CVR Partners LP

Natural gas prices are critical for nitrogen and ammonia-based phosphate fertilizer producers.

In 2013, about 54% of global ammonia was upgraded to urea, according to FERTECON. But urea prices have rebounded from their lows at the beginning of 2016.

Granular urea prices in the Middle East declined 5% to $200 per metric ton in the week ended July 1. It was $210 per metric ton in the previous week.

For the week ending October 28, the overall movement in urea prices was flat to positive. Granular urea prices rose 6.6% to $211 per metric ton in China.

March soybean futures contracts were trading near the support level of $8.70 per bushel on February 23. Prices fell for the second consecutive trading day.

For each of the next four quarters, Intrepid Potash’s EBITDA is estimated to grow YoY. For 1Q17, analysts estimate EBITDA of $2.6 million.

Agrium’s Wholesale segment’s gross margins declined from 27% in 1Q15 to 24% in 1Q16. This was primarily driven by a decline in gross margins in the Nitrogen and Phosphates segments.

PotashCorp’s 3Q16 sales PotashCorp’s (POT) business comprises the three major fertilizers—nitrogen, phosphate, and potassium (XLB). In 3Q16, the company earned about 38% [1. calculated as segment sales excluding freight, transportation and distribution costs divided by total sales excluding freight, transportation, and distribution costs] of its total sales from its Potash segment, 32% from its Nitrogen segment, and 30% from […]

According to CF Industries, nitrogen prices could remain under pressure as new capacities come online in 2017. However, the company believes that things should improve in 2018.

CF Industries reported second-quarter sales of $1.3 billion, which beat analysts’ estimate of $1.2 billion.

In September, the global wheat inventory declined 1.5% to 249 million metric tons compared with 252 million metric tons in August 2016.

CF Industries Holdings’ (CF) stock rose by almost 8.4% on February 18, 2016, the day after the company’s 4Q15 earnings release.

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.

Realized prices for fertilizer companies are the main culprit for the dismal performances among companies in the agricultural fertilizer sector.

According to the U.S. EIA, for the first time natural gas will be the largest fuel source for energy. Natural gas should pass coal in 2016, which may explain why coal prices are low.

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.

In 4Q17, the overall nitrogen shipments of the five companies discussed below moved lower year-over-year.

According to the Fertilizer Affordability Index, 2017 has been one of the most affordable years for fertilizers. Mosaic issues the index.

So far this year, some major agribusiness stocks, particularly in the fertilizer sector, have performed poorly.

In the week ending November 3, agricultural fertilizer stocks were broadly positive.

The Fertilizer Affordability Index has shown a downward trend since the beginning of the year. Fertilizers have become more affordable in 2017.

CVR Partners (UAN) was the top MLP gainer last week, which ended on January 5, 2018. It rose 23.2%.

China is one of the largest fertilizer consumers in the world. Investors are concerned that retaliatory measures might hurt fertilizer companies.

For the week ending April 28, the Fertilizer Affordability Index fell slightly to 0.58x—compared to 0.59x the previous week.

Today, RBC upgraded CF Industries (CF) from its “underperform” rating to “sector perform.”

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.

After CVR Partners’ 4Q15 earnings release, its valuation fell to 7.5x from 8.8x. As of February 21, it was trading close to the peer median of 7.3x.

CVR Partners missed both top-line and bottom-line estimates for the second quarter, and the stock fell 4.5% after the earnings release.

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.

Last week, which ended July 13, was broadly negative for the agribusiness sector. The broader market index was positive.

In its January report, the USDA (United States Department of Agriculture) reported that the world’s ending stock for wheat rose to 253 million metric tons from 252 million metric tons in December.

Agrium’s (AGU) gross margins in 2016 stood at 24.8%, a 26.3% fall from 2015.

Overall, CF Industries’ shipments for its combined segments grew 14% during the quarter to 3.6 million tons from 3.2 million tons in 3Q15.

