By: Josh Linville, Vice President- Fertilizer
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.
GLOBAL
Things have been bad for the global UAN market for a while.
It could get worse...
The spotlight is currently on Russia. President Trump is tiring of Russia's invasion of Ukraine and if they are unwilling to stop their fighting, Trump is threatening heavy handed tariffs from the U.S. as well as threatening similar tariffs on any country that does business with Russia. For some products like urea, potash, and phosphate, it feels like there are enough countries around the world willing to ignore U.S. threats to gain access to cheaper inputs. However, Russia is not going to be that lucky for UAN.
The EU has already moved to block Russian fertilizers.
Australia blocked Russia in the early days of the invasion
Canada blocked Russia in the early days of the invasion.
Now the U.S. is threatening to cut them economically.
For Russia, where else would you go? You have run out of friendly destinations and might be creating product for...no one. How do they react? Likely by significantly slowing their production rates of UAN. That will hurt the global S&D even further than it already is with Europe continuing to produce at 75% of normal and Trinadad having on again/off again issues.
UAN is high priced but unfortunately, if the U.S. proceeds with tariffing Russia, the world could lose a lot more supply which could boost global prices even more.
AUSTRALIA
What happens in the U.S. market happens in the Australian market.
Unfortunately for UAN, this statement remains in place.
After the Australian government shut off all shipments of fertilizer from Russia, Aussie farmers became almost solely dependent on U.S. produced UAN. Take a look at the pie chart below. That is a lot of blue/U.S.
For now, the U.S. outlook is firm as this new fertilizer year is starting in worse shape than last year. To make matters worse, exports are going to be under intense scrutiny. Their spring UAN season saw much of April/May void of any available tonnage. The worst case scenario finally played out and now the market will be watching those exports like a hawk. Doesn't mean they cannot happen. Just makes it harder.
There is hope. If we wake up one morning and see that peace has been found between Russia and Ukraine, we could see a quick return to normal relations which would mean possible allowance of Russian UAN flows to Australia again. Not only would that mean more tons available, it would mean more competition.
For now, UAN values are going to remain high priced vs the same time last year and once the U.S. sets their summer fill values, that is likely to set the low water mark for a while. Russia/Ukraine peace could throw a wrench into the mix, but that would be a VERY low probability situation...but not impossible.
Europe moves to block Russia fertilizer, further changes global supply patterns
The world is growing much more tired of Russia's ongoing invasion of Ukraine and is deciding to take further steps to punish Russia for its actions.
Europe has stepped up in the last month with escalations.
There is no need to go into the dirty details of all the numbers and tariffs that the EU has imposed on Russia. A quick google search can find articles that describe what has happened much better than I can do. The long story short is that Europe has now made it very difficult for Russian fertilizers to flow to EU countries.
This could mean big changes for not only European UAN markets but global UAN markets.
Over the last few years, European nitrogen production has suffered due to excessively high natural gas input costs that occurred due to cheap Russian flows stopping. Today, only 75% of Europe's nitrogen fertilzier production is online which leaves European countries looking around the world for another 2M tons to replace. Russia has been able to step in and supply at least a chunk of those tons...until now.
These economic blockades, which increase in severity over the coming years if the invasion continues, will make it very difficult to justify sending product. This could have an impact on Russian production rates. The global UAN is nowhere near as robust in terms of production or demand locations. Russia losing access to the European market could very well force manufacturers to lower their production rates further.
From the European perspective, this makes it VERY rough for their UAN markets. With production rates down due to hit gas costs, Europe has been more reliant on outside tons to meet demand. Losing Russia will now push demand to places like the U.A. and Trinidad. Well, Trinidad production rates have been suffering due to insufficient gas supplies to those nitrogen plants. Next and almost last in line are tons from the U.S. That could prove to be more difficult this year following what happened last spring. UAN supplies across wide swathes of territory struggled to find product. It was not a price conversation, it simply was not available. Following that situation that had been feared and theorized for years, exports are going to be under more scrutiny than ever. Doesn't mean exports cannot happen, but it is going to be much more of a struggle.
All to say that Europe taking this step against Russia will likely have big ramifications for its UAN marketplace.
What does this mean for farmers?
It is a chain reaction:
Europe blocks Russian UAN
Europe turns elsewhere for UAN
Trinidad production struggles and pushes demand to the U.S.
Australian buyers are now in direct competition with European buyers for U.S. UAN
Yeah, it is a lot of steps, but that is how I see it playing out. U.S. manufacturers are already riding high on near complete control of the UAN market given the new fertilizer year "setup". Adding more demand to an already tight S&D just makes it worse for Aussie buyers.
Trinidad production issues continue
Trinidad, one of the world's largest exporters of UAN, continues to see manufacturing struggles that originate from natural gas input supply issues.
As we have talked repeatedly over the last several months, Trindidad production has been up and down all year and the primary reason is still a lack of reliable gas supplies. Supplies simply struggle to keep up with demand on a regular basis.
Now, there is hope on the horizon. Trinidad has been pushing to increase gas production and has approved the research and development of previously untouched waters and has gone as far to partner with companies/nations to develop these new gas fields. Unfortunately, new production is not something that happens over the course of months. Research takes time. Permits and planning takes time. Building the facilities to mine the gas takes time. Everything takes time. This is not a situation where we believe it will be months but rather years.
