The N Files: Jumpin' by June

January 7, 2014 10:19 AM
 

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There has been a lot of speculation about what the impact of low corn prices on fertilizer applications will be. Most growers are now looking to spend somewhere around half of what they did last year for P&K, but nitrogen demand is expected to trend on-par with last year's demand. Like the previous year, this year's anhydrous applications were cut short on some areas by weather.

We saw this in the fall of 2012 and the following spring and summer noted an increased reliance on UAN solutions. The industry may have already caught on to that trend and the year-over numbers are still skewed dramatically with NH3 $231.14 below year ago and UAN28% down just $60.29 year-on-year. Anhydrous has followed the price of corn very closely, but UAN solutions have not.

 

Part of the reason for this is N content. Because of the great risk for winter loss, a fall applied 28% N solution would probably do more harm than good on its own, and would leave the spring soil starved for nitrogen. This is nitrogen best applied in-season and when the corn gets too tall for trips between the fencelines, demand for liquid nitrogen fertilizer dries up. From a demand standpoint, the risk for purveyors lies in NH3, which has been in price discovery mode since the summertime.Picture1

UAN demand is expected to outpace last year's in 2014. This is price positive for NH3 and may pressure anhydrous lower through spring, but expected demand will hold UAN pricing at the top end of any price breaks, as it has compared to anhydrous. Add to that increased demand for UAN solutions as a means to conservation compliance and renewed best practices, and the UAN business should be jumping by June. We expect to catch UAN prices sleeping in Late February or March and will look to capitalize on upcoming price setbacks. Watch for that alert from your Inputs Monitor.

 

This week --

  • Anhydrous $231.14 below year-ago pricing -- down $4.27/st this week to $650.52.
  • Urea $109.02 less than the same time last year -- up 7 cents/st this week to $455.81.
  • UAN28% $60.29 below year-ago -- down $4.71/st this week at $315.04.
  • UAN32% $71.73 below last year -- down $2.13/st this week to $345.93.

 

N by the pound -- Anhydrous 1/4 cent lower at 39 1/4 cents/lbN; Urea unchanged by the pound at 50 1/2 cents; UAN28% down 1 1/4 cent to 55 1/2 cents per pound and UAN32% unchanged at 53 1/2 cents/lbN.

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

Nitrogen pricing by pound of N -- 1/7/14

Anhydrous $N/lb

Urea $N/lb
UAN28 $N/lb
UAN32 $N/lb
Iowa
$0.38
$0.51
$0.55
$0.55
Illinois
$0.41
$0.52
$0.54
$0.53
Indiana
$0.41
$0.53
$0.59
$0.61
Wisconsin
$0.41
$0.47
$0.52
$0.50
Minnesota
$0.38
$0.49
$0.57
$0.55
South Dakota
$0.41
$0.48
$0.59
$0.53
North Dakota
$0.38
$0.49
$0.63
Not reported
Nebraska
$0.34
$0.51
$0.52
$0.53
Missouri
$0.37
$0.50
$0.59
$0.48
Kansas
$0.35
$0.50
$0.52
$0.53
Ohio
$0.41
$0.56
$0.50
Not reported
Michigan
$0.46
$0.49
$0.55
$0.53
Average
$0.39 1/4
$0.50 1/2
$0.55 1/2
$0.53 1/2
Year-ago
$0.54
$0.62
$0.66
$0.65

 

Corn -- DSC 0032 (2)

December 2014 corn opened today at $4.54 1/4 -- 3 3/4 cents above the previous N Files. At trendline 160bu/acre and one retail short ton of anhydrous ammonia at $650.52, the ZCZ14-NH3 spread widened 5.47 points on the week to stand at -36.28. A negative number here indicates anhydrous is priced below expected new-crop revenue per acre based on December 14 corn futures.

Wholesale --

MosaicCo. reports wholesale urea moved slightly higher out of Ukraine and in the Cornbelt on the week, slightly lower at NOLA and sideways at Middle Eastern locations. Ammonia continued sideways -- unchanged for several weeks at $450.00/ton.

 


Photo credit: D. Michaelsen, Inputs Monitor, 2014 

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