production which should help keep supplies in the U.S. robust.

ureaThere are deals to be had out there and we have gotten a few emails from readers asking if they should pull the trigger. My advice usually boils down to checking your state's average and comparing the bid you have in hand with that figure. Bear in mind that the prices we report are full-on whiteboard prices and do not include considerations like bulk discounts and the like, so we tend to run a little high. If your bid comes in 10% or more below our posted price, consider that bid a fair value and go ahead and book for fall.

Our longer-term forecast does call for lower prices through the winter months so we advise spring users wait until after the first of the year to book.

December 2017 corn closed at $3.69 on Friday, September 2. That places expected new-crop revenue (eNCR) per acre based on Dec '17 futures at $578.26 with the eNCR15/NH3 spread at -47.68 with anhydrous ammonia at a discount to expected new-crop revenue. The spread widened 12.67 points on the week.

This week, the average cash corn price built-in to nitrogen prices is $3.14 1/4 per bushel.

Nitrogen pricing by pound of N 9/30/15

Anhydrous $N/lb

Urea $N/lb
UAN28 $N/lb
UAN32 $N/lb
Midwest Average
$0.32
$0.37
$0.44
$0.43
Year-ago
$0.41
$0.49 1/2
$0.55 3/4
$0.55 3/4

 

The Margins -- UAN28% and urea are at parity with anhydrous ammonia; UAN32% solution is 1 cent above NH3 on price.

Nitrogen
Expected Margin
Current Price by the Pound of N
Actual Margin This Week
Outstanding Spread
Anhydrous Ammonia (NH3)
0
32 cents
0
0
Urea
NH3 5 cents
37 cents
5 cents
0
UAN28%
NH3 12 cents
44 cents
12 cents
0
UAN32%
NH3 10 cents
43 cents
11 cents
1 cent

 

Indexes

 

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