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Non-Tech : UAN - The variable distribution MLP that could go a long way
UAN 80.50+2.0%9:40 AM EST

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From: Elroy10/12/2021 4:10:44 PM
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Supply Disruptions Add Costs
Bottlenecks Loom for Critical Ag Supplies

-- FERTILIZER. This week, the upward trend continues for the fertilizer market, showing large, year-over-year increases in all key areas. DTN Staff Reporter Russ Quinn, who focuses on retail fertilizer prices, said he has been covering these markets for more than 13 years with a data set that goes back to 2008. The industry is seeing the largest year-over-year (YOY) increases to date by that data set. Quinn reported this week these YOY percentage increases as follows: potash at up 101%, UAN28 at up 91%, anhydrous at 89% higher, UAN32 at up 83%, urea at 81% higher, DAP (diammonium phosphate) at up 67%, MAP (monoammonium phosphate) at up 78% and starter fertilizer (10-34-0) at up 40%.

Quinn noted, "These are not the highest prices we've ever seen, but we've seen prices climbing nearly a full year now, so we could easily set some all-time highs." He added that prices on these inputs tend to peak during spring and fall, when demand is at its highest.

"The people I've talked to, retailers and Extension and farmers, who are talking to suppliers and wholesalers and retailers, tell me not to expect any slowdown in prices anytime soon," Quinn said. "We've seen 11 months now of continuously higher prices. In past years, it was more a demand issue. This time, it's a supply issue, and the fact we can't get enough supply because of weather disruptions domestically and China cutting back on exports of fertilizer to the U.S. will only make it worse."

-- NATURAL GAS. DTN Refined Fuels Editor Brian Milne says it is possible natural gas prices could hit $10 per 1,000 cubic feet (MMCF) moving into 2022. Global supply issues will have a major impact on whether these price levels are realized.

"We've seen a lot of volatility in this market already, with the front month (November 2021) at $6.46," reported Milne. The previous highs, he added, were set in February 2014 during a cold period, and in December 2008, coming off of a financial crisis.

"By a historical perspective, we are at a seven-year high and ready to go to a 13-year high," he said. Milne noted that in the U.S. supplies are ample, even though they are below the five-year average. Price spikes for natural gas in Europe and Asia, however, are driving upward market trends. In parts of Europe, natural gas prices have spiked as countries move away from coal and nuclear energy. Wind energy in parts of the United Kingdom, he added, has not generated the amount of power expected this past season, leading to unexpected drawdowns on natural gas. Seasonally, Milne says, peak demand for natural gas is from October through March.

"We are going to see prices up from here as we move into the winter months. If it is very cold in Europe and Asia, expect more price spikes," he said. "We could easily get above $8 this winter, possibly over $10. But, speculating a little, there are things that could derail all of this, like a warm winter."
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