The NFiles | Upside Risk Persists

Posted on 04/18/2018 1:18 PM


  • Anhydrous is $5.83 below year-ago pricing -- higher $1.02/st this week at $517.04.
  • Urea is $10.48 above the same time last year -- higher 62 cents/st this week at $370.31.
  • UAN28% is $7.61 below year-ago -- higher 91 cents/st this week to $244.74.
  • UAN32% is priced $11.02 below last year -- higher $2.70/st this week at $268.08.

UAN32% led gains in the nitrogen segment with Wisconsin up $11.53 and Illinois gaining $10.13. Seven states were unchanged and no state posted a lower price on the week.nh3 price chart

Anhydrous ammonia was higher on strength in Michigan, up $10.38 and Iowa gaining $6.64. Five states were unchanged as Nebraska softened $6.65 and Kansas fell $2.87.

UAN28% was higher with Iowa up $9.87 and Illinois firmed $5.10. Three states were unchanged as Wisconsin fell 4 bucks and Minnesota softened 59 cents per short ton.

Urea was led higher by Illinois, which added $7.55 as Ohio firmed $3.03. Four states were unchanged as Nebraska fell $2.20 and Wisconsin dropped $1.72.

Seasonal strength will continue to prop up nitrogen prices and we see upside price risk through the end of May. It is far more likely that soybeans will gain acres than will corn if any switching is to be done. That should help keep nitrogen in good supply across the Midwest. But a surprising increase in corn acreage beyond previously reported intentions could throw a monkey wrench into that.urea price chart

Technically, our nitrogen price survey suggests mild upside risk for anhydrous ammonia, which will likely pull UAN solutions higher. But urea is losing traction and appears to be overvalued. Wholesale urea values are softening and given urea's overpriced condition compared to anhydrous ammonia, downside potential is building.

Urea has been a nitrogen price leader in recent years, but the current technical posture of the nitrogen market suggests urea is losing its grip on anhydrous and UAN prices. If urea is to soften far enough to reach parity with anhydrous ammonia on an indexed basis, we would expect urea to fall to a regional average around $345, down 6.75% from its current price point. That assumes anhydrous will hold steady at current levels, but we reasonably foresee upside risk in anhydrous to the tune of another $10 per short ton to around $525.uan price chart

But once seasonal demand is exhausted, nitrogen prices are likely to fall quickly, lending opportunities to book product for fall applications.

December 2018 corn closed at $4.13 on Friday April 13. That places expected new-crop revenue (eNCR) per acre based on Dec '18 futures at $659.60 with the eNCR17/NH3 spread at -142.56 with anhydrous ammonia priced at a discount to expected new-crop revenue. The spread widened 1.70 points on the week.

Nitrogen pricing by pound of N 4/18/18

Anhydrous $N/lb

Urea $N/lb
UAN28 $N/lb
UAN32 $N/lb
Midwest Average
$0.31 3/4
$0.41 3/4
$0.45 1/4

The Margins by lb/N -- UAN28% gained a 1/4 cent premium to NH3 this week. UAN32% remains at parity with anhydrous ammonia. Urea maintains a 4 1/4 cent premium to NH3.

Expected Margin
Current Price by the Pound of N
Actual Margin This Week
Outstanding Spread
Anhydrous Ammonia (NH3)
31 3/4 cents
NH3 +5 cents
41 cents
+9 1/4 cents
+4 1/4 cents
NH3 +12 cents
44 cents
+12 1/4 cents
+1/4 cent
NH3 +10 cents
41 3/4 cents
+10 cents

nitrogen indices chart




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