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Fertilizer Prices for the Week Ended July 8: More Bad News?

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Part 3
Fertilizer Prices for the Week Ended July 8: More Bad News? PART 3 OF 8

Urea Price Movement: Week Ended June 8 Following the July 1 Decline

Urea prices still declining

In the previous part of this series, we saw that overall ammonia prices declined for the week ended July 8, 2016. Urea prices also fell during the week. Urea is the most commonly used nitrogen fertilizer in the world.

Urea Price Movement: Week Ended June 8 Following the July 1 Decline

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Granular urea prices

Granular urea prices in the Middle East fell by 3% to $195 per metric ton in the week ended July from $200 per metric ton in the previous week. Urea prices fell by 36% in the Middle East from $305 per metric ton in the corresponding week in 2015. However, current urea prices held above their January 2016 low, when they hit $195 per metric ton.

Granular urea prices in the Cornbelt fell by 2% to $208 per metric ton FOB (free on board) from $213 per metric ton in the previous week. Current granular urea prices in this region hit a four-year low. YoY (year-over-year), they fell by 45% from $376 per metric ton.

Granular urea prices in China also fell by 2% to $200 per metric ton week-over-week from $205 per metric ton. Granular urea prices in China fell by 34% from $305 per metric ton in the same week in 2015 to a low point of $200 per metric ton in March 2016.

Prilled urea prices

Prilled urea prices also fell week-over-week in the Black Sea, at $185 per metric ton compared to $190 per metric ton. They fell by 37% year-over-year from $295 per metric ton in the corresponding week of 2015. They fell to a low of $183 per metric ton in January 2016.

Urea prices have hit multiyear lows in 2016, which presents a challenge for nitrogen fertilizer producers such as CF Industries (CF), CVR Partners (UAN), and Agrium (AGU). Falling prices also affect 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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