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Fertilizer Input: Natural Gas Rose for the Week Ended December 23

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Natural gas costs

Natural gas can account for as much as two-thirds of the total production costs for natural gas–based nitrogen fertilizer producers such as CF Industries (CF), Terra Nitrogen (TNH), PotashCorp (POT), and Agrium (AGU). In this part of the series, we’ll look at the weekly price movements for natural gas at Henry Hub in the United States (SOIL). In the United Kingdom, the NBP (National Balancing Point) is where heavy natural gas trading takes place, similar to Henry Hub.

Natural gas prices

For the week ended December 23, 2016, average weekly natural gas prices at Henry Hub rose 1.0% to $3.52 per MMBtu (million British thermal units), compared to $3.45 per MMBtu the previous week. Front-month (expiring in January 2017) futures rose 6.0% to $3.60 per MMBtu last week, from $3.50 per MMBtu.

Last week, the front-month futures in the United Kingdom NBP rose 5.0% week-over-week.

The EIA forecast

In its latest December Short-Term Energy Outlook report, the EIA (U.S. Energy Information Administration) estimated an average price of $2.49 per MMBtu in 2016 at Henry Hub. For 2017, it expects the price to average $3.27 per MMBtu. Previously, it was $3.12 per MMBtu. In 2015, the average price was $2.63 per MMBtu.

In the next few parts of this series, we’ll look at the prices of phosphate fertilizers, including diammonium phosphate and monoammonium phosphate.

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