Natural gas prices moved lower yesterday to support at $3.912. That figure is proving to be a sweet spot for the June contract and despite a few solid attempts to break through, $3.91 has been a hangup level for downside action.

The last time we saw a top at that level was March 14 and the contract has been on a tear ever since, testing support along the way. We observed a strong downside move yesterday and advised subscribers to keep an eye on June natural gas for a move below $3.91. But as it has so many times before, June natural gas found springy support there and moved higher, once again.

Given that strong level of support, downside potential is limited, and today notes that very thing as the contract spiked back above four dollars to $4.06. From the corner office, Chip Flory wondered out loud, "Why didn't we buy that yesterday?" I assured him the contract will be back to $3.91 one day soon, but we may come to realize that natural gas has found a firm near-term bottom at that level.

The tale is told in volume. Trader activity spiked yesterday after the sharp falloff from $4.06 to $3.93. Since then, action came to a standstill and futures moved sideways until late Friday afternoon when natural gas moved 12 cents higher -- once it did, trader interest piqued and another round of profit taking was underway.

Strength in the stock market has diminished interest in the raw commodity sector as a whole and we have seen crop prices suffer as a result. But natural gas has been a trader's playground with tops and bottoms as obvious as Everest.

There is security in understanding, and Wall Street seems to think it has this market figured. That being the case, we can figure it too. I still believe that nattie will break to the downside and I would like to see a violation of support at $3.91. But if traders have come to terms at their 'bread-and-butter' level and feel secure enough to mold this market like play-dough, opportunities to book natural gas will become more clear in the coming weeks.

As always, examine your appetite for risk. If you need to book some natural gas for dryers, or for anything else for that matter, the next move to $3.91 may be the best opportunity you will see until traders find another yard to play in.

I've read a lot of encouraging news from upstream this week. A complete breakdown of it all paints an optimistic picture for NPK in America. The Chinese urea oversupply is expected to continue through 2013 by almost everyone in the know. India's latest subsidy numbers continue to favor urea and the resulting price imbalance will keep India on its present urea-centric course for the foreseeable future.

Downstream supplies of NPK are very healthy in North America, and feedstock is presently priced to encourage production.

Domestic nitrogen production has been strongly encouraged over the last several months. Spiritwood, ND, Wever, IA and an expansion to CF's Donaldsonville, LA facility among others are a bit of a wild card, but are not expected to make the U.S. a net exporter of N until 2020 at the outside.

North American phosphate production has been robust as reported by Mosaic. Feedstocks are exploring the downside in wholesale markets, and record sendouts in the first ten months of Mosaic's fertilizer 2012/13 have the phosphate market well supplied downstream.

Greenfield potash projects are no longer a possibility for companies who expect to turn a profit, and this may become problematic if China and India decide to remedy their NPK imbalance with increased K demand. They eventually will, but PotashCorp has made mention of some brownfield expansions, and North American K producers are confident they will be able to satisfy N.A. demand for the foreseeable future. Meanwhile, K from the Former Soviet Union (FSA) will be eager to service Asian and Indian markets with the convenience of rail.

Belarus Potash Company --

BPC reports an increase of 21% in potash exports from Belaruskali during the first quarter. BPC, which was founded in 2005, accounts for 43% of global potash exports from Uralkali and Belaruskali, shipped by rail to Asian and Indian markets by partner, Belarusian Railways Company. Strength here should encourage good relations between Belarus, Ukraine and the Putin Administration.

As FSA nations walk the tightrope of international export relations, some hard lessons have been learned. The glut of North American natural gas has diminished U.S. reliance on coal which is now sent to the E.U. which in turn, is less reliant on natural gas piped from Russia, through Ukraine. In 2006 and 2009, Russia closed the natural gas valve, stopping the flow of natural gas to the E.U. through Ukraine as part of a strong-arm approach to FSU relations.

But countries like Bulgaria and Poland, who typically aren't considered big players in international energy, have found new sources of energy, forcing Putin to play nice. This will encourage stable FSU/E.U. relations and a steady flow of natural gas through Ukraine where urea and ammonia production can continue, uninterrupted. (click here for the Monitor's "Capitalism Ain't Easy")

If BPC can keep it together and provide potash to Asian, Indian and South American buyers, Canadian potash will be plentiful in North America and encourage low K pricing here in the U.S.

