February '26 Farmer Fertilizer Newsletter - UAN

February '26 UAN

Major global UAN Export Location Price Graph

The intention of the below graphs are not to use to say "my price should be X based on this graph".  These prices are derived from an FOB price point average.  The intent is to show major global price movement trends.  Your values will likely have significant basis difference (similar to your local grain price being different than the traded market price).

This graph is labeled as MT in USD currency.​

 

What everyone wants to know first, what do we think will happen going forward?

GLOBAL

UAN is interesting to me right now.

- Russian exports remain low due to lack of demand destinations

- European production remains around 75% of normal (and any hopes of restarts are basically gone)

- Trinidad production continues to suffer

- N.A. production suffered due to short cold snap

- Urea values continue to skyrocket

All of these issues in a relatively small global market...yet Russian values dropped and N.A. values have not done much.

I continue to look at the global UAN market and scratch my head on why values have been mostly flat.  However, that should start to rectify itself and see values higher as Northern Hemisphere spring nears.  I am still watching for bullishness in the space.

 

NORTH AMERICA

I am going to parrot the points above and add:

- N.A. starting UAN inventories were low

- Production shortfalls due to planned downtime repairs and cold temperatures

Fortunately, my import fears (losing Russian imports) and export fears (bigger exports to Europe than last year) have not played out.  However, that does not mean that I think UAN is going lower.  I still think the market S&D is incredibly tight and will show itself closer to spring.

In fact, in the days leading up to writing this, we are already seeing/hearing of manufacturers doing small price increases ($5 - $10/ton).  My guess is that rising urea values which have closed the NOLA price gap between urea/UAN to only 4-cents is giving them the confidence to make the push without a lot of demand.

As I keep watching the UAN market, I see a lot more roads to higher prices than I do lower...for preplant demand.  Sidedress, that is a coin flip.  I would be a lot more confident in saying I am expecting lower prices (due to poor farmer financials and an expectation that urea could fall by then) but after last spring supply debacle and a worse start to this year, I'm afraid we may not see relief as quick as we hope.

 

General global import/export UAN information

 

What has happened in the last 30 days

Small hopes of European nitrogen production restarts fade

If you guys wonder why I never let my hopes get up, Europe is a perfect example of why!

Last month, it looked like there was a growing, albeit still very small chance, that Europe's offline nitrogen production plants may consider restarts.  The CBAM (carbon border adjustment mechanism) was becoming reality and really looked like it was going to drive domestic European nitrogen values higher.  Dutch TTF values had fallen back to the upper $8/lower $9 MMbtu range.  Demand has never faltered, but with spring coming around the bend, the calendar was working in favor of restarts.

So much for all of that.

Gas values in Europe have once again rebounded into the $10 - $13MMbtu range.  There is still some uncertainty surrounding what the CBAM situation will do to domestic fertilizer values.

Unfortunately, that means one of the most supportive UAN global factors continues to remain in effect.  25% nitrogen production being offline means that those tons need to be sourced from elsewhere.  Russia is not a good option given political tensions and trade blockades being in place.  That then pushes demand to places like Trinidad...but they have been having their own gas supply/nitrogen production issues.  Ultimately, it pushes a solid chunk of demand to U.S. produced tons.  With a healthy export relief valve for times when demand is slow, it helps to hold/boost N.A. values.

Basically, the European story causes U.S. and Canadian farmers to fight European farmers for tons...the manufacturer is the only real winner there.

Source:  www.barchart.com

 

Firm urea markets help to boost UAN market price outlook

If you have read my stuff or listened to my presentations in the past, you know that I talk a lot about how different nitrogen products can move independently from each other but ultimately they tend to flow higher/lower together.  This is why we watch the NOLA urea and UAN nitrogen priced spread on a price per pound of N.  When one or the other becomes over/under valued vs the other, we start to watch for signs of demand switching.  A "blow out" to the high/low side can be seen as an indication of an unhealthy product.

That has been my POV on UAN.

When I look at the current UAN, there is a laundry list of problems.  Low starting inventories.  Big demand expected.  More N.A. exports expected than what is considered normal.  Several plants being offline for repairs and recent cold temps impacting production further.  Even with all of that, we still saw first half December value dip ever so slightly.  Why?  Because urea prices had continued to fall and a lack of demand likely made manufacturers nervous.

