Anhydrous Crosses Downside Milestone | Advice Issued

Posted on 07/22/2019 1:52 PM


  • Fertilizer prices were lower on the week with only potash posting a price gain.
  • Our Nutrient Composite Index (NCI) softened 5.59 points to 621.01.

I mention this below in the potash commentary, but we record a significant move this week. Subscribers, radio listeners and seminar attendees should recall my views on the spread between anhydrous ammonia and our indexed potash figure. The two tend to track closely together and whenNH3 vitamin K spread the spread becomes skewed significantly either to the upside or the downside, that spread will work quickly to narrow itself. See the chart at right, and bear in mind, our data does not go back far enough not to make a liar out of me, but that spread has always stuck in my head, as though it has a message for us.

I have made predictions regarding anhydrous ammonia prices based on this analysis, and this week, that analysis was realized. Last week, Ohio NH3 fell to the lowest level since October 2018 in what we deemed a corrective move as farmers limit expenditures, and product went undelivered. This week we note similar declines in a few states, driving our regional average anhydrous price below that of potash indexed. In some cases, rather than making wide swings in the spread, the two will track sideways very near parity for a period of time. The "I" states, Missouri and Minnesota are still priced at their previous elevated levels, but that supports the idea that in other areas, demand for anhydrous has fallen off a cliff. That opens a window of opportunity.

I do not expect the sort of corrective move in the "I" states that we have seen in Ohio and the Dakotas as growers continued to nurture crops more aggressively there. That suggests the seasonal anhydrous price floor is near. Either way, we believe it is prudent to reward the setback in areas where prices have fallen.

ADVICE -- Book at least 30% of expected fall anhydrous needs and consider locking in 30% of your spring NH3 needs as well. States under the advice include Ohio, Michigan, Wisconsin, the Dakotas, Nebraska and Kansas. The remaining five states should check local prices, and consult the price map on Pro Farmer's homepage to compare your local bids. If you are significantly below our posted price in your crop district, go ahead and lock in 30% of fall NH3 and 30% of spring NH3.

I am not ready to go all-in on fall and spring anhydrous yet as we have not recorded a "V" bottom in NH3. I would also point out, after falling around $112 last week, Ohio anhydrous is up nearly $10 per short ton this week. So rather than chasing prices lower, or risking letting this price dip come and go, get the jump on booking anhydrous, and we will look for more opportunities in the weeks to come.

Last week I promised to discuss predictions from industry analysts about 95 to 100 million acres of corn planted in 2020. For the sake of brevity, I will simply point out that a surge in corn planting will only stabilize the floor under nitrogen prices, and that adds an element of urgency to this week's post.


  • All four of the nitrogen products in our survey posted a price decline this week.nitrogen indices chart
  • Anhydrous ammonia fell sharply on steep declines in South Dakota, North Dakota and in Michigan.
  • UAN32% fell $1.83 by the short ton led by Michigan, Wisconsin and Iowa. This as Illinois added more than 10 bucks and Nebraska firmed $2.41. All other states were unchanged this week.
  • Urea softened $1.53 per short ton with The Dakotas and Nebraska leading declines. Iowa and Ohio each posted mild gains on the week.
  • UAN28% was slightly lower led by declines in Wisconsin, South Dakota and Michigan. Nebraska led gains along with firmer prices in North Dakota and Ohio.


  • Phosphate prices were lower with MAP leading declines.
  • MAP was pulled lower by Wisconsin, North Dakota and Iowa with Nebraska and Kansas posting slight gains.
  • Wisconsin and Michigan weighed on DAP this week. Meanwhile, Ohio and Illinois added a few bucks per short ton. All other states were unchanged on DAP this week.
  • According to MosaicCo., wholesale phosphate prices were mostly sideways with product out of Tampa and NOLA slightly lower.p and k indices chart
  • Phosphate prices have moved below expected new-crop corn revenue but may be leveling off at current prices.


  • Potash was our only gainer in the fertilizer segment this week, adding 64 cents per short ton regionally.
  • North Dakota led gains, although price changes in most states were very small.
  • According to MosaicCo., wholesale potash prices were unchanged at U.S. terminals in the week ended July 19.
  • With anhydrous moving sharply lower in the past few weeks, when considered on an indexed basis, potash is priced at a premium to NH3. We have anticipated potash would indicate anhydrous price movements, and this week, we toot our horn as anhydrous has respected potash's direction. I would warn, however, such price moves between potash and anhydrous ammonia can be short-lived and have proven to be worth taking advantage of.

Corn Futures

  • December 2019 corn futures closed Friday July 19 at $4.18 putting expected new-crop revenue (eNCR) at $691.68 per acre -- lower $7.04 per acre on the week.
  • With our Nutrient Composite Index (NCI) at 626.60 this week, the eNCR/NCI spread widened 9.42 points and now stands at -72.12.
Current Week
-14 cents
+64 cents

NCI chart

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