CF Industries --

CF released glowing news in their first quarter report this week and confirms what we have expected -- this fertilizer season will be spelled out in sidedress. CF cites favorable ammonia and UAN price realization and record shipments of UAN in Q1 2013. That means that CF is 'in the money' and this will encourage production of nitrogen, build N supplies, and keep a lid on pricing for the end user. Meanwhile, storage strategies downstream are in place to keep product on-hand where it is most in demand.

CF has a favorable natural gas margin locked in at its suppliers until July, and the way nattie pricing is headed, their next contract will likely carry a similar price tag to its current contracted $3.57. The report, however states a natural gas price anywhere between $3 and $5 would still allow acceptable returns on production.

CF also announced 41 years without a 'lost time' incident at its Huntington, Indiana Terminal, 12 years at the Courtright, Ontario facility and 4 years accident free at Port Neal. Fertilizer has been demonized a bit since the Texas explosion, but, thankfully, the American attention span is short. Safety and compliance is a priority here, and successful production depends on the welfare of the individual workers.

Mosaic --

Mosaic disclosed last week that 16.4 million tons of P&K had been shipped during the first ten months of fertilizer 2012/13 in anticipation of transport difficulties and increased corn acreage. That constitutes a year-over increase of 15% -- an increase Mosaic calls, "the largest by a long shot since the formation of Mosaic in 2004." Only 3.4 million more tons need to ship to the U.S. in order for Mosaic to realize projected demand. The result is a potential surplus of DAP in the United States.

Steady ammonia prices based on quiet waters in the Black Sea Region, and robust export production in Trinidad will encourage P production not just in Canada, but also in Florida and North Carolina. Phosphate rock from Morocco continues to be a favorable source, and sulfur rounds out the hat trick of phosphate production at the low end of its pricing range.

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This is an awful lot of good news all at once, but producers around the world seem to be waving the same flag. Natural gas will continue to rule these markets and encourage good relations between producing nations and their customers. The situation becomes even more positive with each acre that does not get planted to corn.

Upstream fertilizer producers had been expecting high planted U.S. acres to corn, and produced enough product to satisfy that demand. Shaving off a few of those acres would leave a little NPK in the bin as a hedge against future price spikes, and that is what we believe will be the case. We don't expect a return to the high inventories of pre-2008, but producers seem to have caught their breath, and the market is showing signs it has partially righted itself after that defining year.

This may lead you to wonder, Is it Time to Book Fall Inputs? Click to read more from this week's Monitor...

 April didn't turn out the way any of us thought. Cool temperatures and record or near-record amounts of precipitation still have most growers across the Midwest pacing in their machine sheds, waiting for soil conditions to allow iron in the field. We observed some strong moves to the upside in nutrient pricing in Missouri as early fieldwork in that state created a demand push this month and the expectation has been for nutrient pricing increases to follow crop progress northward.

This may not be the case, however, as the late start to spring may leave growers little time for fertilizer applications. Demand will decline as the planting window shrinks, and I expect many growers will look to make up the difference post-emerge with UAN sidedress -- suggesting upside room for UAN solutions ahead.

Dry urea continues to decline after mild increases during the first two weeks of April, but as more growers book nutrient for sidedress later on, 28% and 32% solutions post the largest month-over gains. The largest move to the downside came from anhydrous which was on a generous downward trajectory the entire month.

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Declines in nutrient pricing outweighed gains by a margin of just 42 cents. We expected hand-to-mouth demand to move nutrient pricing higher, but $22.55 in total declines was just enough to edge out $22.13 in gains.

Anhydrous declined $9.39 to end the month at $872.61/ton; Urea moved a modest $2.51 lower to $568.15; UAN28 added $7.77 to end the month at $402.02; UAN32 firmed $10.07 posting the largest increase in this month's index to $445.29.

DAP moved $3.10 lower to $637.31; MAP moved higher, adding $4.29 to end at $659.29.

Potash fell $7.44 to end the month at $587.94. Potash did show some strength during the last week of April adding $2.64 that week, and as the oversupply in Saskatchewan corrects itself, potash may catch an upward draft near-term.

Farm diesel maintained downward movement the entire month, down $0.077 all told to $3.473/gallon.

