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The N Files: Vigilante Fertilizer Math

October 1, 2013
By: Davis Michaelsen, Pro Farmer Inputs Monitor Editor

Your Inputs Monitor is proud to introduce its latest weekly report, 'The N Files'. This report will include calculations formulated here at the Monitor aimed at predicting trends in nitrogen pricing in U.S. retail markets. These first few weeks will include a measure of explanation -- stick with us here -- to help the reader follow these volatile markets, and try to explain my own brand of vigilante fertilizer math.

We base much of our analysis on the assumption that nitrogen prices and December corn futures (ZCZ) move together. Below, we publish the current relationship between one acre of expected new-crop revenue to the price of one short ton of retail anhydrous ammonia --our ZCZ-NH3 spread.paritybox

December corn at midday stands at $4.38. At trendline 160bu/acre and one retail short ton of anhydrous ammonia at $696.57, the ZCZ-NH3 spread stands at -4.23. A negative number here suggests upside potential for anhydrous as one acre of December corn is priced at a premium to retail anhydrous, and the two will seek parity.

This week --

  • Anhydrous $129.14 below year-ago pricing -- up $12.46/st this week
  • Urea $135.43 less than the same time last year -- down $12.56/st this week
  • UAN28% $61.89 below year-ago -- up $8.24/st this week
  • UAN32% $71.57 below last year -- down $13.38/st this week

 

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

Nitrogen pricing by pound of N -- 10/1/2013

Anhydrous $N/lb

Urea $N/lb
UAN28 $N/lb
UAN32 $N/lb
Iowa
$0.41
$0.59
$0.55
$0.56
Illinois
$0.43
$0.58
$0.52
$0.53
Indiana
$0.47
$0.50
$0.55
$0.63
Wisconsin
$0.42
$0.46
$0.48
$0.52
Minnesota
$0.40
$0.47
$0.59
$0.58
South Dakota
$0.42
$0.46
$0.57
$0.53
North Dakota
$0.41
$0.47
Not reported
Not reported
Nebraska
$0.37
$0.51
$0.52
$0.53
Missouri
$0.41
$0.52
$0.70
$0.52
Kansas
$0.37
$0.50
$0.54
$0.53
Ohio
$0.55
$0.53
$0.52
Not reported
Michigan
$0.49
$0.51
$0.52
Not reported
Average
$0.43
$0.51
$0.55
$0.61
Year-ago
$0.51
$0.70
$0.66
$0.66

 

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