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Kamikaze Nitrogen and Last Week's Bear Run: N Pricing by the Pound

July 31, 2013
By: Davis Michaelsen, Pro Farmer Inputs Monitor Editor

Summer refill and December corn futures in the tank conspired last week to lower fertilizer pricing, and nitrogen pricing took a kamikaze flight to the downside. Anhydrous was the star of the show falling over $60.00/short ton (st) in regional averages to post a current price of 48 cents per pound of N. Urea fell $20.00/st to 58 cents per pound, leaving the dime between anhydrous and urea in place, despite NH3's slide.

In solutions, UAN32% gave the most ground during the report week falling $23.00/st to 64 cents per pound of N and 28% fell just $7.22 by the ton to 70 cents per pound of N. The tables below show current N pricing by the pound of N for each of the 12 Monitor states and the regional average.

Nitrogen pricing by pound of N

Anhydrous $N/lb

Urea $N/lb
UAN28 $N/lb
UAN32 $N/lb
Iowa
$0.48
$0.61
$0.68
$0.67
Illinois
$0.51
$0.63
$0.68
$0.61
Indiana
$0.55
$0.63
$0.71
$0.75
Wisconsin
$0.47
$0.54
$0.68
$0.56
Minnesota
$0.49
$0.53
$0.64
$0.61
South Dakota
$0.42
$0.53
$0.63
not reported
North Dakota
$0.43
$0.50
$0.64
not reported
Nebraska
$0.41
$0.59
$0.68
$0.66
Missouri
$0.43
$0.53
$0.71
$0.64
Kansas
$0.41
$0.54
$0.70
$0.64
Ohio
$0.58
$0.53
$0.71
Not reported
Michigan
$0.57
$0.53
$0.71
Not reported
Midwest Average
$0.48
$0.58
$0.70
$0.64

 

A closer look at anhydrous by the ton (table below) shows the strongest declines in the Dakotas where South Dakota NH3 now wears a $600 handle. But Kansas claims the lowest priced anhydrous in the Midwest at just $669.52/st. Not everyone enjoyed declines however. Michigan and Indiana both moved strongly higher, each now above $900.00/st while Ohio remains unchanged at $952.00/st. We expect these to correct to the downside in the next week or so to join the rest of the Cornbelt.

These numbers together with Dec corn -- currently at $4.79 -- suggest we may have come full circle from 2008. That year got us all to thinking that fertilizer pricing follows December corn futures. This data goes a long way to confirming the nightmare may be over and as Dec corn turned decidedly milder, nitrogen followed.

 

Anhydrous/short ton last week

Change
Anhydrous/short ton current week
Iowa
$831.20
-$51.95
$779.25
Illinois
$863.53
-$27.86
$835.67
Indiana
$870.00
+$34.74
$904.74
Wisconsin
$841.17
-$64.84
$776.33
Minnesota
$854.23
-$56.16
$798.07
South Dakota
$890.31
-$194.48
$695.83
North Dakota
$850.36
-$144.12
$706.24
Nebraska
$749.51
-$66.02
$683.49
Missouri
$821.67
-$107.36
$714.31
Kansas
$749.21
-$79.69
$669.52
Ohio
$952.00
unchanged
$952.00
Michigan
$902.50
+$25.03
$927.53
Midwest Average
$847.97
-$61.06
$786.91

 

Will we see declines this sharp again before fall? On a state-to-state basis the answer is no. These declines are fueled largely by resupply. These are the new pricing points and if your state did not fall last week, look for declines soon.

However, if your state posted strong downside moves, the floor may be in place already. Manage the upside risk by booking 30% of fall N today. If prices rebound, you will have captured the savings from today's posted prices, and will still be ahead by only booking portions along the way. At Pro Farmer's weekly editorial meeting this morning, the consensus was that $4.50 Dec corn is a distinct possibility and that a rally may not come until harvest. But if there is an early frost -- Chip and I were goofing around one day and he predicted a Labor Day frost in jest -- corn prices may respond by moving sharply higher and the potential is there for inputs to follow.

But there is the possibility that the coupling of 2008 has run its course. After all, my beloved 18% theorem is more a measure of growers' pricing tolerance than it is predictive of fertilizer pricing movements. We can no more predict the exact movements of fertilizer pricing than we can Dec corn. So with our best guesses in hand, we advise you check your appetite for risk, consult your preferred retailer as prices vary wildly at present but consider jumping in to some nitrogen if your state is priced within your budget's sweet spot.


 

 

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