Well, that no longer appears to be the case.

Urea values have been on a climb recently.  Since the mid-December low's for NOLA urea ($350), values have climbed $90 (today trading $440).  That has been a massive (and for me, unexpected) rally.  UAN had been holding an 8 to 10-cent premium over urea.  Today, that premium has dropped to "only" 4-cents...

...and that is where I start to get more bullish on UAN.

My fear is that:

1. We are already seeing early signs of UAN prices climbing with $5 to $10 increases being seen/heard.

2. UAN price increases will go into overdrive once demand starts showing up.

Ultimately, I have continued to be bullish UAN...but firm urea markets may do more than I expected.

 

Global supplies remain tight

Broken record time.

Global UAN supplies continue to struggle with multiple production problems around the world that keep a decently solid price floor on values.

• Europe - production rates remain forecasted around 75% of normal as gas values remain too high and political push back keep offline plants from restarting.  That not only reduces supplies, but turns European farmers into unnatural buyers in the world market.
• Russia - exports have taken a hit.  Nothing to do with production capabilities.  It is all political.  When they invaded Ukraine, they lost access to most UAN demand around the world.  Canada shut their borders to Russian goods.  Australia shut their borders to Russian goods.  A big chunk of Europe did the same.  That means that the only major demand point left for Russian UAN exports is the U.S.  Production and exports have had to slow for lack of export options.
• Trinidad - production levels continue to suffer here for lack of reliable gas supplies.  While it appears that Trinidad is now willing to allow gas production expansions into previously untouched waters surrounding the nations, these waters are close to Venezuela and the western world has not been willing to back that partnership.
• North America - a big spring '25 meant very little supply left to start the new fertilizer year.  Several nitrogen production facilities had planned downtime due to repairs that were needed.  These two events meant that produced tonnages were smaller during a time when more was needed. 

Unfortunately, from my perspective, nothing has improved across all of these problem regions.  Worse, global UAN markets are nowhere near as large as some think.  It is a much smaller and condensed marketplace which means that this list is a much bigger problem than it might seem.

Ultimately, UAN still needs to trend higher and lower with other nitrogen products.  Most notably urea.  However, with global supplies still having this many problems, we continue to expect UAN to keep a high premium.

 

N.A. artic temperatures impacts nitrogen production...but doesn't seem as much as market thinks

Back in 2021 (I think that was the year), a huge artic blast swept across the U.S.  Freezing temps reached their way to the U.S./Mexico border and lasted several days.  The public struggled to heat their homes.  Water lines froze.  As expected, gas prices skyrocketed as the public demand spiked...and that caused an opportunity for nitrogen manufacturers.

If the manufacturing plant had hedged their coming gas needs and were sitting on cheap positions, the market provided them an opportunity to either reduce or stop production.  By taking that step, they were able to sell their cheap contracts at significantly higher profits than what would have been made by producing fertilizer.  Not only did they make bigger profits on the gas contracts, the reduced supplies helped to boost price ideas.  Win/win.

Since then, the market feels to be on edge every winter out of fear the same thing happens.

It was given a reason to get excited in later January.  Cold temperatures have once against plunged through the U.S. to the point that gas values jumped on the larger than normal demand.  There have been stories of some nitrogen plants reducing production lines and even one in Texas that reportedly stopped production.  However, it does not appear this even is anywhere near as large as the original.

The nitrogen markets have largely brushed off the event and kept values relatively stable with the only price movements being seen as a movement along with global prices.  However, it is still only early February meaning there is still time for winter to raise its ugly head!!!  Something to watch.

