The fertilizer industry is cyclical, and earnings are sensitive to and positively correlated with fertilizer price movements. Lately, fertilizer prices have been moving higher, and urea prices saw a similar move last week.
Last week, urea prices continued their positive momentum from a week ago in the NOLA (New Orleans) region of the United States as well as in the Brazil region. Granular urea prices in NOLA rose ~4.5% week-over-week to $212 per metric ton (or $234 per short ton) from $203 per metric ton a week ago. Similarly, granular prices in the Brazil region rose ~5.2% week-over-week to $262 per metric ton from $249 per metric ton a week ago.
Urea prices remain strong compared to a year ago and have continued to rise this year. In NOLA, urea prices are now 44% higher from $148 per metric ton a year ago. In Brazil, urea prices were almost 24% higher from $211 per metric ton a year ago.
Next, we’ll look at natural gas prices, which are a key input for nitrogen fertilizers and add to the volatility in cost structure for producers.