Ammonia Prices Turn Around: Fill Fall Anhydrous Needs

September 5, 2013 05:40 AM

International ammonia prices moved unexpectedly higher earlier this week, which may signal a late season rally for anhydrous pricing. A number of factors are working together on the world stage to suggest a floor for anhydrous ammonia is in place. We believe the price slide in NH3 pricing will take a pause at current levels, with the future of NH3 pricing now more beholden to corn futures than before.

Check with your preferred retailer and book 100% of fall anhydrous ammonia needs today. Wholesale NH3 has made its first upside move since spring this week. This and other upside moves at world ports support near-term NH3 pricing at or above current levels.

Production cuts -- Scheduled maintenance in Trinidad and Tobago has begun and while the result will be decreased ammonia production, the disruption is not expected to last beyond October. However, Trinidad is the No. 1 supplier of ammonia to the U.S. and production cuts there will impact pricing in the United States. Ukraine's Stirol production facility has also announced it will temporarily halt ammonia production altogether in an effort to ease supply imbalances there. This also suggests higher pricing ahead.

Prices -- Ammonia prices at NOLA moved $13.50/ton higher early this week adding upside potential to anhydrous. Prices edged higher out of the Black Sea Region as well, and Mosaic reported that ammonia at Tampa C&F is well below year-ago prices and moved higher this week.

Your Inputs Monitor noted an overall decline in anhydrous pricing across the Midwest last week, but both Dakotas and Wisconsin moved slightly higher with Ohio unchanged.

We had expected anhydrous ammonia to find the floor before urea and P&K. Maintenance and production shutdowns in Trinidad and Ukraine initiated on Sept. 1 will rebalance this slightly oversupplied market and likely raise NH3 pricing until global production resumes.

This could be a big week for anhydrous at retail depots as very little -- if any -- product has been booked thus far for fall. The ensuing demand push will also have its sway over retail prices and NH3 could get away from us in a hurry.

Hold off on P&K -- Our position is unchanged for P&K as India's currency woes will continue to limit phosphate pricing. It is still unknown how much the FSU shakeup will impact potash pricing, but we do not believe K pricing will do anything but fall. Hold on P&K.

Ammonia may dip again late this year once production resumes in Trinidad, but Ukraine producers are making moves to influence NH3 pricing higher. Add to all of this a commodity sector that continues to struggle to find upward traction, and an upside breakout in corn futures could also push anhydrous prices higher.

Book fall anhydrous needs today.

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