LP was very flat, offering a 3 1/2 cent decline during the third week of April as the only movement this month. LP down $0.035 to $1.46.

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A lot happened in the world of nutrient and energy during April. Follow the links below to catch up on what you may have missed in the news, on the farm, upstream and in energy news.

In the news...

Explosion at Texas Fertilizer Facility Claims Lives, Several Injured

California Senator Urges EPA Investigation of West, TX Explosion

Donations to West, Texas Lag Boston

Natural Gasoline Barges Explode in Mobile Bay

On the farm --

Is there Nitrogen in Snow?

December Corn vs Anhydrous -- Thinning the Revenue Gap

Price Comparison -- NPK From Thanksgiving 2012 to Today

Nitrogen Uptake Favors Modern Hybrids

Upstream --

Agrium Shareholders Overwhelmingly Support Incumbent Board

JANA Cries 'Foul' in Scathing Letter

The View From Upstream -- Correction or Correction?

Energy --

Ukraine More Than Doubles Gas Imports From Europe

Up, Up and Away -- Natural Gas Lingers at the Top

How Far Can North Dakota Crude Fall?

EIA Short-term Energy Outlook -- Fuel Efficiency to Outpace Miles Traveled

With the spring season off to a slow start, those growers who had a chance to knife in anhydrous last fall are glad they did. Soil temperatures were too warm in much of the Corn Belt to allow for anhydrous ammonia applications until very late in the season, and some growers missed the fall anhydrous window altogether.

Anhydrous ammonia has been the nitrogen source of choice for many Midwestern growers, but that trend may be due for a change. Anhydrous pricing has been stuck at the top of its retail pricing range for a good long time now -- long enough anyway, that some are looking for an alternative source of N.

Urea is the world's most popular nitrogen fertilizer, and while urea has a strong foothold in areas like Oklahoma and Ohio, the northern Belt has been resistant to making the switch. But some new research from Purdue University Extension suggests that a split application of nitrogen may be required, as modern hybrids developed after 1990 demonstrate a 27% increase in N uptake during the flowering stage compared to pre-1990 hybrids.

Along with this shift comes a necessary examination of how nitrogen is applied most effectively, and which form of N will produce the best yields. This discussion will look at the major differences between urea and anhydrous ammonia for corn. We all know there is much more to growing corn than burying seeds and going to church. A targeted, intentional approach to nitrogen application requires forethought, soil testing and research -- it wouldn't hurt to go to church no matter what your preferred N source.

Anhydrous ammonia --

Anhydrous ammonia (AA) is a gas that is transported and handled as a liquid under pressure. This can be a fickle form of N as product can easily be lost if, when knifed in, the soil is damp and clumpy or very sandy as the knife openings may not fully close, allowing AA to escape into the air. This risk is mitigated to a degree by AA's nearly 85% nitrogen content, which is potent enough to withstand some winter losses while leaving plenty behind for the following spring.

There are inherent dangers to humans with anhydrous application and with the product itself. AA moves toward water and when accidental exposure occurs, injuries can range from skin irritation, to organ failure and death. Special equipment and expertise is required and often adds to the expense. Commercial applications take the danger out of the grower's hands, but can be expensive.

Urea --

Urea is an equally respected form of N -- the most widely used worldwide -- and is much less hazardous to humans. But the corn carries the risk. Growers who prefer AA find it works on their timetable, and produces the most nitrogen bang for the buck. But as sidedress applications become more popular, UAN solutions -- urea ammonium nitrate -- will likely become more popular.

Urea is available in either granular, prilled or liquid form making it user-friendly to growers, requiring very little special equipment. Dry granular urea has a nitrogen content of 46% and currently runs roughly a dime per pound of N above anhydrous. In its granular form, urea can be surfaced applied, but must be incorporated to avoid N loss. Losses of up to 50% have been observed when dry urea has been spread over moist ground, allowing premature nitrification. But surface applied urea under the right conditions can pack some real benefits.

Fall applications of urea have been shown to be a bad idea as significant losses typically occur. Given the right soil conditions, dry urea is most effective when applied to the surface and either tilled in or rained in. Just 1/4 to 1/2 inch of rain within a few days of application has been shown to get urea's N where it needs to be. Liquid urea (UAN) can be easily sidedressed post-emerge, when corn plants need it most. Surface applications of urea are not recommended for a no-till approach as crop residue may block urea from making it to the soil.

