Nitrogen Files: Look This Horse in the Mouth

September 24, 2013 10:45 AM
 

This week -- gifthorse

  • Anhydrous $142.18 below year-ago pricing
  • Urea $128.95 less than the same time last year
  • UAN28% $68.88 below year-ago
  • UAN32% $78.99 below last year

 

The following is an updated table of nitrogen pricing by state by the pound of N. This week, 32% and anhydrous both moved higher as 28% and urea fell. In order to capture expected price relationships, urea must move higher against NH3 and take 28% with it. (Read more)

Nitrogen pricing by pound of N

Anhydrous $N/lb

Urea $N/lb
UAN28 $N/lb
UAN32 $N/lb
Iowa
$0.44
$0.67
$0.50
$0.59
Illinois
$0.43
$0.62
$0.48
$0.53
Indiana
$0.46
$0.49
$0.54
$0.75
Wisconsin
$0.45
$0.52
$0.59
$0.73
Minnesota
$0.41
$0.47
$0.61
$0.55
South Dakota
$0.42
$0.46
$0.57
Not reported
North Dakota
$0.42
$0.47
Not reported
Not reported
Nebraska
$0.37
$0.51
$0.52
$0.52
Missouri
$0.41
$0.51
Not reported
$0.50
Kansas
$0.37
$0.49
$0.54
$0.53
Ohio
$0.49
$0.48
$0.52
Not reported
Michigan
$0.43
$0.49
$0.54
Not reported
Average
$0.42 1/2
$0.51 1/2
$0.54
$0.58 3/4
Year-ago
$0.51
$0.67
$0.66
$0.69

 

MosaicCo reports wholesale ammonia continued its sideways movement and is fishing for demand. The more folks talk about fertilizer declines ahead, the longer this market will have to wait as up and down the supply chain, everybody feels like gambling. The table below demonstrates the 'perfect world' price spread between N products. To acheive this balance, Urea only needs to add a penny per pound of N while 32% is just 1/4 cent off. UAN28% has the most work to do, currently off by a penny and a half.
 

N Pricing by the Pound
Expected Margin
Current prices corrected
Anhydrous Ammonia
NH3 = $0.42 1/2
$0.42 1/2
Urea
NH3 + 10 cents
$0.52 1/2
UAN32%
NH3 + 16 cents
$0.58 1/2
UAN28
NH3 + 13 cents
$0.55 1/2

 

The margins between N products are skewed slightly this week, and the question is, will anhydrous and UAN32% correct lower, or will urea and UAN28% correct higher. Based on corn futures, today's deferred contracts faded, suggesting downward pressure on nutrient. But MosaicCo's report of sideways movement in ammonia, and increases in urea may be a clue that NH3 and 28% are settling in while 32% and urea must adjust to the standard-bearer, anhydrous.

If you have not yet booked fall anhydrous, we strongly recommend you at least have a conversation with your preferred supplier today. I'm fully willing to accept that nutrient prices have downside potential yet to tap, but do yourself a favor and look this gift horse in the mouth.

Remember, anhydrous is $142.18 below year-ago pricing; Urea $128.95 less than the same time last year; UAN28% $68.88 below year-ago and UAN32% $78.99 below last year's peg. With declines like that already installed into current pricing, it's hard not to expect more of the same, however, price slides must all run out one day.


Photo credit: D. Michaelsen, Inputs Monitor

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