Nitrogen Pricing by the Pound and the UAN Rodeo

May 21, 2013 10:36 AM
 

bullrideUAN

With late season fertilizer applications expected to increase as the calendar pages flip on this planting season, nitrogen pricing has leveled off. The margin between anhydrous and urea per pound of N has slipped to within 10 cents and that may benefit growers if post-plant urea applications are planned.

Upstream producers had prepared for corn plantings near 98 million acres, and after a dry year like last year, nitrogen demand was expected to be high. In this way, delays in planting have helped out by minimizing hand-to-mouth purchases, lowering the price of nitrogen.

Bottom end N pricing could be the result if less than 98 million acres of corn is planted in the U.S. this year, and we expect that number to settle somewhere around 95 million acres. Given that, we expect anhydrous and urea to remain stable at current levels, but fully expect a wild ride out of UAN solutions.

Anhydrous: $0.53/lbN --

Anhydrous users didn't all have a chance to apply before planting and, in most cases, once you book nutrient, you own it. That means most suppliers will not switch out leftover anhydrous for another form of N. That being the case, if demand is weak for fall bookings, upside potential for anhydrous is limited.

Urea: $0.61/lbN --

Urea users have reason to celebrate the near-continuous price slide urea has been on since last summer. Chinese oversupply has the global urea market saturated with product and with the 2% tariff window set to open on Chinese exports July 1, the global surplus will keep upside action limited here as well. Wholesale prices have been projected by some to have downside potential to $300/ton. Currently, wholesale urea averages roughly $420.00/ton. Reductions of that magnitude would definitely make it to the end user.

UAN: 28% @ $0.71/lbN, 32% @ $0.68/lbN --

Solutions have a chance to shine this year, and CF Industries and other N producers upstream report record or near-record sendouts as well as strong profitability through the first quarter of 2013. Solutions currently have the 'rodeo potential' squarely in their stall as demand at sidedress could force prices higher.

Of all of the nitrogen products in our index, UAN solutions have proven the most volatile. Renewed interest in UAN will keep production steady, and offers growers a safe way to top off fields with some 'gentle' nitrogen. But demand inspired pricing swings could let the UAN bull out of the chute, and raise near-term prices, once more of the crop emerges.

The table below outlines pricing in each state for the four nitrogen products our index monitors. Prices are by the pound of nitrogen -- updated 5/21/13.

Nitrogen pricing by pounds of N

Anhydrous $N/lb

Urea $N/lb
UAN28 $N/lb
UAN32 $N/lb
Iowa
$0.52
$0.66
$0.71
$0.67
Illinois
$0.54
$0.61
$0.70
$0.69
Indiana
$0.55
$0.63
$0.73
$0.73
Wisconsin
$0.54
$0.60
$0.73
$0.67
Minnesota
$0.54
$0.62
$0.75
$0.69
South Dakota
$0.54
$0.61
$0.70
$0.70
North Dakota
$0.52
$0.62
$0.73
not reported
Nebraska
$0.48
$0.62
$0.66
$0.67
Missouri
$0.52
$0.60
$0.71
$0.64
Kansas
$0.48
$0.60
$0.70
$0.69
Ohio
$0.58
$0.63
$0.71
not reported
Michigan
$0.55
$0.62
$0.70
not reported
Midwest Average
$0.53
$0.61
$0.71
$0.68

 


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