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.
- If Russia refuses to leave Ukraine and Trump attacks with tariffs which blocks UAN shipments, likely we will see Black Sea UAN values drop further due to lack of options. I do not think it will signal an actual drop in global prices, more that it will mean Russian exporters must get more aggressive in the few destinations remaining to them.
- On the flip side, negotiation success could mean normalizing global relationships which could actually INCREASE Black Sea price ideas. If Russia agrees to remove forces and that is met with cordial relationships with Russia, their exporters would once again have the world available to them. That means they no longer have to desperately insert themselves into select markets. More options for sellers typically means higher prices.
2025 UAN market outlook
With each fertilizer, I decided I wanted to do a general market outlook for the coming year. This is not going to capture every single thing that will impact supplies/pricing. If I knew all of that, I would be writing this on a beach somewhere. However, this is meant to give insight into what we are watching the most.
- Russian destinations - when it comes to urea/phosphate/potash, Russia has plenty of friendly countries to ship to. They can handle western countries pushing them out. All they have to do is shift their ships to countries like China/Brazil/India. These are countries that have been willing to ignore western calls to slow/stop shipments from Russia in favor of cheaper prices and guaranteed supplies. However, UAN is different. The world of UAN is much smaller than other major fertilizers...and many major destinations are western countries. UAN is simply a harder product. It is harder to use as you need more specialized equipment. It is harder to ship as you need leakproof containers. It is harder to transport from ports to farmers. We have already seen Australia and Canada block Russian fertilizer products. We have seen Europe be unwilling to take their product, and there is a chance that larger tariffs be implemented. Now, with Trump taking office, there is a chance that the U.S. may start blocking product as well (more details below). In the end, this could leave Russia with very few destinations available to them...which might mean their having to abandon production of UAN which would further tighten the global S&D.
- European production - Europe has continued to struggle with high natural gas values which started with the stoppage of shipments thru the Nordstream pipelines and was ensure to continued when someone attacked the underwater lines. As a result, European UAN production continues to be estimated at 75% of normal. To put that into perspective, that 25% that is offline represents approximately 2M tons of UAN production per year. Unfortunately, we do not see this improving near term. Even if peace could be found between Russia/Ukraine and as a result a normalization in relationships between the Europe/Russia, only then would they start repairs to the pipeline. A pipeline that was damaged as it was would take time to repair if it were on land. This wasn't. This pipe lies under the water where repairs take longer and are much more complicated. Unfortunately, it looks like European production is going to remain low for the time being.
- Tight N.A. supply outlook / timing - we are currently in the middle of rerunning our demand models as we start 2025...and it doesn't look good for UAN. First, imports have been slower than normal while exports have picked up the pace. That hurts. Second, there have been several production hiccups across North America. On their own, they do not make much of an impact to supplies, but combined they represent a few hundred thousand tons of expected production to vanish. Third, nitrogen demand for the spring is growing. Not only did fall NH3 fall slightly below normal, but we are also seeing 2025 corn acres growing. We just moved our acreage up to 92.5M. Last, winter production can be tough. We are currently staring down a very cold event moving across North America. You can read more about it below, but if this cold dips far enough south and lasts long enough, we could see UAN production slow/stop to all gas to flow to residential demand. As tight as the S&D already is, that would hurt...and hurt bad.
Fortunately, we have not seen UAN values rise recently as we had expected...but these points continue to drive our POV that bullish markets lie ahead. No doubt other things will happen that are not expected. They always do but for what we know today, these are the things that are keeping us up at night.
How will Trump administration change global UAN trade flows?
Let me clarify. What I actually mean by that title is "how will North American UAN markets change if Trump comes in and blocks Russian imports".
Canadian readers may be seeing this piece and wondering "why does this matter to me? Canada blocked Russia already." You would be right. Canada, along with Australia, fully blocked imports from Russia and have maintained that status. However, I always see Canada/U.S. as a single entity and the U.S. has continued to receive Russian product. In fact, over the last few years, Russian imports have accounted for the majority of tons received. For Canadian farmers, as long as the U.S. receives tons, that allows more U.S. tons to flow to Canada. The N.A. S&D remain in better shape than it could be...if those imports stopped.
Which is exactly what I am starting to fear.
In the next month, President Trump will start his 2nd term. To me, it seemed like he came into his 1st term a bit surprised by the fact he won. It took a while for him to figure out the system, his team, etc. This time that isn't a problem. He is coming into this 2nd term at a dead sprint, and he intends to make waves.
