The N Files: Anhydrous and Urea on the Teeter Totter

November 5, 2013 06:29 AM
 

This week --

It has been the story of this season. One goes up and one goes down. We have seen it in DAP and MAP... one week one is up and the other down. The next week, the other is up and the one is down. The same is true of nitrogen this week. Anhydrous moved higher as urea moved lower. Meanwhile, UAN solutions followed that lead with 28% down and 32% up.8450857233 a4d7ddffca

This may be a signal that prices are searching for demand and despite the suggestion that this late planted crop is coming in ahead of schedule, the white buffaloes in my neck of the woods are still parked where the fellas unhooked them, waiting. Roughly 75% of this year's corn crop has been reduced to stubble and buyers will have to pull the trigger on fall nutrient soon.

The upticks in anhydrous and 32% may be an indication of increased demand for immediate application and while urea is best spread in the spring and 28% a popular sidedress, now may be a good time to book a portion of each as a hedge against winter price increases.

  • Anhydrous $181.10 below year-ago pricing -- up $3.40/st this week to $680.65.
  • Urea $135.07 less than the same time last year -- down $9.79/st this week to $452.43.
  • UAN28% $53.96 below year-ago -- down $4.28/st this week at $322.34.
  • UAN32% $99.74 below last year -- up $1.69/st this week to $341.92.

 

N by the pound -- Anhydrous down 3/4 cents to 41 1/4; Urea 1/4 lower at 49 3/4 cents; UAN28% down 3/4 cents to 57 cents per pound and UAN32% down 3/4 cents at 53 cents/lbN.

The following is an updated table of nitrogen pricing by state by the pound of N as reported to your Monitor for week ended Nov. 1, 2013.

Nitrogen pricing by pound of N -- 11/5/2013

Anhydrous $N/lb

Urea $N/lb
UAN28 $N/lb
UAN32 $N/lb
Iowa
$0.41
$0.54
$0.55
$0.53
Illinois
$0.41
$0.54
$0.55
$0.55
Indiana
$0.43
$0.50
$0.55
$0.55
Wisconsin
$0.42
$0.50
$0.50
$0.52
Minnesota
$0.40
$0.46
$0.55
$0.55
South Dakota
$0.42
$0.46
$0.59
$0.56
North Dakota
$0.40
$0.47
$0.64
Not reported
Nebraska
$0.37
$0.53
$0.54
$0.52
Missouri
$0.39
$0.49
$0.70
$0.45
Kansas
$0.37
$0.49
$0.55
$0.55
Ohio
$0.42
$0.49
$0.57
Not reported
Michigan
$0.51
$0.50
$0.54
Not reported
Average
$0.41 1/4
$0.49 3/4
$0.57
$0.53
Year-ago
$0.52
$0.64
$0.68
$0.69

 

Corn --

December 2014 corn opened today at $4.66 1/2 -- down 7 1/2 cents from last week's N Files. At trendline 160bu/acre and one retail short ton of anhydrous ammonia at $680.65, the ZCZ14-NH3 spread narrowed 17.18 points on the week to stand at -25.75. A negative number here indicates anhydrous is priced below December 14 corn futures and suggests upside potential for anhydrous near-term. Picture1

Wholesale --

MosaicCo. reports wholesale urea moved higher week-over in the Middle East, NOLA and at the Black Sea. Meanwhile, values in the U.S. Corn Belt edged $3 lower. Ammonia moved sideways at Tampa and currently stands $238.00/ton below the same time last year.

Near-term Outlook --

Strong supplies and weak demand currently conspire to limit upside price risk for nitrogen and as the U.S. corn crop makes its way in from the field, one of two things will happen. Either growers will pull the trigger and apply anhydrous right away OR many are now muttering about leaving off the fall anhydrous in favor of a spring application. Either way, without some strength in December corn and a little nutrient disappearance in the market, prices are not likely to move dramatically higher anytime soon.

Urging prices higher are time and natural gas prices. Today, December 13 natural gas opened at $3.443 and has since added a few highside cents. CF's release today put their realized natural gas price over Q3 at $3.54. Meanwhile, EIA expects natgas to run closer to $4 for 2014. At the same time, a wave of precipitation stretching from the Texas panhandle to Southern Minnesota lumbers across the Midwest, slowing harvest progress and postponing fertilizer applications for at least another few days.


Photo credit: Seattle Municipal Archives / Foter.com / CC BY

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