There’s a handful of big players in the agricultural fertilizer industry. Setting up business requires huge capital, which makes for a high barrier to entry.

Wheat prices traded at an average of $4.4 per bushel in 2016, lower than their average of $5.1 per bushel in 2015.

Plains All American Pipeline (PAA) was the biggest MLP loser last week, which ended on January 19, 2018. The partnership ended the week 6.1% lower.

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.

On February 10, 2017, six analysts recommended either a “strong buy” or a “buy” for CF Industries (CF) stock.

CVR Partners (UAN) rallied 9.7% in the week ended July 13, making it the top MLP gainer for the week.

As of January 18, 2017, six analysts have recommended either a “strong buy” or a “buy” for PotashCorp (POT) stock, although the majority still recommend a “hold.”

Industry experts often show ex-China global urea capacity utilization because China’s export tax makes domestic producers’ urea more expensive for international buyers.

For the week ending March 18, the pet coke index remained unchanged compared to a week ago.

CVR Partners is expected to report a loss per share of $0.06 in the second quarter compared to a loss per share of $0.03 in the corresponding quarter a year ago.

The average UAN price for CVR Partners at gate, which excludes transportation costs, was $227 in 3Q15, compared with $254 per ton in 3Q14.

In the week ending April 22, 2016, ammonia prices in Tampa CFR (Cost and Freight) continued to move sideways for the 13th straight week.

In recent quarters, fertilizer companies have experienced earnings growth deceleration due to unsupportive prices pressured by excess production capacity.

The week ending January 27 was broadly positive for agricultural fertilizer stocks. The VanEck Vectors Agribusiness ETF (MOO) rose by 64 basis points.

In recent weeks, US natural gas prices have started trending higher, and they continued to do so last week. Prices significantly impact nitrogen fertilizer producers.

In this series, we’ll look at key NPK (nitrogen, phosphorous, and potassium) fertilizer prices last week.

China is the largest exporter of urea, which saw an increase in prices in the previous week ended March 18.

CF Industries (CF) is expected to announce its 1Q16 earnings on May 4, 2016. CF Industries has lost 17% of its value since January 2016, with the stock trading at $33.70 as of April 27, 2016.

Coal prices, like natural gas prices, have hit a low point due to a low demand and excess supply imbalance. Recently, natural gas prices have ticked up while coal prices are mostly unchanged.

Several midstream stocks hit their respective 52-week lows in the last five days. Crude oil prices took a hit yesterday amid concerns over trade talks.

This series covers key trends that are currently affecting coal and natural gas prices and, consequently, nitrogen fertilizer producers as well.

Nitrogen is an important nutrient for crop development and growth. It’s also the most important input that allows farmers to feed billions of people in the world.

For the week ending November 2, the natural gas prices at Henry Hub declined to $3.29 per MMBtu from $3.36 per MMBtu.

In the week ending November 2, urea prices continued to drop—a continuation of the trend we observed in the past few weeks.

Natural gas prices for the week ending October 26 increased week-over-week at most locations in the US.

CVR Refining (CVRR) reported its third-quarter results on October 24 after the markets closed. The stock rose 7.2% in after-hours trading yesterday.

In the week ending October 19, natural gas prices trended lower after experiencing a spike in the week ending October 12 at Henry Hub.

On October 2, CF Industries (CF) received a target price upgrade from UBS. The stock gained ~1.8% and rose to $55.8 during the day.

The week ending September 21 was broadly positive for the fertilizer sector. MOO rose 2.3% from the week ending September 14.

Low natural gas prices in the US have been highly beneficial for North American fertilizer companies (XLB) including CF Industries (CF), CVR Partners (UAN), Nutrien (NTR), and Mosaic (MOS).

We track natural gas prices since they can have a significant impact on the prices of nitrogen fertilizers companies.

We’re looking at natural gas prices in this series, primarily because they make up two-thirds of the input costs for nitrogen-based fertilizers.

