The N Files: Go Time on Nh3

March 4, 2014 08:37 AM
 

 Picture3

Urea -- We have watched urea recover over the past few weeks and while a cool, wet spring application season could pull some early demand out of the market, the expectation is for prices at or above today's prices up until the Chinese urea tariff holiday opens in early summer.

Political tension in Ukraine has moved corn, beans and wheat higher over the last two days, however, Ukraine has thus far outpaced export shipments compared the the prior year at this time. Our concern is for fertilizer exports, however. As long as Ukraine can continue to move nitrogen to the open sea, global prices should stay on their current course. But if export sendouts are impeded, the global supply balance could force nitrogen prices higher until Ukrainian product is able to pull its weight in the global marketplace.

Picture4The regional average price firmed $11.54 on the week to $527.54/st and prices have been headed higher since establishing a low in the first week of December. But today's price is still $40.00 below last year's price at this time suggesting more upside risk ahead. We are currently 80% filled on spring and summer urea and will leave the remaining 20% of spring coverage to gambling stocks near-term.

UAN solutions -- Another week of upward movement in UAN solutions has 28 and 32% closer to their year-ago pegs. UAN28% has thinned the year-over gap the most of all four of these forms of N, four dollars closer this week to year-ago prices than is urea.

If flooding, soil or rainfall prohibit early -- or even 'on time' -- anhydrous applications, UAN solutions will make up the difference at sidedress. That could inject some fresh demand late in the spring and excite prices for summer. If anhydrous applications are somehow cut short, expect UAN prices to respond higher. We are currently 80% filled here as well with 20% still holding out for a spring price break, but even in that event, prices are expected above today's.Picture2

Anhydrous -- December corn is up nearly another full dime from last week's report. The margin between one acre of expected new-crop revenue and one ton of anhydrous ammonia widened to -65.00 this week. Meanwhile, urea and UAN prices have rallied sharply and we believe anhydrous is anxious to get in on the upside run. The chart at right shows anhydrous ytd and anhydrous from last year compared to one acre of expected new-crop revenue based on December 14 corn futures (ZCZ14NCR). The wider the gap between anhydrous and Dec 14 corn, the more upside potential we see for Nh3.

We pulled the trigger this morning on anhydrous and we advise you get caught up to 100% filled on anhydrous for spring. Check with your local retailer as prices may vary.

Nitrogen
Expected Margin
Current Price by the Pound of N
Actual Margin This Week
Outstanding Spread
Anhydrous Ammonia (Nh3)
0
39 1/2 cents
0
0
Urea
Nh3 +5 cents
58 cents
+ 18 1/2 cents
+ 13 1/2 cents
UAN28%
Nh3 +12 cents
62 cents
+ 22 1/2 cents
+ 10 1/2 cents
UAN32%
Nh3 +10 cents
57 cents
+ 17 1/2 cents
+ 7 1/2 cents

 

This week --

  • Anhydrous $225.26 below year-ago pricing -- firmer $8.73/st this week to $656.07.
  • Urea $38.21 less than the same time last year -- up $11.54/st this week to $527.54.
  • UAN28% $34.38 below year-ago -- up $2.94/st this week at $353.45.
  • UAN32% $63.57 below last year -- up $1.16/st this week to $369.87.

 

N by the pound -- Anhydrous up 1/4 cent to 39 1/2 cents/lbN; Urea climbs 1 1/4 cent higher by the pound to 58 cents; UAN28% is unchanged at 62 cents per pound and UAN32% up 1/2 cent to 57 cents/lbN.

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

Nitrogen pricing by pound of N -- 3/4/14

Anhydrous $N/lb

Urea $N/lb
UAN28 $N/lb
UAN32 $N/lb
Iowa
$0.38
$0.59
$0.61
$0.55
Illinois
$0.40
$0.53
$0.55
$0.52
Indiana
$0.43
$0.59
$0.64
$0.61
Wisconsin
$0.40
$0.54
$0.59
$0.59
Minnesota
$0.38
$0.57
$0.64
$0.58
South Dakota
$0.42
$0.60
$0.66
$0.58
North Dakota
$0.40
$0.60
$0.73
Not reported
Nebraska
$0.35
$0.60
$0.57
$0.55
Missouri
$0.37
$0.60
$0.68
$0.59
Kansas
$0.33
$0.58
$0.57
$0.56
Ohio
$0.43
$0.59
$0.63
Not reported
Michigan
$0.47
$0.59
$0.59
$0.59
Average
$0.39 1/2
$0.58
$0.62
$0.57
Year-ago
$0.54
$0.62
$0.68
$0.67

 

Corn -- index

December 2014 corn opened today at $4.76 -- another 9 cents above the previous N Files. At trendline 160bu/acre and one retail short ton of anhydrous ammonia at $647.34, the ZCZ14-NH3 spread widened 5.67 points on the week to stand at -65.53. A negative number here indicates one short ton of anhydrous is priced below expected new-crop revenue per acre based on December '14 corn futures.

Wholesale --

MosaicCo. reports wholesale urea moved slightly lower out of the Black Sea and the Middle East, Higher at NOLA and sideways in the U.S. Corn Belt. Tampa Ammonia is unchanged this week at $435.00.


 

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