We know that Trump is a firm believer in tariffs as a tool/weapon. We also know that Presidents Trump and Putin seem to have a cordial relationship. Our hope is that this relationship can mean a swift end to the Russian invasion of Ukraine...but what if it doesn't? If Trump takes office, reaches out to Putin to put an end to the invasion, and is told to...well, let's say mind his own business! In that scenario, I could see Trump swiftly taking action and starting to put blockades on all things from Russia.
This would not help buyers of UAN.
In that scenario, the U.S. / N.A. markets suddenly loses its largest external supplier. That leads to a loss of competition. To make matters worse, where else will those tons come from? The global UAN market is nowhere near as robust as urea and NH3. There are not many major manufacturers out there so options are limited. To add fuel to the fire, Russia losing the U.S. market would mean they are running out of destination options. Rather than trying to find a home for UAN, they may just slow down UAN production which would hurt the global S&D even more than it already is.
Now, this is all predicated on "if". We do not know what will happen when the changing of the guard happens. This is all speculation. However, it is important to know what it "could" mean if it happens. Better to be prepared and ready to act rather than not prepared and having to react...
What does this mean for farmers?
For U.S./N.A. farmers, a wide spread tariff against Russian goods that include UAN would mean higher prices due to less competition.
Russia has been one of the main competitors against domestic production, helping keep prices in check. If those imports were suddenly lost, while it wouldn't guarantee higher prices, it would certainly make it easier to justify due to unchanged demand and lower supplies.
For the world, if you are in one of the few nations around the world still willing to take Russian product, it should be a blessing in the form of lower prices With Russia losing one of its last major destinations, it would have to get even more aggressive in the last few homes they can target.
Now, if the U.S. shuts Russia down, we could see Russian UAN production start dropping substantially which would lead to lower global supplies/higher global prices. Russia cannot produce at a lose. Eventually they will say enough is enough.
Time before spring running out, can ill afford production hiccups
As I write this, a large portion of North America is staring down the barrel of an extremely cold pattern setting in. If this thing plays out as they expect, Northern Plains/Canadian farmers might actually put on a pair of gloves to stay warm!!!
I typically do not spend a lot of time worrying about northern temps in the winter. It gets cold...and you guys and gals are used to it. Just a part of life. That said, I spend a lot more time watching territory south of Kansas City. Once you get south of where I am, the cold is a bigger deal...and it looks like it is going to get cold.
So what happens in those scenarios? A massive cold bubble extends to the southern states who are ill equipped for it. This causes natural gas demand to surge so people can stay warm. That surge in demand causes spot gas prices to skyrocket...and present nitrogen manufacturers an opportunity.
Most nitrogen manufacturers "should" be locking up gas futures when they dip and head into the winter with a lot of inputs already secured. Well, as much as we may not like it, they may have an opportunity to shut down nitrogen production and sell those gas futures back to the spot market at a higher profit than if they made fertilizer. We have seen this the last couple winters when artic blasts made their way thru. The longer the cold lasts, the bigger the opportunity...but unfortunately the longer the production downtime.
This feels an even more important watch point this year for UAN. Our demand models are continuing to reflect a UAN market that is extremely tightly supplied. There has already been several production outages. Any single one by itself is no big deal but combined, they account for a few hundred thousand tons of production as "missing". We are also continuing to watch exports exceed average tonnages due to Europe's ongoing production issues due to their own high natural gas costs. Lastly, as detailed above, we need to be wary of what the Trump administration will do to Russian imports. Russian product has remained one of the few competitive imports for domestic production. If those tons get blocked, it could be painful.
All in all, our S&D is tight...and it isn't getting better. If we have any sort of further production hiccups, whether that be weather or plant related, it is only going to make a bad situation worse.
What does this mean for farmers?
Right now, we are staring down the barrel of a major cold front that looks to bring freezing temperatures to southern states. We all know they struggle with these conditions.
The last few winters have seen similar situations. Southern states freeze, natural gas demand skyrockets, natural gas prices shoot higher, and then nitrogen production slows or stops. This is due to manufactures having already lower priced natural gas contracts in place. When the gas market shoots up, it presents an opportunity to slow/stop production and sell the contracts back at a higher premium. With this situation happening so close to spring, it is hard to make up the difference and values are typically higher as a result.
No guarantees this will happen, but it is a major short term watch point.