For now, unreliable production rates continues to be a limiting factor for their UAN manufacturing. If their production/supplies are lower, then that starts to change global trade patterns. Our primary focus will continue to be Europe demand either pressing hard on available Trinidad product...or being forced to the U.S. as a secondary option.
What does this mean for farmers?
Again, as mentioned on the previous story, it means more direct competition between European farmers and Australian farmers.
If Europe cannot get UAN from Russia, their natural nest place is Trinidad. If Trinidad cannot produce enough, they have to turn to the U.S. and compete to get exports that are already going to be under intense scrutiny from N.A. farmers.
President Trump threatens Russia with tariffs, could block largest UAN supplier as result
President Trump is growing tired and impatient with Russia's continued invasion of Ukraine...and N.A./global UAN markets need to take notice.
Originally, Trump had threatened bold tariffs on Russia within 50 days if peace progress was not made. It appears whatever Russia's response to that statement was not positive because not too long after, that timeframe got shortened to 10 days. Not only would the tariffs impact Russia, but they would be placed onto any nation that did business with Russia.
It appears President Trump is not playing this time.
So what could that mean for UAN?
Well, for starters, it could be devastating for the N.A. market. The spring UAN situation was the nightmare scenario come true, with supplies near impossible to find during peak season. There were many factors that went into creating the scenario. However, one of the "help" factors were a decent chunk of imports. Almost half of the 2024 imports originated from Russia. Without that import lineup, the spring nightmare scenario could have been so much worse.
Which brings us to today...
It appears that Trump is going to follow through on his tariff threats against Russia. On the other side, Putin is not someone that likes being told what to do. He is resolute in his stance that Russia must take over Ukraine.
So if/when these tariffs get put into place, the U.S. / N.A. market can effectively write off Russian imports. Nearly half of the tons that flow into the U.S. will be gone. This will have a U.S. and Canadian impact. Yes, Canada has blocked Russia, but if the U.S. does the same, North America as a whole likely raises prices. Then, if Russia is forced to further lower or stop their UAN production, global markets likely see price support as global supplies drop.
This entire situation is still very fluid. For all we know, we may start next week with news that peace talks were successful and the war is coming to an end which could devastate global nitrogen values. Low likelihood, but not zero. Just know that if these U.S. tariffs on Russia get put into place, you need to watch your nitrogen/UAN values...
What does this mean for farmers?
Yet again, the U.S. S&D getting in worse shape makes it a more difficult position for Aussie farmers.
If the U.S. loses access to Russian tons, then it loses half of its import flow. That either makes the tons sold to Australia higher priced...or could have U.S. manufacturers backing away from exports which would leave Aussie farmers hanging.
N.A. UAN market outlook worse today than last year at this time
You might have read that headline and thought "oh, here we go again. One season on one product where product was tight and now Linville is going to lay that story over every product".
Trust me, I get it. You have had the market crying wolf for years and years on the tight supply story. "This is going to be the year that you cannot get product" has been told so many times that it was a joke between farmers. Even this last spring, it took so many factors coming together that it would be hard to repeat the situation.
I AM NOT saying that I guarantee that UAN will repeat the supply outage story in spring '26.
I AM saying that we are starting much closer to repeating that story than we ever have before.
Again, I am not guaranteeing a supply outage repeat and in no way and I trying to say "I told you so". However, many of the points above are points we discussed all winter and look where we ended. Each of these factors could be worse and could lead us to another story.
However, the opposite could be true. Maybe peace between Russia and Ukraine is possible. That would change things for the better. Maybe Trinidad production rates improve to normal. Maybe European production restarts. There is always a way for the market to go against our POV.
I just want to make sure I am doing my job and detailing how bad of shape UAN is in right now...
What does this mean for farmers?
I know. I just keep repeating myself.
If the U.S. situation is this poor this early on, it is going to make it more difficult and higher priced to get tons from there. What happens to the U.S. happens to Australia for UAN.
NOLA/New Orleans, Louisiana
Number 1 global importer in 2024
Number 2 global exporter in 2024
Price Comparisons
Vs 30 days ago - 0% or approximately $0
Vs 90 days ago - -3% or approximately $10 lower
Vs 6 months ago - 32% or approximately $85 higher
Vs 1 year ago - 71% or approximately $145 higher
Black Sea (Russia)
Number 1 global exporter in 2024
Price comparisons
Vs 30 days ago - -11% or approximately $32 lower
Vs 90 days ago - -11% or approximately $31 lower
Vs 6 months ago - 12% or approximately $28 higher
Vs 1 year ago - 47% or approximately $84 higher
Because no market is ever guaranteed to go higher/lower, we try to consider the factors that can sway values so that we are able to act when they occur rather than react.
We believe that only looking at the flat price of either grains or fertilizer can be misleading:
Only selling grain can hurt you if fertilizer prices rise substantially
Only buying fertilizer can hurt you if grain prices fall
We look at the ratio "value" to get a better indication of where we are or how many bushels of X does it take to pay for 1 ton of fertilizer.
Would you rather:
Spend 100 bushels to pay for 1 ton of UAN
Spend 60 bushels to pay for 1 ton of UAN
When we compare the current ratio value against recent years, we start to see if we are high or low.
YOUR VALUES MAY LOOK DIFFERENT
This graph looks at the NOLA UAN price vs the flat grain price. There are no logistics on either product. Your location will look different due to fertilizer logistical costs, grain basis, etc.
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.
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