There are positives and negatives on each side of this issue and this is only an introduction to what I expect will be a great debate in the minds of many growers. I urge you to stick with your program this year -- don't change horses midstream. But as technology changes how plants consume nitrogen, growers will follow proven success. Talk to your agronomist or CCA and fellow farmers. There is a wealth of experience and knowledge there, so take some time to compare anhydrous ammonia and urea as you look ahead to next year... we, here at the Monitor will do the same, and keep you posted.

The late start to this year's fertilizer application in parts of the Corn Belt give us a pause to revisit some basics of anhydrous safety. Anhydrous ammonia is the Nitrogen source of choice for many corn growers and is currently the least expensive form of N by the pound at $0.52/lbN. Dry urea is a favorable alternative, but is a little more pricey by the pound at $0.62/lbN. Urea is less dangerous to handle and more user friendly, and some growers have made the switch this year from the unpredictable NH3 to simple dry urea.

Experts agree that the best policy when handling, applying and transporting anhydrous is to slow down and pay attention. A little prevention can go a long way to preserving your safety and that of those around you. Exposure to anhydrous ammonia has both immediate and delayed health implications including severe eye injury, respiratory system damage and skin damage and can be fatal if inhaled or swallowed.

Here are a few tips I have collected from various University extension offices. Your preferred retailer will have a safety checklist and can offer more detailed suggestions.

Transport --

When you pull up to your local retailer to pick up a tank of NH3, be sure to use a strong hitch pin with the keeper securely in place, and safety chains. Once you pull a nurse tank onto a state roadway, you are under the jurisdiction of the state DOT, and subject to DOT rules. The maximum speed you can go is dictated by the tires on the nurse tank which usually recommend 25mph for a fully loaded tank. Do not transport NH3 at night, and come to a complete stop at all railroad crossings.

Inspection --

Before hooking on, check all hoses and connections. Make sure the flo-meter is in the closed position prior to connecting hoses. Never handle a hose by the valve -- always grip the end of the hose by the valve body and hose. Check the valves on both the male and female halves of couplers. Once you have made all connections, recheck all hoses and connections. Here again, make sure to use the proper sized hitch pin with the keeper in place and safety chains affixed.

Exposure --

Should something go horribly wrong and a spill occurs, remove yourself from areas exposed to destroy anhydrous. Anhydrous ammonia seeks water once in the air and can quickly injure or destroy mucous membranes within the body. If anhydrous escapes in a closed area, evacuate the area immediately and close it off to foot traffic until the area can be cleared.

If anhydrous spills on you, water is the only remedy. DO NOT apply lotions, creams, ointments, salve -- just water. Stay upwind from the release. Carefully remove contaminated clothing. Flush affected skin for 20 minutes with fresh clean water, flush eyes for 30 minutes using an eyewash station if you have one. Just about any source of water will do... the pump outside the hog shed, livestock watering tanks or even the cattle creek that cuts through the waterway. Keep the water tank on the nurse tank full of fresh water at all times.

The important thing is to seek medical attention for even the smallest exposure. Anhydrous ammonia has both immediate effects and delayed effects and while you may think you only ruined a pair of blue jeans, NH3 can cause permanent lung and tissue damage that may only be immediately apparent to a physician. As with everything, early detection is the key to recovery.

The Illinois Department of Agriculture has released the following video on anhydrous safety and it is worth a look. Along with all of the above safety precautions, remember to wear heavy jeans and a long sleeved shirt or coveralls and work boots when handling or applying anhydrous ammonia. Never wear contact lenses, use appropriate eye protection and wear heavy gloves.

An ounce of prevention can save pounds of nitrogen. Anhydrous may be the least expensive form of N by the pound, but the safety hazards can outweigh the benefits if a little extra caution is not exercised Your local retailer has more on NH3 safety and we recommend you have a conversation about a 'worst case scenario' with your supplier.

Alert the authorities for large spills, wear your safety gear, take your time and check your P's and Q's. The explosion in Texas is a sobering reminder that NH3 is nothing to trifle with. But with a little extra care, NH3 can be safely knifed in, and growers can get on with growing.