Source:  www.tradingeconomics.com

 

Where are current values in relation to the past

• Bullish Factors
• Russian/U.S. relations deteriorate – if relations between the U.S. and Russia deteriorated to the point that trade stopped, it would be bad for the global UAN market and worse for the N.A. UAN market.  If trade stops, the U.S. (and N.A. by proxy) will lose its largest supplier of tons.  If Russia loses access to the U.S., that means losing access to the last remaining large demand nation in the world.  They would likely need to reduce UAN production and export flows.  That would hurt global S&D.  Every farmer that uses UAN would feel this.
• Trinidad production issues continue – it seems like there are more questions than answers regarding Trinidad nitrogen production.  We are still not seeing reports of production returning to normal which hurts the UAN market the most.  The global complex is already dealing with enough production issues, it doesn't need help from Trinidad.  The longer they struggle, the more supply it removes and the more nervousness it brings to the market which typically pushes prices higher.
• Bullish urea markets continue supporting UAN prices – when urea values were falling first half December, we finally saw signs of UAN price weakness...that seems like so long ago.  Since then, NOLA urea values are up $80 and it no longer seems a question of "if" UAN goes higher but "when".  If urea continues to rally, UAN will see little reason not to do the same.

• Bearish Factors
• If EU CBAM story helps offline production restart – there are still a tremendous number of questions regarding the EU CBAM story.  Right now, it seems like there is question of if they will hit on fertilizers as were previously stated.  If going forward we find out that they are going into effect, that could have domestic EU nitrogen prices rallying higher.  Eventually, that could have prices and margins high enough for offline EU regional plants to consider restarts.  That would likely have a large bearish effect on global values as it boosts supplies and removes an "unnatural" buyer from the world.
• EU / U.S. relations continue to sour, turning off U.S. UAN exports to the region – I wish I were not sitting here writing about how EU / U.S. relations could sour, but in todays world anything is possible.  If President Trump and EU leaders get into another pissing match, we could see big tariffs be put in place from both sides.  Obviously, EU UAN buyers losing access to U.S. tons would be hurtful and would see domestic values rise.  However, on the other side, if EU buyers were forced away, more U.S. produced tons would stay home which would help its S&D and likely put some bearishness in the market.
• Wide open early spring cycle allows fantastic NH3 applications – this is a stretch because I couldn't come up with a 3rd bearish factor.  That is how bullish I am on the market.  However, if N.A. weather improves and gives a wide open February/March application cycle, we could see a lot more NH3 applied than we currently expect.  If enough is applied, it could start to chew into UAN demand which could weaken price resolve.

 

Where are the current UAN/grain ratio values today?

• Josh Linville’s Focal Points
• Russia/U.S. relations - in today's UAN world, the U.S./N.A. market is going to suffer dramatically if the U.S. were to cut off Russian goods.  Likewise, Russian UAN exports would suffer dramatically is the U.S. were to shut its border to their goods.  Neither nation has a secondary market that they can tap to replace the supply/demand.  That is the bad.  The worse if this trade flow was stopped is that the global S&D takes a hit as Russia is likely to drastically lower their exports while the U.S. scours the world for supply/stops any exports.  I truly hope this does not happen, but have it on your radar.
• The global tariff war - there are a lot of threats being thrown around the world.  Now it isn't even as simple as one country tariffing another.  Now we have threats where if a nation does business with another nation that yet another nation does not like, then that nation gets tariffs.  Lets make this very simple.  Tariffs do not work like politicians think.  If your country puts tariffs on another country that you get UAN from, it is extremely likely that your price is going to rally.  The supplier country will pay the tariff...using your money.
• EU CBAM story - another story that I do not know what to think.  At first, it looked like the EU was going to tariff every UAN supplier with hefty tariffs.  That was going to effectively stop most imports and drive EU UAN values higher which in turn could help return European nitrogen production to full strength.  While this would have been bad for Europe, it would have been good for the world.  However, as in all things politics, there is a lot of back and forth of what it will actually be.  Just know that if CBAM rates get put into effect, European farmers are going to hurt even worse than they already do.
• If urea continues to rally, how long before UAN pushes higher - in the first half of December, urea values were falling around the world to the point that UAN values were starting a surprise slide.  That is no longer the case.  Urea prices are up dramatically and as a result, UAN has gone from being very expensive to being in line with urea on a price per pound of actual N.  If urea continues higher, it is just a matter of time before UAN moves in kind.

StoneX Ratio Calculation

The ratio calculation is derived from Bloomberg historical grains values as well as fertilizer values from StoneX, NPKFAS, and Argus.

The calculation is simply dividing the fertilizer price by each grain price.

All data was sourced from StoneX unless otherwise noted.