The NFiles: Anhydrous Price Dives

June 9, 2016 11:16 AM


  • Anhydrous is $132.54 below year-ago pricing -- lower $17.49/st this week at $585.22.
  • Urea is $90.59 below the same time last year -- lower $3.24/st this week to $372.01.
  • UAN28% is $61.39 below year-ago -- lower $1.03/st this week to $279.42.
  • UAN32% is priced $63.89 below last year -- lower $7.51/st this week at $299.69.

Anhydrous ammonia led the nitrogen segment lower with some states posting some huge price declines. Wisconsin was our leader where NH3 fell $125 on the week. Ohio was down $38.70 and Minnesota fell $12.22 by the short ton. But all states were either unchanged or lower. Even without the massive declines in Wisconsin, we would have been lower on NH3 this week.

UANUAN solutions were mixed but lower overall and we did not see the aggressive pullback we observed in anhydrous. Sidedress is well underway as growers have been anxious to lend a shot of nitrogen to young plants and the generally early start to planting in some areas has resulted in an early sidedress season. Strong Midwestern supplies will continue to limit UAN pricing near-term.

Urea prices were lower as well this week with Wisconsin down $13 and Minnesota down $10.10. Upside action was limited to 6 cents in South Dakota and 2 cents in Indiana. All other states were unchanged to lower. Summer prices may get a lift, but currently, U.S. urea prices are the lowest in the world. The addition of domestic nitrogen production will likely trump higher import prices, should that be the case through summer.

UreaIn fact, since prices indicate ample supplies at the end of the application season, domestic production may trump upside risk in all flavors of nitrogen in the United States. There is also the thought that higher corn prices will woo acres over to corn in spring 2017. We must keep in mind, however that the current rally in grains was led by soybeans which are also priced at sharply higher levels than just a few months ago.

We have a long ways to go before 2017 planting intentions are set and if both corn and beans are priced at profitable levels, the battle between corn and soybeans for acreage in 2017 may be a wash.

Since there is the potential for nitrogen prices to rise along with corn prices, we will be watching our fertilizer markets very carefully and will book portions of fall needs on indications nitrogen wants to firm.

December 2016 corn closed at $4.19 on Friday, June 3. That places expected new-crop revenue (eNCR) per acre based on Dec '16 futures at $662.31 with the eNCR15/NH3 spread at -77.09 with anhydrous ammonia at a discount to expected new-crop revenue. The spread softened 27.58 points on the week.

This week, the average cash corn price built-in to nitrogen prices is $3.46 per bushel.

Nitrogen pricing by pound of N 6/9/15

Anhydrous $N/lb

Urea $N/lb
UAN28 $N/lb
UAN32 $N/lb
Midwest Average
$0.35 1/2
$0.41 1/4
$0.43 3/4
$0.51 1/4
$0.56 1/2


The Margins -- UAN28% is overpriced compared to anhydrous by 2 1/2 cents; UAN32% solution is 1 1/2 cent above NH3 on price. Urea flipped to a 3/4 cent premium to anhydrous by the pound of N this week.

Expected Margin
Current Price by the Pound of N
Actual Margin This Week
Outstanding Spread
Anhydrous Ammonia (NH3)
35 1/2 cents
NH3 5 cents
41 1/4 cents
5 3/4 cents
3/4 cent
NH3 12 cents
50 cents
14 1/2 cents
2 1/2 cents
NH3 10 cents
47 cents
11 1/2 cents
1 1/2 cent