The NFiles | Nitrogen Strength May Shave Corn Acres

Posted on 01/24/2018 4:09 PM

 

  • Anhydrous is $28.29 below year-ago pricing -- higher $1.67/st this week at $449.98.nh3
  • Urea is $2.21 above the same time last year -- lower $2.20/st this week at $348.83.
  • UAN28% is $218.60 below year-ago -- higher 56 cents/st this week to $218.60.
  • UAN32% is priced $18.29 below last year -- higher 89 cents/st this week at $245.64.

Anhydrous ammonia led gains in the nitrogen segment this week. Illinois gained $42.77 per short ton as Missouri firmed $6.89. Seven states were unchanged as Nebraska fell $25.53 and Iowa slipped $5.74.

UAN32% was higher as well, led by Nebraska, which firmed $8.91 and Illinois added $4.49. Nine states were unchanged as Kansas fell $6.25.

UAN28% was up just slightly, led by an $18.13 rise in Illinois prices as Nebraska added $5.71. Eight states were unchanged as Ohio slipped $2.72.uan

Urea posted the only declines in the nitrogen segment led by Kansas, which softened $25.80 as Illinois fell $6.50.Seven states were unchanged as Ohio gained $7.69 and Kansas firmed 19 cents.

Industry watchers believe nitrogen is working on a near-term top and will soften in the next few weeks as dealers refill supplies ahead of spring and wholesale urea trickles lower. The general expectation is for nitrogen prices to slide slightly before firming once again into the spring application season.

The question is, if fertilizer prices firm into the spring application season, will farmers respond by moving corn acres over to soybeans? Since fall nitrogen applications were strong, it is not hard to envision a scenario in which inputs price corn acres out of the rotation. I came across the following on twitter from someone who will remain anonymous... "I’d like to take a moment to thank the domestic producers of Anhydrous Ammonia & mining companies of phosphates around the globe for helping me break a personal record in soybeans seed sales! You folks made it seem effortless, because it was..."urea

If early seed sales are an indication of acres that will be moved away from corn to soybeans, or even other crops, the above tweet certainly speaks to that possibility. Fewer corn acres would support higher nitrogen stocks, and eventually pressure prices. But that price pressure would come only after fewer corn acres are planted. It is unlikely, given low fertilizer prices over the last few years, that sellers will try to coax buyers in with bargain nitrogen prices on the front end.

That means we may not see a major drop in nitrogen prices until late summer 2018. In the meantime, we have 30% of our nitrogen yet to book for spring/summer applications, and a seasonal setback within the next few weeks would be right on schedule.

December 2018 corn closed at $3.80 on Friday, January 12. That places expected new-crop revenue (eNCR) per acre based on Dec '18 futures at $601.37 with the eNCR17/NH3 spread at -153.06 with anhydrous ammonia priced at a discount to expected new-crop revenue. The spread narrowed 9.61 points on the week.


Nitrogen pricing by pound of N 1/24/18

Anhydrous $N/lb

Urea $N/lb
UAN28 $N/lb
UAN32 $N/lb
Midwest Average
$0.27 1/2
$0.38 3/4
$0.38 3/4
$0.38 1/2
Year-ago
$0.29 1/2
$0.38 1/2
$0.41 1/4
$0.39 1/4

The Margins by lb/N -- UAN32% is at a 1 cent premium to NH3. Urea is 6 1/4 cents above anhydrous ammonia; UAN28% solution is priced 3/4 of a cent below NH3.


Nitrogen
Expected Margin
Current Price by the Pound of N
Actual Margin This Week
Outstanding Spread
Anhydrous Ammonia (NH3)
0
27 1/2 cents
0
0
Urea
NH3 +5 cents
38 3/4 cents
+11 1/4 cents
+6 1/4 cents
UAN28%
NH3 +12 cents
38 3/4 cents
+11 1/4 cents
-3/4 cent
UAN32%
NH3 +10 cents
38 1/2 cents
+11 cents
+1 cent

nitrogen indices

 

 

 

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