The NFiles: Book NH3

March 9, 2016 12:51 PM


  • Anhydrous $153.58 below year-ago pricing -- higher 18 cents/st this week at $562.71.
  • Urea $103.56 below the same time last year -- higher $2.67/st this week to $363.77.
  • UAN28% is $63.92 below year-ago -- higher $2.70/st this week to $273.62.
  • UAN32% is priced $69.94 below last year -- higher 42 cents/st this week at $303.02.

Reports of wheels turning are popping up all along the north-south soil temperature dividing line. A growing list of weather forecasts are calling for a wet spring and a dry summer. We know of growers in Illinois, northern Missouri and even southwestern Iowa who have already been hard at work with preplant field prep, and some already have corn in the ground. As soil temperatures warm to key 50 degrees, farmers will be chomping at the bit to roll.

UANWe already have our urea and UAN booked, and this week anhydrous is 18 cents higher with gains and declines offsetting each other. Since wheels are already turning, farmer demand will place a floor under the market. We advise farmers book anhydrous ammonia for spring and summer applications at today's price. There may be a few small steps to the downside yet to come in some states, and wholesale values suggest NH3 is slightly overpriced. But commodities and fertilizer are obsessed with demand as a clue that prices have fallen far enough. As demand rises for NH3, prices will rise as well.

Chinese urea production will continue at firm levels as coal prices are low enough to incentivize production. UAN production in North Africa will continue as well at current levels, and natural gas prices suggest further declines in wholesale ammonia prices. All of that will lever for lower N prices longer-term, but as I said, fertilizer and commodities are obsessed with demand and the introduction of willing buyers will excite prices through spring fieldwork. After that, we expect summer prices ureato fall as demand leaves the market.

Click here to view our advice to book anhydrous ammonia.

December 2016 corn closed at $3.78 on Friday, March 4. That places expected new-crop revenue (eNCR) per acre based on Dec '16 futures at $593.39 with the eNCR15/NH3 spread at -30.68 with NH3 at a premium to December 2016 corn futures. The spread narrowed 0.18 points on the week.

This week, the average cash corn price built-in to nitrogen prices is $3.39 3/4 per bushel.

Nitrogen pricing by pound of N 3/9/15

Anhydrous $N/lb

Urea $N/lb
UAN28 $N/lb
UAN32 $N/lb
Midwest Average
$0.34 1/4
$0.40 1/4
$0.47 1/4
$0.43 1/2
$0.51 3/4
$0.58 1/4


The Margins -- Anhydrous is underpriced compared to the rest of the nitrogen segment. NH3 shorts urea 1 cent by the pound of N; UAN28% is overpriced compared to anhydrous by 2 3/4 cents; UAN32% solution is 3 cents above NH3 on price.

Expected Margin
Current Price by the Pound of N
Actual Margin This Week
Outstanding Spread
Anhydrous Ammonia (NH3)
34 1/4 cents
NH3 5 cents
40 1/4 cents
6 cents
1 cent
NH3 12 cents
49 cents
14 3/4 cents
2 3/4 cents
NH3 10 cents
47 1/4 cents
13 cents
3 cents