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How Did Fertilizer Stocks and Fertilizer Prices Move Last Week?

PART:
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Part 3
How Did Fertilizer Stocks and Fertilizer Prices Move Last Week? PART 3 OF 8

Urea Prices Hit Multiyear Lows Last Week

About urea

Urea is one of the most widely used nitrogen fertilizers in the world. It requires ammonia as a feedstock. Earlier in this series, we saw that ammonia prices for the week ending July 22 were broadly unchanged week-over-week in North America while they declined in the international markets. Let’s see how urea prices moved over the same period.

Urea Prices Hit Multiyear Lows Last Week

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Granular urea

Last week continued to prove negative for urea prices. China is the largest producer and exporter of urea. It saw a 2% decline in granular urea prices last week to $191 per metric ton week-over-week, which is the lowest point since the beginning of this year. The fertilizer industry is at the bottom of its cycle, and urea prices in China have fallen by 34% from $290 per metric ton in the same week in 2015.

Similarly, in the Middle East, granular urea fell by 2% to $181 per metric ton in the week ending July 22 from $185 per metric ton a week ago. Urea prices fell by 36% in the Middle East from $285 per metric ton in the same week in 2015. Urea prices in the Middle East have now slipped below the previous low of $185 per metric ton in January 2016.

Prices of urea in the Corn Belt region also fell by 2% to $204 per metric ton free on board, compared to $208 per metric ton a week ago. Similar to urea prices in China and the Middle East, current granular urea prices in this region hit a five-year low. They fell by 44% from $363 per metric ton YoY (year-over-year).

Prilled urea prices

Prilled urea prices remained unchanged in the Black Sea at $180 per metric ton, compared to a week ago. They fell by 36% YoY from $280 per metric ton in the same week of 2015. This week’s urea prices hit their lowest point in the past five years.

Urea prices have hit multiyear lows in 2016, which has presented a challenge for nitrogen fertilizer producers such as CF Industries (CF), CVR Partners (UAN), PotashCorp (POT), and Agrium (AGU). Falling prices also impact ETFs such as the iShares Global Materials ETF (MXI). MXI invests ~4.5% of its holdings in agricultural chemical companies including Monsanto (MON) and Dow Chemicals (DOW).

In the next part of this series, we’ll look at natural gas, a key input cost for nitrogen fertilizers. According to PotashCorp, natural gas accounts for 70%–85% of ammonia production costs.

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