The N Files: Nh3 Gives Up A Dime

March 18, 2014 07:04 AM
 

 Picture2

Urea -- The regional average price firmed $3.05 on the week to $532.78/st and prices have been headed higher since establishing a low in the first week of December. But today's price is edging closer to the year-over peg suggesting the recovery may slow in the next few weeks. 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 -- This week, 32% firmed $2.81 while 28% rose $3.66. We are currently 80% filled here as well with 20% still holding out for a spring price break, but even in that event, spring prices may be above today's. This is a weather fertilizer. Many are speculating about spring application conditions and the extent to which weather difficulties will delay anhydrous applications. If that scenario plays out, UAN will get the nod, and prices willPicture1 likely run up as demand for sidedress increases.

Anhydrous -- Nh3 fell just a dime on the week to a regional average of $653.11/st, but strength in December corn futures stretched the margin between a ton of anhydrous and an acre of expected new-crop revenue (NCR) to -84.49 on Monday. Landed wholesale ammonia values are on the rise and we expect anhydrous prices to capture some of the strength we have seen in UAN and urea.

Were it not for confirmation in the year-over numbers I would wonder if my calculator is broken. Urea is currently at a 14 1/4 cent premium by the pound of N to anhydrous and while the outstanding spreads for UAN solutions are a little closer to expected margins, we expect the numbers in the 'Outstanding spread' column to one day all read zero. That would indicate the fourPicture3 nitrogen products we track have realigned according to historic pricing expectations.

Anhydrous is currently priced $229.30 below year ago while urea is only $35.00 below year-ago. 32% solution is still $56.00 below last year, but UAN28% is catching up with year ago prices just as quickly as urea, now $33.80 below year ago. As urea and UAN recover, anhydrous wants to just lay there. Part of the year-over gap is due to very high Nh3 prices this time last year, but by the margins in the present day, anhydrous is so cheap you couldn't get a better deal if you stole it. We are 100% filled on spring anhydrous, and our expectation is for higher pricing in the near-term.

 

Nitrogen
Expected Margin
Current Price by the Pound of N
Actual Margin This Week
Outstanding Spread
Anhydrous Ammonia (Nh3)
0
39 1/4 cents
0
0
Urea
Nh3 +5 cents
58 1/2 cents
+ 19 1/4 cents
+ 14 1/4 cents
UAN28%
Nh3 +12 cents
63 cents
+ 23 3/4 cents
+ 11 3/4 cents
UAN32%
Nh3 +10 cents
58 3/4 cents
+ 19 1/2 cents
+ 9 1/2 cents

 

This week --

  • Anhydrous $229.30 below year-ago pricing -- softer 10 cents/st this week to $653.11.
  • Urea $34.88 less than the same time last year -- up $3.05/st this week to $532.78.
  • UAN28% $33.08 below year-ago -- up $3.66/st this week at $357.75.
  • UAN32% $56.20 below last year -- up $2.81/st this week to $379.68.

 

N by the pound -- Anhydrous is 1/4 cent lower at 39 1/4 cents/lbN; Urea climbs 1/4 cent higher by the pound to 58 1/2 cents; UAN28% firms 1 1/2 cents to 63 cents per pound and UAN32% up 3/4 cent to 58 3/4 cents/lbN.

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

Nitrogen pricing by pound of N -- 3/18/14

Anhydrous $N/lb

Urea $N/lb
UAN28 $N/lb
UAN32 $N/lb
Iowa
$0.38
$0.58
$0.59
$0.58
Illinois
$0.40
$0.57
$0.59
$0.55
Indiana
$0.42
$0.59
$0.64
$0.64
Wisconsin
$0.40
$0.56
$0.61
$0.59
Minnesota
$0.38
$0.57
$0.68
$0.58
South Dakota
$0.41
$0.60
$0.66
$0.58
North Dakota
$0.40
$0.60
$0.68
Not reported
Nebraska
$0.34
$0.59
$0.61
$0.61
Missouri
$0.37
$0.60
$0.68
$0.58
Kansas
$0.32
$0.58
$0.57
$0.58
Ohio
$0.44
$0.60
$0.64
Not reported
Michigan
$0.46
$0.60
$0.61
$0.59
Average
$0.39 1/4
$0.58 1/2
$0.63
$0.58 3/4
Year-ago
$0.54
$0.48
$0.70
$0.67

 

Corn --

December 2014 corn opened today at $4.81 1/4 -- another 5 1/4 cents above the previous N Files. At trendline 160bu/acre and one retail short ton of anhydrous ammonia at $653.21, the ZCZ14-NH3 spread widened 7.70 points on the week to stand at -76.89. 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 modestly lower out of the Black Sea, the Middle East and in the U.S. Corn Belt, and sideways at NOLA. Tampa Ammonia stayed put at $460.00.


 

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