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The N Files: Natural Gas Supply Woes Threaten Spring Pricing

November 19, 2013
By: Davis Michaelsen, Pro Farmer Inputs Monitor Editor

This week --

A lot of factors are working against nitrogen this week, and most of the trouble revolves around natural gas supply. China announced last week that urea production and other industrial activity would be curtailed until natural gas stores can build into winter. It is not known how long or how much urea production will suffer, but this may give global nitrogen inspiration to mount a recovery. However, the price of urea in China may not impact U.S. pricing until spring on the basis of slow fall demand that will intensify over the winter.putinbox

Meanwhile, a natural gas war is brewing in the Former Soviet Union. The controversy is centered in Ukraine, America's number three supplier of nitrogen fertilizer. Russia's Gazprom says Ukraine has unpaid bills piling up and has stopped the sale of natural gas to Ukraine. Ukraine claims it has enough natural gas to get by for now and has refused natgas sendouts from Russia, but, like China, if natgas runs short, nitrogen production may be cut back in favor of home heat and power generation. This, too could influence nitrogen pricing higher. Working in favor of Ukraine N production is the fact that fertilizer Czar Dmitry Firtash sources natgas for ammonia and urea production from Asian sources, outside the FSU.

However, if Firtash's Asian sources divert natural gas supplies to China, Ukraine would have to shutter N production to make way for home heat and power burn through the winter. If the European and Chinese winters are especially cold, natural gas supplies for fertilizer will have to redirect toward keeping the citizens warm. That would limit N production in both China and Ukraine and that could easily lead to higher prices by spring. Natural gas will be a story to watch all winter.

  • Anhydrous $195.19 below year-ago pricing -- down $1.68/st this week to $671.06.
  • Urea $132.46 less than the same time last year -- up 64 cents/st this week to $450.21.
  • UAN28% $63.47 below year-ago -- down 13 cents/st this week at $315.86.
  • UAN32% $99.74 below last year -- up $6.16/st this week to $347.63.

 

N by the pound -- Anhydrous down 1/4 cent to 40 1/2 ; Urea unchanged at 49 1/2 cents; UAN28% up 1/4 cent to 55 1/2 cents per pound and UAN32% unchanged at 52 3/4 cents/lbN.

The following is an updated table of nitrogen pricing by state by the pound of N.

Nitrogen pricing by pound of N -- 11/19/13

Anhydrous $N/lb

Urea $N/lb
UAN28 $N/lb
UAN32 $N/lb
Iowa
$0.40
$0.56
$0.55
$0.53
Illinois
$0.42
$0.54
$0.55
$0.53
Indiana
$0.43
$0.49
$0.55
$0.64
Wisconsin
$0.41
$0.49
$0.50
$0.48
Minnesota
$0.40
$0.46
$0.54
$0.56
South Dakota
$0.41
$0.46
$0.59
Not reported
North Dakota
$0.39
$0.47
$0.66
Not reported
Nebraska
$0.37
$0.52
$0.50
$0.53
Missouri
$0.38
$0.48
$0.59
$0.47
Kansas
$0.37
$0.48
$0.55
$0.55
Ohio
$0.42
$0.50
$0.55
Not reported
Michigan
$0.47
$0.50
$0.54
Not reported
Average
$0.40 1/2
$0.49 1/2
$0.55 1/2
$0.52 3/4
Year-ago
$0.52
$0.64
$0.66
$0.66

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