The N Files: Anhydrous & Urea Slightly Lower

October 15, 2013 04:09 AM
 

This week --

Retail urea and anhydrous softened slightly in prices reported to your Monitor while UAN solutions both moved higher.

  • Anhydrous $148.48 below year-ago pricing -- down $3.80/st this week to $703.94.
  • Urea $131.82 less than the same time last year -- down $5.47/st this week to $457.21.
  • UAN28% $62.24 below year-ago -- up $1.00/st this week at $317.76.
  • UAN32% $72.44 below last year -- up $2.86/st this week to $357.00.

 

The following is an updated table of nitrogen pricing by state by the pound of N.

Nitrogen pricing by pound of N -- 10/15/2013

Anhydrous $N/lb

Urea $N/lb
UAN28 $N/lb
UAN32 $N/lb
Iowa
$0.41
$0.57
$0.57
$0.56
Illinois
$0.43
$0.56
$0.53
$0.53
Indiana
$0.41
$0.49
$0.57
$0.63
Wisconsin
$0.42
$0.48
$0.50
$0.52
Minnesota
$0.40
$0.47
$0.59
$0.58
South Dakota
$0.43
$0.46
$0.59
$0.56
North Dakota
$0.40
$0.46
Not reported
Not reported
Nebraska
$0.37
$0.52
$0.53
$0.55
Missouri
$0.40
$0.51
$0.70
$0.52
Kansas
$0.38
$0.50
$0.56
$0.55
Ohio
$0.55
$0.53
$0.53
Not reported
Michigan
$0.48
$0.51
$0.54
Not reported
Average
$0.42 1/4
$0.50 1/2
$0.56 1/2
$0.55 1/2
Year-ago
$0.52
$0.66
$0.68
$0.67

 

Corn --

December corn opened today at $4.32. At trendline 160bu/acre and one retail short ton of anhydrous ammonia at $703.94, the ZCZ-NH3 spread stands at +11.54. A positive number here indicates December corn is priced below retail anhydrous and suggests downward movement ahead for NH3. However, this will be driven by corn futures, and many believe the downside is all but exhausted for nitrogen.

Based on December corn futures, nitrogen is slightly overpriced presently.

Wholesale --

MosaicCo reports wholesale urea edged higher week-over at the Black Sea, Middle East and in the Cornbelt with an $11 week-over decline at NOLA. Ammonia moved sideways at Tampa and currently stands $225.00 lower than the same time last year. DAP moved roughly $10 lower/ton at Tampa and Morocco while MAP trended sideways, unchanged at NOLA and Brazil on the week.

Near-term Outlook --

We believe nitrogen will level off at present levels for harvest with mild downside potential through harvest. Pressure on deferred corn contracts will keep pressure on nutrient.

In this case, if these four products will look to align according to the 'expected margin' column, Urea must soften 3 1/4 cents per pound N, UAN28% needs to correct slightly higher and add 1 1/4 cents. Meanwhile, UAN32% overshot its target this week and must now soften 3 1/4 cents.

However, anhydrous is due to reverse at any time now, and could easily fill the 3 1/4 cent gap between itself and urea and 32%. That scenario would have 32% and urea pausing, anhydrous up by 3 1/4 cents and 28% firming along with NH3.
 

 

N Pricing by the Pound
Expected Margin
Current price
Necessary change
Target
Anhydrous Ammonia (0)
NH3 = $0.42 1/4
$0.42 1/4
+0
$0.42 1/4/lbN -- $690/st
Urea
NH3 + 5 cents
$0.50 1/2
-$0.03 1/4
$0.47 1/4/lbN -- $420/st
UAN32%
NH3 + 10 cents
$0.55 1/2
-$0.03 1/4
$0.52 1/4/lbN -- $330/st
UAN28%
NH3 + 13 cents
$0.56 1/2
+1 1/4 cent
$0.57 3/4/lbN -- $320/st

 

If you have not yet booked fall anhydrous, we strongly recommend you have a conversation with your preferred supplier today. Gamblers may gain a cent or two per pound of N by holding out for another week or two, but the time is running short to book tonnage for fall applications.


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