Urea is the most globally used nitrogen fertilizer. According to the International Fertilizer Industry Association, urea accounts for 56% of all nitrogen fertilizers consumed globally. CF Industries (CF), which announced its earnings last week, is one of the largest producers of nitrogen fertilizer.
During the week ended February 17, 2017, urea prices were mixed. It’s important for nitrogen investors (XLB) (DJIA-INDEX) to watch the prices of nitrogen fertilizers.
Granular urea prices at the three locations in the above chart were in negative territory week-over-week. Overall, prices fell by an average of 2.9% from the week prior. In the Middle East, granular urea prices fell 3.5% to $249 per metric ton. NOLA (New Orleans) granular prices fell 3.3% to $215 per metric ton, compared with $222 per metric ton the week prior. Similarly, urea prices in the US Corn Belt fell 1.8% to $245 per metric ton.
Lately, urea prices have been supported by favorable supply and demand dynamics. Higher prices are positive for nitrogen producers. Companies such as CF Industries, Terra Nitrogen (TNH), CVR Partners (UAN), and PotashCorp (POT) will likely benefit from rising nitrogen prices. Granular urea prices at the three locations in the above graph rose 40 basis points YoY (year-over-year).
Last week, prilled urea prices rose 40 basis points to $249 per metric ton in the Yuzhny area of Ukraine. Prices at Yuzhny have risen 17% YoY. Next, let’s take a look at natural gas prices.