CF Industries reported today that its Woodward, Oklahoma nitrogen facility has been completely shutdown due to a problem with a boiler. The Woodward complex has an average annual production capacity for 480,000 tons of gross ammonia, 820,000 tons of UAN, and 25,000 tons of urea liquor. CF says it will take up to eight weeks to make the repairs and complete turnaround maintenance that had originally been scheduled for June, during the shutter.
This is not what we need right now. Rail and pipelines have left some growers and suppliers hanging this year and the added crimp on domestic production will mean more import cargoes either through the Gulf Coast or from Canada. Neither of these even seems plausible at present and despite a recent change in rail transport rules and regs, fertilizer may be slow to arrive, especially now, with diminished springtime N production capacity.
Urea -- This week, urea added $3.24 after adding just a pocketful of change last week. Import cargoes are still moving at a good clip and demand for nitrogen -- really, fertilizer in general -- is outrunning the rail industry's ability to place product in a timely fashion.
So far, we have noted little price response, however, as crop progress moves northward, fertilizer shipments will have to follow. If transport delays for urea to northern parts of the Cornbelt create shortages, spot demand could inflate prices significantly.
We are 80% filled for spring/summer urea and will fill the remaining 20% on a clear 'buy' signal, possibly later this week.
UAN solutions -- This week, 32% firmed $1.38 by the ton while 28% added $1.35. The national supply was strong enough to hold prices in place last week, but retailers are hesitant to overextend UAN inventories as anhydrous movement has been very strong.
Transport delays will likely have less impact on UAN for late season application and by the time growers are ready to sidedress, we expect to see UAN supplies in place at dealers. The East-Central Cornbelt has had a fair amount of rain in the last few weeks, but a lot of anhydrous is rolling and at this pace will limit UAN applications to intentional UAN users.
We are 80% filled here for spring/summer UAN. We will fill the remaining 20% when a clear signal to pull the trigger arrives. But the shutter of CF's Oklahoma plant gives us cause for concern -- stay tuned.