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To: Touching who wrote (56718)1/21/2016 8:12:11 PM
From: Elroy  Respond to of 70372
I'm not familiar with CF.

80% of ammonia and nitrogen production is from natural gas, the rest mainly from coal.

My fertilizer position is UAN, which I believe gets their fertilizer COGS from CVRR, a refiery operation. Those two stocks are the MLPs under CVI which is something like the parent company of the two.

UAN is a solution of urea and ammonium nitrate in water used as a fertilizer.

So it seems UAN gets their ammonia from from CVRR's natural gas refining business, and produces fertilizer. Presumably this ammonia COGS for UAN has been declining with the price of natural gas, so even though fertilizer prices are falling badly, it may be that UAN's COGS are also in decline, so maybe their results will be OK. Or maybe not, I really have no idea. We'll see.

The stock is acting like a disaster is on its way.{"allowChartStacking":true}

UAN was paying 35-40 cents per Q through Q3 2015, when they paid zero due to an unexpected plant shutdown. The shutdown is (presumably) over, so we'll see what they can do in Q4 with the declining prices. They should have 2 additional weeks of production in Q4 relative to the Q1 to Q3 in 2015 due to a planned 6 week shutdown which was amortized over the first 3 quarters of 2015. At $5.00, it seems hard to believe that UAN can spit out 35 cents again for Q4, but we'll see. They seemed to do fine when prices were declining earlier in the year, so time will tell. I'm hoping the big sell off is mainly due to the market's aversion to MLPs, aversion to high yield and aversion to commodity related companies, and NOT due to UAN-specific info. But that's just a prayer, it's not based on any special understanding of mine about the fertilizer biz :-)