The NFiles | Anhydrous Retreats Below Year-ago

Posted on 05/02/2018 1:00 PM

 

  • Anhydrous is $2.25 below year-ago pricing -- lower $1.61/st this week at $522.98.
  • Urea is $14.97 above the same time last year -- higher 12 cents/st this week at $370.52.
  • UAN28% is $7.84 below year-ago -- higher $1.11/st this week to $244.22.
  • UAN32% is priced $5.04 below last year -- lower 38 cents/st this week at $272.27.

Anhydrous ammonia led declines with North Dakota off $11.51 and South Dakota down $8.89. Five states wereanhydrous price chart unchanged as Kansas gained $10.37 and Missouri firmed 72 cents per short ton.

UAN32% followed NH3 lower with Minnesota and Missouri each off about 5 bucks and Illinois shedding $2.36. Six states were unchanged as Iowa added $7.21 and Nebraska gained 68 cents.

UAN28% led gains, both in the nitrogen segment and in our overall survey this week. Minnesota firmed $7.45 as Michigan and Iowa both gained $1.38 by the short ton. Five states were unchanged as South Dakota posted the only decline in 28%, down $3.97.

Urea was 12 cents higher on the week led by Illinois, up $13.75 and South Dakota up $1.85. Four states were unchanged as Iowa dropped $7.34 and Missouri fell $4.67.

uan price chartDespite concerns winter would linger into the spring planting season, wheels are turning and crops are being sown quickly. That implies preplant nitrogen applications are likely over half complete. That means the end of peak preplant demand. Upside risk will soon be shifting from anhydrous ammonia to UAN solutions. We have pointed out before that NH3 is growing in popularity for sidedress, UAN still holds the top spot for post-emerge applications.

As anhydrous prices begin to slide, UAN prices may tick higher. Currently, 28% is priced right in-line with anhydrous and 32% is at a slight premium on an indexed basis. That being the case, the greatest degree of upside risk resides with UAN28%. That risk will remain until the end of post-emerge applications, probably sometime in early June.

We will be watching nitrogen prices closely through the summer offseason. As corn and crude oil prices rise, so does upside price risk for nitrogen. Offsetting, Midwestern supplies will continue to grow from homegrown production urea price chartfacilities. We believe nitrogen prices will fall to a level roughly 5% above the same time last year at the offseason low. We expect to book a portion for fall around mid-summer, and, for those who do not plan to apply in the fall, we will advise growers book a portion for spring at that same time.

This week's price action in anhydrous, which has driven NH3 back below prices from the same week last year may hint at an offseason low at-or-below last year's price. In that event, we would expect little more than a 5% discount to last year, at most.

Nitrogen prices are uncertain, but should be moderated by a building Midwestern supply-side cushion. But outside influences will do their best to urge prices higher given the last few years of slumping retail values.

December 2018 corn closed at $4.14 on Friday April 27. That places expected new-crop revenue (eNCR) per acre based on Dec '18 futures at $661.30 with the eNCR17/NH3 spread at -138.32 with anhydrous ammonia priced at a discount to expected new-crop revenue. The spread widened 22.01 points on the week.


Nitrogen pricing by pound of N 5/2/18

Anhydrous $N/lb

Urea $N/lb
UAN28 $N/lb
UAN32 $N/lb
Midwest Average
$0.32 1/4
$0.41
$0.43 1/2
$0.42 1/2
Year-ago
$0.32 1/2
$0.39 1/2
$0.45
$0.43 1/4

The Margins by lb/N -- UAN28% is 3/4 cent below NH3 this week. UAN32% is at a 1/4 cents premium to anhydrous ammonia. Urea maintains a 3 3/4 cent premium to NH3.


Nitrogen
Expected Margin
Current Price by the Pound of N
Actual Margin This Week
Outstanding Spread
Anhydrous Ammonia (NH3)
0
32 1/4 cents
0
0
Urea
NH3 +5 cents
41 cents
+8 3/4 cents
+3 3/4 cents
UAN28%
NH3 +12 cents
43 1/2 cents
+11 cents
-3/4 cent
UAN32%
NH3 +10 cents
42 1/2 cents
+10 1/4 cents
+ 1/4 cent

nitrogen indices chart

 

 

 

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