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Urea Prices Fell Last Week: How Did Other Fertilizers Perform?

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Part 3
Urea Prices Fell Last Week: How Did Other Fertilizers Perform? PART 3 OF 8

Why Did Urea Prices Hit the Bottom 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 15 were broadly unchanged week-over-week. Let’s see how urea prices moved over the same period.

Why Did Urea Prices Hit the Bottom Last Week?

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Granular urea

China is the largest exporter of urea. It saw a 3% decline in granular urea prices last week to $195 per metric ton week-over-week. Urea prices in China fell by 33% from $290 per metric ton in the same week in 2015.

In the Middle East, granular urea fell by 5% to $185 per metric ton in the week ending July 15 from $195 per metric ton a week ago. Urea prices fell by 39% in the Middle East from $305 per metric ton in the same week in 2015. Keep in mind that this week’s urea prices in the Middle East hit the previous low in January 2016.

Prices of urea in the Corn Belt region remained unchanged at $208 per metric ton free on board—compared to a week ago. Current granular urea prices in this region hit a four-year low. They fell by 44% from $371 per metric ton YoY (year-over-year).

Prilled urea prices

Prilled urea prices also fell week-over-week in the Black Sea at $180 per metric ton—compared to $185 per metric ton. They fell by 39% YoY from $295 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. This presents a challenge for nitrogen fertilizer producers such as CF Industries (CF), CVR Partners (UAN), 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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