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Non-Tech : UAN - The variable distribution MLP that could go a long way
UAN 78.94-0.8%Nov 26 1:00 PM EST

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To: Area51 who wrote (277)10/15/2021 5:33:16 PM
From: Elroy   of 309
 
maybe I'm still too bearish on the stock.

?? What is a current reason to be bearish on UAN units?

I'm no fertilizer expert, but I'm pretty sure the price of UAN fertilizer will stay flat or rise from now until about April 2022. While the price of UAN fertilizer is rising, UAN's revenues are basically going to rise with them.

UAN's production costs are perhaps going to be higher than in the past few years due to the increase in natural gas prices, but the increase in revenues is orders of magnitude more than the increase in natural gas costs.

I wonder what's going to keep UAN's unit value down in this environment? A few months ago I was expecting them to distribute $15-$25 over the next four quarters, but if the UAN fertilizer price keeps increasing, there is no lid on how high the distribution can go.

Today alone Q1 delivery price for UAN fertilizer went up almost 5%. In one day.

cmegroup.com
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