The world has a problem that’s actually good for the fertilizer industry. This is the world’s population, which is ever-growing, as is food consumption.
Fertilizer affordability tracks how the prices of key NPK fertilizers moved in comparison with the key fertilizer-consuming crops such as corn, soybean, and wheat.
In the recent quarters, fertilizer companies (MOO) have rationalized their output and costs to sustain the downward momentum in fertilizer prices that seemed to keep going down.
After recent peaks, natural gas prices have fallen back to normal levels. Recently, natural gas prices have been high on the back of severe winter conditions in North America.
In the week ending January 19, natural gas prices at Henry Hub remained elevated with the prices peaking at $5.46 per MMBtu (million British thermal units) on January 16, 2018.
In the week ending January 19, the VanEck Vectors Agribusiness ETF (MOO) rose 1%, and the broader market S&P 500 (SPY) also ended in positive territory with a gain of 1.2%.
For the week ending January 5, 2018, DAP (diammonium phosphate) global prices at most locations were flat to positive with the exception of Saudi Arabia.
Natural gas is one of the key input components for gas-based nitrogen fertilizer producers (MOO)(MXI) such as CF Industries (CF), Terra Nitrogen (TNH), CVR Partners (UAN), and Nutrien (NTR).
In the earlier part of this series, we discussed how shipments impacted CF Industries’ (CF) sales. From our analysis, it’s clear that a rise in selling prices remains the most important growth catalyst for the company.
Nitrogen in 2018 Nitrogen prices remained weak for most of 2017, falling as much as 27% YoY (year-over-year). Ammonia, a fundamental nitrogen input, is further upgraded to nitrogen fertilizers such as urea and urea ammonium nitrate. Ammonia supply As shown in the above chart, ammonia capacity saw a net addition of five million metric tons, or […]
CVR Partners (UAN) emerged as the top gainer last week, rising 17.4% week-over-week to close at $3.70. CF Industries (CF) followed, rising 4.4% to close at $39.30.
Since the Senate approval of the tax bill, the S&P 500 Index (SPY) is up by 48 basis points, and the VanEck Vectors Agribusiness ETF (MOO) is up by 74 basis points.
In 3Q17, CF Industries (CF) sales saw growth across each of its five segments year-over-year. Overall, the company’s sales grew 28% year-over-year to $870 million from $680 million in 3Q16.
The natural gas prices at Henry Hub in the US fell 4.1% week-over-week from a weekly average of $2.96 per MMBtu to a weekly average of $2.84 per MMBtu.
On average, granular urea prices were flat to positive week-over-week. In NOLA (New Orleans), granular urea prices rose as much as 3.5% week-over-week.
Calendar 2Q17 remained subdued for the nitrogen fertilizer pricing environment. Cheap energy costs have driven capacity buildups and flattened the cost curve.
CF Industries (CF) is expected to see a significant reduction in its capital expenditure (or capex) year-over-year (or YoY) in 2Q17 and for the next four quarters.
Last week, granular urea prices moved higher, which helped bring some relief to urea producers. But the falling global ammonia prices remained a challenge.
For each of the past two years, there have been net urea capacity additions of ~22 million metric tons. During the same period, ~14 million metric tons of capacity were shut down.
Urea prices have fallen YTD (year-to-date) as of June 23, 2017. They’re now trading even lower than the levels they saw in the corresponding week in 2016.
Fertilizer prices are one of the key determinants of the survival of fertilizer companies such as CF Industries (CF), PotashCorp (POT), Intrepid Potash (IPI), and Terra Nitrogen (TNH).
Not only did CF Industries’ earnings fall year-over-year (or YoY) in 1Q17, its margins were also significantly lower YoY. To understand why, let’s dig deeper into the cost curve.
The demand for nitrogen fertilizers (XLB) remains robust, as we can see in the latest earnings releases of CF Industries, PotashCorp (POT), Agrium (AGU), and Terra Nitrogen (TNH).
CF Industries (CF) reports its sales in five segments: UAN (urea ammonium nitrate), Granular Urea, Ammonia, AN (ammonium nitrate), and Other Nitrogen Products.
In recent quarters, nitrogen fertilizer prices have been lower YoY including in 1Q17. Overall nitrogen prices continue to impact producers’ profitabilities.
Last week was broadly negative for agricultural fertilizer stocks. The VanEck Vectors Agribusiness ETF (MOO) fell 53 basis points, and SPY rose 42 basis points.
The week ending April 28, 2017, was broadly positive for agricultural fertilizer stocks. The VanEck Vectors Agribusiness ETF (MOO) rose by 126 basis points.
Urea prices in the US Gulf NOLA rose 4.8% week-over-week to $197 per short ton. Prices in the Middle East rose 3.1% week-over-week to $200 per metric ton.
Urea prices have fallen by an average of 14% annually over the past five years. The consistent fall has been due to falling energy costs, leading to lower production costs across the board.
The week ended March 10, 2017, was broadly negative for agricultural fertilizer stocks. Israel Chemicals (ICL) emerged as the top performer, falling ~3.7% to $4.43 per share.
