The NFiles | Urea, UAN Test Upside

Posted on 08/16/2018 11:05 AM

 

  • Anhydrous is $44.17 above year-ago pricing -- off 60 cents/st this week at $506.96.
  • Urea is $48.47 above the same time last year -- up 13 cents/st this week at $372.49.
  • UAN28% is $12.38 above year-ago -- higher 28 cents/st this week at $249.41.
  • UAN32% is priced $17.77 above last year -- higher 2 cents/st this week at $268.15.

Anhydrous ammonia was our sole decliner in the nitrogen segment. Ten states were unchanged as North Dakota anhydrous price chartfell $4.56 and Iowa softened $2.67. No state posted a higher NH3 price on the week.

UAN28% was our upside leader in the nitrogen segment with Michigan up $1.69 and South Dakota gaining $1.41. As with anhydrous, ten states are unchanged, but no state posted a lower price on the week.

Urea was higher as well amid a more mixed tone. Iowa led gains firming $2.65 as South Dakota gained $1.06. Seven states were unchanged as North Dakota softened $2.09 and Michigan dropped 64 cents per short ton.

UAN32% was only slightly higher firming 2 cents by the short ton. Iowa was the sole gainer in 32%, up $1.26. Nine states were unchanged as Nebraska and Kansas each fell roughly 50 cents per short ton.

As we continue to watch anhydrous and urea tug at UAN for influence in the nitrogen segment, anhydrous UAN price chartappears to have lost some ground on the week. But gains in UAN and urea were very small with the highest gain posted by UAN28%, up a whopping 28 cents per short ton. Offseason prices should continue to soften as harvest approaches, and word around the campfire is that farmers are willing to wait before booking post harvest fertilizer.

As farmers wait out nitrogen's unwillingness to soften earnestly, price discovery will play a role in depressing prices until buyers arrive. While it is concerning that UAN solutions followed urea higher this week as anhydrous softened, the gains in urea and UAN were very small. In the past, moves of similar magnitude at this time of year have meant nitrogen was testing highs, looking to post a top before falling through August. We believe this is the case with this week's nitrogen segment price action, and we will continue to wait out nitrogen's test of the upside.

December 2019 corn closed at $4.00 on Friday August 10. That places expected new-crop revenue (eNCR) per acre based on Dec '19 futures at $648.75 with the eNCR18/NH3 spread at -141.79 with anhydrous ammonia priced at a discount to expected new-crop revenue. The spread narrowed 16.69 points on the week.


Nitrogen pricing by pound of N 8/16/18

Anhydrous $N/lb

Urea $N/lb
UAN28 $N/lb
UAN32 $N/lb
Midwest Average
$0.30 3/4
$0.41 1/4
$0.45
$0.41 3/4
Year-ago
$0.28 1/4
$0.36 1/2
$0.41 3/4
$0.39

The Margins by lb/N -- UAN28% is at a 2 1/4 cent premium. UAN32% is at a 1 cent premium to anhydrous ammonia. Urea holds a 5 1/2 cent premium to NH3.


Nitrogen
Expected Margin
Current Price by the Pound of N
Actual Margin This Week
Outstanding Spread
Anhydrous Ammonia (NH3)
0
30 3/4 cents
0
0
Urea
NH3 +5 cents
41 1/4 cents
+10 1/2 cents
+5 1/2 cents
UAN28%
NH3 +12 cents
45 cents
+14 1/4 cents
+2 1/4 cents
UAN32%
NH3 +10 cents
41 3/4 cents
+11 cents
+1 cents

nitrogen indices chart

 

 

 

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