American Midstream Partners (AMID) was the lowest-performing MLP in the week ended July 27.

Between July 11 and July 18, natural gas spot prices at Henry Hub fell about 4.2% to $2.72 per MMBtu (million British thermal units).

Wall Street analysts estimate sales growth of $102 million in the second quarter, which would be a 4% year-over-year increase from $98 million in the second quarter of 2017.

Last week, urea prices continued to be positive for companies (XLB) such as CF Industries (CF), Nutrien (NTR) (POT), and CVR Partners (UAN).

The upward trend for fertilizer continued last week, with CVR Partners (UAN) rising 9.6% week-over-week to $3.30.

Last week, the major NPK (nitrogen, phosphorous, and potassium) fertilizer prices rose broadly week-over-week.

CF Industries (CF), one of the major nitrogen producers in North America, has had a bumpy ride since 2015.

After a brief pause in the direction two weeks ago, urea prices found positive momentum last week.

Mosaic is expected to report EPS of $0.28 in 1Q18, which would be a significant rise from its EPS of $0.04 in 1Q17.

Last week, most fertilizer stocks ended in positive territory. Intrepid Potash (IPI) was the biggest gainer, rising 4.3% to $4.20.

Calumet Specialty Products Partners (CLMT), a downstream MLP involved in the production of specialty fuels, was the top MLP gainer last week.

Urea prices for the standard grade in the NOLA (New Orleans) region of the US and in Egypt saw the steepest weekly change last week.

Last week, urea price movements were broadly positive with prices in the Middle East experiencing strong gains week-over-week.

CVR Partners, the MLP involved in nitrogen fertilizer production, was the top MLP loser in the week ending January 26. The partnership fell 7.1% last week.

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.

Nitrogen fertilizer prices remained volatile on the back of the volatility in the input prices of natural gas.

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%.

Natural gas is one of the critical input materials needed for nitrogen and some phosphate-based fertilizers.

Urea is sold in the granular and prilled variety. In the week ending January 12, granular urea prices were broadly flat to positive week-over-week.

Ferrellgas Partners (FGP) was the top MLP loser in the week ending January 12, 2017. The partnership ended the week 11.5% lower.

Nineteen Wall Street analysts are covering CF Industries. They have a consensus mean rating of 2.7 on the stock with an overall “hold” recommendation as of January 10, 2018.

Foresight Energy (FELP) was the top MLP loser last week. It fell 3.8% in a single trading session on Friday, January 5, 2018.

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 week ending January 5, the prices for granular as well as prilled urea were broadly higher week-over-week.

Intrepid Potash (IPI) shifted its focus to produce trio. Besides trio, the company continues to diversify its income sources.

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.

The remaining companies In this part, we’ll compare the five remaining agribusiness companies’ valuation, again using forward EV-to-EBITDA (enterprise value-to-earnings before interest, tax, depreciation, and amortization) multiples. Valuation multiples As shown in the above chart, the remaining companies’ valuation multiples have risen in the last two years. At 18.3x, FMC (FMC) was trading at a premium to the peer […]

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 […]

Blueknight Energy Partners (BKEP) was the top MLP loser last week—it fell 6.8%. The partnership has lost 30.7% since the beginning of the year.

CVR Partners, an MLP involved in nitrogen fertilizer production, was the biggest MLP gainer last week (ended December 8), rising 17.4% during the week.

The average weekly natural gas prices at Henry Hub for the week ending November 17 moved higher week-over-week.

On average, nitrogen fertilizer prices failed to show a meaningful growth YoY (year-over-year) in 3Q17.

EV Energy Partners (EVEP), an upstream MLP, was the biggest MLP loser last week, which ended on November 10, 2017. EVEP fell 25.5%.

In the week ending November 3, the overall weekly urea prices were broadly flat to negative week-over-week.

In the previous part of this series, we saw how CF Industries’ (CF) overall and segment sales performed in 3Q17. The company’s growth was mainly driven by shipments growth.