NOLA/New Orleans, Louisiana
Number 2 global importer in 2022
Number 1 global exporter in 2022
Price Comparisons
Vs 30 days ago - 9% or approximately $20 higher
Vs 90 days ago - 20% or approximately $40 higher
Vs 6 months ago - 11% or approximately $25 higher
Vs 1 year ago - 2% or approximately $5 higher
U.S. Midwest Average
Vs 30 days ago - 4% or approximately $10 higher
Vs 90 days ago - 8% or approximately $21 higher
Vs 6 months ago - 3% or approximately $7 higher
Vs 1 year ago - -7% or approximately $19 lower
Black Sea (Russia)
Number 2 global exporter in 2022
Price comparisons
Vs 30 days ago - 3% or approximately $5 higher
Vs 90 days ago - 13% or approximately $24 higher
Vs 6 months ago - 5% or approximately $10 higher
Vs 1 year ago - 14% or approximately $25 higher
- Time is getting tight for Northern Hemisphere spring season – while it may not seem like it today, logistically speaking spring season is just around the corner. There is typically a bit of a downtime in late January/February that can cause prices to dip, but given how tight the global UAN market is today, that should not have a large effect. Global shipments need to be picking up the pace or run the risk of missing spring. Buyers getting backed into that corner is rarely a bearish situation.
- U.S. / Canada tariff threats could hurt pricing – while it remains to be seen how it will play out, President Trump has made it very well known that he plans to place tariff's on Canadian goods if his demands are not met. We are also seeing some Canadian politicians wanting to fight fire with fire. If we see tariff's imposed on both sides that include UAN, it is much more likely that both sides farmers will pay the price...
- Incoming Trump admin could block Russian imports – speaking of President Trump, how he proceeds with Russia/Putin could be hugely detrimental to the N.A. UAN marketplace. Canada currently has blocked any shipments from Russia so one might think it will have little impact. That could not be further from the truth. U.S. tons continue to flow north so if the U.S. S&D gets impacted and pushes prices higher, Canadian tons will follow. If we see tariff's put in place, it should mean imports slow significantly and U.S. manufacturers no longer need to worry about one of their largest competitors. That should be a green light to rally price ideas.
- Trump admin brings peace and with it, stability – the world has been dealing with a lot of fighting the last few years. Either consciously or subconsciously, that helps to place war premiums in the market. Some have pointed to President Trump's 1st term as a period of relative peace. If he and his administration can replicate that during his 2nd term, the fear of fighting goes away and hopefully the new stability could usher in lower price ideas for nitrogen in general.
- U.S. blocks Russian imports of UAN – so this is a bit of a double edged sword. If you are a U.S. or N.A. farmer, this would be a bad thing. Losing Russia would mean N.A. manufacturers of UAN no longer need to compete against Russian imports. That would likely mean higher prices. However, global buyers would benefit. Russia losing the U.S. as a destination would mean they get more desperate to force their way into the few remaining demand points around the world. Forcing their way in typically means lowering their price ideas. What hurts one group benefits another...
- Sizeable shift away from nitrogen needing acres – this is pretty far down the list of probable events, but it is worth watching. For the U.S., we have actually increased our corn acreage expectation for 2025 from 92 to 92.5M acres. However, there is still time before spring. Farmers can still make changes and if those changes involve switching away from nitrogen intensive crops, we could see demand fall enough to lean on price ideas. Not likely, but worth keeping in mind.
We believe that only looking at the flat price of either grains or fertilizer can be misleading:
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Only selling grain can hurt you if fertilizer prices rise substantially
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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:
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Spend 100 bushels to pay for 1 ton of UAN
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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.
- Russian tonnage destinations - while it may not seem like it to some parts of the world, the UAN global market is very small with few major production origins...and few major demand destinations. That is why it is so important to focus on where tons are allowed to go and why I am so focused on Russian tonnage. Today, Russia is blocked from sending product to Australia and Canada. Large parts of Europe push back against their tons with threats of raising tariffs further. The U.S. has become one of the few major destinations still wide open to their tons...but there is doubt about that future with Trump coming into office. He may convince Putin to find peace in Ukraine and world supply routes return to normal...or they may clash and we see major U.S. tariffs put into place, essentially blocking shipments which would leave domestic manufacturers to their own devices. Global politics play can play large roles in how products are shipped...or not shipped. In the end, we know who pays the price.
- Urea price movement in coming months - UAN values have done a very good job of staying relatively connected to urea price movements. N.A. manufacturers appear to have learned their lesson from a couple winters ago when they kept UAN values insanely high as urea values fell hard. The result was massive farmer switching that ended up costing UAN manufacturers in the end. It was heard from multiple places that they vowed to never allow that to happen again. So if we take them at their word, then a lot of UAN price movement will be dictated by the urea markets. Unfortunately, my current POV is that the urea market is going to be bullish thru much of Q1.
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.
