|Bid||0.00 x 2200|
|Ask||0.00 x 800|
|Day's Range||3.5100 - 3.7600|
|52 Week Range||2.7100 - 4.3500|
|Beta (3Y Monthly)||1.22|
|PE Ratio (TTM)||N/A|
|Forward Dividend & Yield||N/A (N/A)|
|1y Target Est||N/A|
In the week ending November 2, the natural gas prices in most of the locations in the United States declined week-over-week due to warmer weather. Warmer weather reduced the need for heating, which is supplied by natural gas. Let’s look at how natural gas prices performed at the key Henry Hub location in the United States.
In the week ending November 2, urea prices continued to fall—a continuation of the trend we observed in the past few weeks. CF Industries (CF), which reported its third-quarter earnings last week, provided an update on nitrogen prices in its earnings update. Before we discuss that, let’s look at how nitrogen prices performed last week.
Natural gas prices for the week ending October 26 increased week-over-week at most of the locations in the US, according to the EIA (Energy Information Administration).
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. CVR Refining’s adjusted EBITDA (earnings before interest, tax, depreciation, and amortization) rose to $221 million compared to $139 million in Q3 2017. The refiner’s performance was driven by strong crack spreads, wider crude oil differentials, and lower RIN (renewable identification number) costs during the quarter.
In the week ending October 19, natural gas prices trended lower after experiencing a spike in the week ending October 12 at Henry Hub in the United States (MXI). According to the EIA (U.S. Energy Information Administration), most natural gas prices in locations other than Henry Hub rose.
In the week ending October 19, urea prices in the NOLA (New Orleans) region of the US and in Brazil paused after a meteoric rise since the beginning of April. The pause impacts nitrogen players (MOO) including CF Industries (CF), CVR Partners (UAN), and Nutrien (NTR).
Last week, which ended October 12, global tensions remained high, and natural gas prices spiked as the overall stock market traded in the deep red. An increase in natural gas prices raised the costs for companies (MOO) such as CF Industries (CF), Nutrien (NTR), and CVR Partners (UAN). Let’s look at the movements in natural gas prices and the short-term outlook.
Nitrogen fertilizer companies (XLB) CF Industries (CF), Nutrien (NTR), and CVR Partners (UAN) fell last week due to the broader market sell-off. But their fundamentals remained strong. Urea prices, for example, continued to make new highs last week, which is a continuation of the ascending trend we’ve seen since April.
Natural gas prices are a key price driver for urea and other nitrogen fertilizers. An increase in natural gas prices can negatively impact margins for nitrogen fertilizer producers (MOO) such as CF Industries (CF), CVR Partners (UAN), and Nutrien (NTR). Natural gas prices are also critical for ammonium-based phosphate fertilizers.
Urea prices continued to strengthen last week, which added to the optimism surrounding nitrogen companies (XLB) such as CF Industries (CF), CVR Partners (UAN), and Nutrien (NTR). Let’s look at the weekly gains in urea prices for the two locations discussed below.
Sugar Land-based CVR Energy Inc. (NYSE: CVI) has expanded its board by one seat after one of its directors resigned. The outgoing CVR director, Louis Pastor, told the board Sept. 26 he would be leaving for personal reasons and two days later the board named two new appointees, according to a Sept. 28 filing with the U.S. Securities and Exchange Commission. CVR is the holding company of its refining subsidiary CVR Refining LP (NYSE: CVRR) and its nitrogen fertilizer subsidiary CVR Partners LP (NYSE: UAN).
Last week, the week ending September 28, the EIA (U.S. Energy Information Administration) reported that the natural gas prices in the United States were mixed. We have been tracking natural gas for nitrogen players (MOO) like CF Industries (CF), Nutrien (NTR), and CVR Partners (UAN). They have been fairly stable in 2018. Last week, natural gas prices remained higher than $3 per MMBtu (million British thermal units).
In the week ending September 28, the urea prices in NOLA (New Orleans) and Brazil made new highs again. The rising trend started in May. Stronger urea prices favor producers (XLB) like CF Industries (CF), CVR Partners (UAN), and Nutrien (NTR).
In the week ending September 21, natural gas prices remained slightly above the $3 per MMBtu (million British thermal units) level. The level has been important for nitrogen (XLB) fertilizer producers like CF Industries (CF), CVR Partners (UAN), and Mosaic (MOS).
Urea prices continued to rise in the week ending September 21. The prices in the NOLA (New Orleans) region and Brazil increased week-over-week from the week ending September 14.
The week ending September 21 was broadly positive for the fertilizer sector. The VanEck Vectors Agribusiness ETF (MOO) rose 2.3% from the week ending September 14. The overall market S&P 500 Index rose by 40 basis points. Let’s look at how some of the major fertilizer stocks performed last week.
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). The lower natural gas prices enable these companies to sit on the lower end of the cost curve, which is good for margins when overall fertilizer selling prices rise.
Urea, the most common nitrogen fertilizer, has been on an upward trend in recent weeks. In the week ended August 31, urea prices made new highs at each of the locations in the chart below. Last week, which ended September 7, urea prices were broadly flat to positive at those two locations.
Fertilizer affordability has been negatively impacted by the direction in which fertilizer prices have been moving in relation to the prices of key fertilizer-consuming crops such as corn, wheat, and soybeans. Lower fertilizer affordability can weigh on companies (XLB) such as Mosaic (MOS), Intrepid Potash (IPI), CVR Partners (UAN), and CF Industries (CF). The index, issued by Mosaic, has been rising lately, which is a similar pattern to the recent movement of fertilizer prices.
We’re looking at natural gas prices in this series, primarily because they make up about two-thirds of the input costs for nitrogen-based fertilizers. Low natural US gas prices have proved beneficial to companies (NANR) such as CF Industries (CF), Mosaic (MOS), Nutrien (NTR), and CVR Partners (UAN). Let’s see how natural gas performed last week, which ended August 31.
Low natural gas prices in the United States have been a significant benefit to companies (XLB) such as CF Industries (CF), CVR Partners (UAN), Nutrien (NTR), and Mosaic (MOS). In the Market Realist article Analyzing the Global Cost Curve of Nitrogen, we saw how lower natural gas prices benefit nitrogen fertilizer producers by increasing their margins. While there are expectations that natural gas prices will remain low, let’s see how they performed last week, which ended August 24.
Urea prices continued to show strength last week, which ended on August 24. Urea prices have gotten a lift from a tighter supply environment on the back of higher energy costs in Europe and China. In its recent earnings call, CF Industries (CF) stated that it expects the supply to remain weak from Europe and China on the back of weak energy prices.
Natural gas is one of the most important inputs required for nitrogen fertilizers. Companies such as CF Industries (CF) that are located in the United States are at a unique advantage with access to low natural gas prices. In its quarterly earnings, CF Industries cited low natural gas as a key driver for improvement in margins.