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   Non-TechUAN - The variable distribution MLP that could go a long way


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From: Elroy9/1/2021 10:24:33 AM
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46% of farmers expected input costs would be worse in the coming year, with only 16% projecting lower input costs





Agriculture Confidence Index Results
Agriculture Confidence Index Shows Farmers Confident, but Concerned About Input Costs







https://www.dtnpf.com/agriculture/web/ag/news/business-inputs/article/2021/08/31/agriculture-confidence-index-shows

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From: Elroy9/1/2021 5:30:33 PM
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Q1 UAN NOLA futures up $15 on average today.......get ready for UAN the MLP to explode upward fairly soon.

cmegroup.com

At $300/ton UAN the MLP can easily pay $20 per year.

It appears 2022 prices are going to be well above $300 ton. The 2022 big buying season starts in November 2021......

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From: Elroy9/2/2021 9:49:02 AM
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The Mosaic Company Announces Hurricane Ida Impacts

finance.yahoo.com

Wind damage to the Faustina and Uncle Sam facilities from the storm is expected to result in reduced production as repairs are completed over the next 8 to 9 weeks. The following expectations also include estimates of production loss from an August equipment failure at the company's New Wales facility in Florida.

In the third quarter, relative to historical averages, production is expected to be down by approximately 300,000 tonnes. Fourth quarter operating rates are expected to improve sequentially, but production may still be down from historical averages. Mosaic plans to provide an update, including estimated financial impacts of the hurricane, when it reports third quarter results.

--

We care about the affect of Ida on CF's UAN manufacturing facilities in the area. I read CF manufactures 50% of the UAN consumed in the US in that region.

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From: Elroy9/2/2021 3:40:31 PM
   of 320
 
More indicators that fertilizer prices are high and perhaps moving higher.....

Strong Corn Prices Come at a Cost

dtnpf.com

oe Sinclair, president of national ag chemical wholesaler Quality Ag Service, recently told DTN's Elizabeth Williams that he advises farmers to check fertilizer prices before making cropping plans. "There will be some sticker shock for producers. Nitrogen and potassium prices are almost double year-ago prices.

Sinclair said the last time fertilizer prices spiked like this was in 2008, but prices fell back the following year.

"Will we see a similar reality check for corn and fertilizer prices in 2022? I think it might take until 2023 before prices come back down," Sinclair said. "World ending stocks are so low, it may take another year to build up a safety net of grain stocks."

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From: Elroy9/2/2021 6:20:26 PM
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CEO of UAN bought 5,000 shares of UAN.

sec.report

Bring on the distributions!!

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From: Elroy9/3/2021 12:25:40 PM
1 Recommendation   of 320
 
Hmmm, here's a post on Seeking Alpha about natural gas prices, they are apparently becoming problematic in certain parts of the world for fertilizer production.

We should all be aware of what is happening on the cost side for nitrogen fertilizer. Natural gas has gone from$1.75 to $4.75 in the US in the last year. That will cut into profits for the nitrogen producers (I have used $4.30 for my projections going forward which is a lot more than the forward curve for next year, but I may have to adjust for Q4). But what is happening in Europe (and Asia) is astonishing. In the same period, natural gas has gone from $2 to over $18.

To give some perspective to this, $18 gas means that $860 worth of gas goes into a ton of ammonia (current price about $665 in the corn belt). That does not include any labor or capital or maintenance costs. For UAN, it takes $375 worth of gas to make a ton, again with no other expenses. What that means is that nitrogen fertilizer made in Europe (or Asia from gas) is now done at a huge loss. To what extent they will start shutting down production is not something that I can judge, but economically they should shut it all down.

China has always been the marginal producer of nitrogen fertilizer, but they make it mostly from coal (which is very expensive there). Those producers still need an extremely high price to keep producing, but that price is now less than the price in Europe.

Bottom line is that while I have focused on the demand for NH3 and UAN, the supply side is at least as important. And the supply is going to start contracting without much higher prices. Very scary if you are a farmer, but really good for CVR owners.

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From: Elroy9/3/2021 1:00:28 PM
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My hunch is the Q3 distribution should be at least $4.00, and might be higher.

We get a $5m reversal of the charges taken for the previously planned Q4 2021 turnaround which has been postponed to 2022.

We get high sales prices for UAN and ammonia. It's hard to say what the prices will be since UAN forward sells production sometimes, but not others. My guess is they get AT LEAST $280/ton for UAN, compared to $237/ton in Q2 2021.

There was some production left over from Q2 which did not get sold. They will likely sell that in either Q3 or if not then for sure in Q4. Gotta wait and see.

And since there's no turnaround planned for 2021 now, we can expect the plants to run at maximum capacity. They've been doing fairly well with production recently hitting between 95%-100% of capacity. But you never know, we only find out about unplanned downtimes when the financial results are released.

Hurricane Ida is going to take competitors New Orleans plant off line for some period, hard to say how long, but whatever the length of downtime it's good for reduced supply. UAN has no such issue (I think) as their plants are not in the path of the storm.

The expected major cash user this quarter is the planned debt buyback of the $95m 9.25% stub that was left in existence when the refinancing was done. They've indicated they will buy it all back over two years, or when the carbon credits get monetized whichever comes first. Debt buyback reduces distribution in the quarter that they buy it. So perhaps they bought back $12m of debt in Q3, perhaps they bought have all $95m, perhaps they bought back zero, who knows?

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From: Elroy9/3/2021 5:23:28 PM
   of 320
 
UAN NOLA futures up again today….Q1 2021 above $350/ton now.

cmegroup.com

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From: Elroy9/3/2021 6:07:55 PM
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UAN Q1 $350/ton

I am going to start regularly posting Q1 UAN NOLA prices each time they go $10 higher. Today they hit $350/ton

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From: Elroy9/7/2021 5:27:13 PM
   of 320
 
Force Majeure at Top Fertilizer Plant Has Prices Soaring

finance.yahoo.com

Every month up a few bucks today. It's early Sep, slow period. What's going to happen in Jan 2022???

cmegroup.com

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