Silicon Investor - UAN - The variable distribution MLP that could go a long way

[Elroy] DTN Retail Fertilizer Trends 5 Fertilizers Significantly More Expensive, Urea Up...

Elroy — 4/8/2026 2:25:54 PM

DTN Retail Fertilizer Trends
5 Fertilizers Significantly More Expensive, Urea Up 34% From Month Ago

OMAHA (DTN) -- Retail fertilizer prices continue to jump, in some cases by double-digits -- one of them by more than 30%. According to prices tracked by DTN for the last week of March 2026, all eight of the major fertilizers are higher compared to last month for the second week in a row.

Five of the eight major fertilizers had considerable price increases compared to prior month. DTN designates a significant move as anything 5% or more.

Urea led the way higher again as the nitrogen fertilizer was a whopping 34% higher compared to last month. The liquid fertilizer had an average price of $838/ton.

Both UAN28 and UAN32 were 21% higher than a month ago. UAN28 had an average price of $496/ton, while UAN32 was at $564/ton.

Anhydrous was 18% higher than the prior month and had an average price of $1,060/ton. 10-34-0 was 8% more expensive than last month and had an average price of $714/ton.

The remaining three nutrients were slightly higher in price compared to last month. DAP had an average price of $863/ton, MAP was $917/ton and potash $489/ton.

On a price per pound of nitrogen basis, the average urea price was $0.91/lb.N, anhydrous $0.65/lb.N, UAN28 $0.89/lb.N and UAN32 $0.88/lb.N.

In recent weeks, there has been much discussion about how much fertilizer farmers have already bought as both wholesale and retail nutrient prices continue to skyrocket. USDA Agriculture Secretary Brooke Rollins has stated farmers have 80% of their nutrients locked in, while several others have stated that number might be much lower.

So, DTN ran an unscientific poll among DTN subscribers from March 18-28 and asked the question, "As spring planting approaches, are you able to get the fertilizer you need this season amid rising prices and potential shortages tied to the Iran War?"

Choice 1 was "Yes -- I preordered and have what I need in storage."

Choice 2 was "Mostly -- I have some fertilizer secured but I'm still trying to lock in the rest."

Choice 3 was "I can get it, but the price increase is a serious financial strain."

Choice 4 was "No -- I have not been able to secure the fertilizer I need for spring planting."

Choice 5 was "I'm still deciding on my crop mix (corn vs. soybeans) and haven't fully committed to a fertilizer order yet."

With about 100 respondents, Choice 1 led the way with the most responses; 65% responded with this option. Choices 2 and 3 were next with 14% of the responses. Choice 5 was next with 5% of the vote and Choice 4 was 2%.

So perhaps Rollins was a bit high with her estimate of farmers pre-purchasing their fertilizer. But obviously a higher percentage of crop producers did lock in their fertilizer needs before the Iran war began.

All eight fertilizers are now higher in price compared to one year earlier by the following amounts: potash, 6%; 10-34-0, 10%; MAP and DAP, 12%; UAN32, 34%; anhydrous and UAN28, 38%; and urea, 48%.

DTN gathers fertilizer price bids from agriculture retailers each week to compile the DTN Fertilizer Index. DTN first began reporting data in November 2008.

[Elroy] DTN Retail Fertilizer Trends 4 Fertilizer Prices Rise Double-Digits; Anhydrous J...

Elroy — 4/1/2026 11:11:16 AM

DTN Retail Fertilizer Trends
4 Fertilizer Prices Rise Double-Digits; Anhydrous Jumps Above $1,000 Per Ton

dtnpf.com

[Elroy] UAN is going to pay out a ton of money over the next 6 quarters. I don't know w...

Elroy — 3/13/2026 6:55:13 PM

UAN is going to pay out a ton of money over the next 6 quarters. I don't know where the unit price will go when the Iran hostilities end, but fertilizer prices are higher (lots of natural gas and ME fertilizer production disrupted) in what was already described as a "tight inventory" market.

I'll bet UAN pays $35-$50 over the next 6 distributions.

[Paul Senior] Thanks for these updates.

Paul Senior — 3/13/2026 4:37:52 PM

[Elroy] White House teases solutions to fertilizer crisis sparked by Iran war washingto...

Elroy — 3/13/2026 4:22:39 PM

White House teases solutions to fertilizer crisis sparked by Iran war

washingtontimes.com

Ms. Rollins said about a quarter of U.S. farmers have not yet purchased their fertilizer for planting season.

[Elroy] War Heightens Ag Input Price Concerns Farm Bureau Urges Trump to Protect Fertil...

Elroy — 3/9/2026 10:46:14 PM

War Heightens Ag Input Price Concerns

Farm Bureau Urges Trump to Protect Fertilizer Supply Chain

dtnpf.com

Ott, who grows cotton, corn and peanuts, said his own fertilizer dealer last week would not price or deliver fertilizer. Ott was then told prices for delivery would increase significantly, even though that fertilizer was already staged for local delivery when the war broke out.

John Newton, chief economist for AFBF, said a lot of farmers had cut back on locking in their fertilizer purchases earlier in the season. Newton said he had talked with a North Dakota farmer who had about 60% of his fertilizer needs priced. "They went in and booked the remaining, but it was -- significantly higher, about $200 a ton higher --

The price for a short ton of urea in New Orleans to load on barges has gone up nearly 25% since the start of hostilities -- rising from $465 a ton on Feb. 27 to $580 a ton on Monday.

[Elroy] Here are CF's latest comments about ammonia and UAN: 2026 ammonia production is...

Elroy — 3/9/2026 10:49:32 AM

Here are CF's latest comments about ammonia and UAN:

2026 ammonia production is expected to go down:

This enabled us to produce 10.1 million tons of gross ammonia in 2025, which represents a 97% utilization rate.

we expect our network to produce approximately 9.5 million tons of gross ammonia in 2026.

From a supply perspective, we believe global nitrogen channel inventories are lower than historical averages.

There is some new US ammonia production coming online in 2026, but it will not be used to make UAN fertilizer.

we do expect that new North American ammonia capacity, should it come online at full rates, will affect prices for globally traded ammonia, but will not impact tightness for urea or UAN. As a result, we expect the global nitrogen market to remain constructive in the near term.

THIS QUESTION OCCURRED IN THE JAN CF EARNINGS CALL.....

Lucas Beaumont
UBS Investment Bank, Research Division

All right. And then I guess just maybe a bit of a short-term question on the Middle East tensions with Iran. So I mean, they're about 10% of the global urea export markets. I guess, how would you see the market dealing with any disruption to production there and the impact on pricing? And I guess how would that sort of need to flow through from a timing perspective in terms of, I guess, disruption to the shipments before it's really starting to have an impact and how long it would be down.

Bert Frost
Executive Vice President & Chief Commercial Officer

Yes. If you look at the Middle East and the suppliers that are located there, the producers, Bahrain, Iran, Oman, Qatar, Saudi Arabia and UAE for urea, that's about 20 million tons. So in a globally traded ocean going traded ton, that's about 35% of the world's supply that goes through the Strait of Hormuz or close to it.

However, you also have to look at ammonia where those same countries referenced are about 5 million tons or also 30% of the globally traded ammonia ton. And so if something were to happen, the constraining factor to supply would be pronounced. As well as LNG, about 25% of the world's LNG also transit through that, the Strait. So if conflict were to occur, it would be, I would think, even more difficult or more challenging than the current situation in Russia and Ukraine and moving out of the Black Sea.

[Elroy] Here are some comments about fertilizer inventory situation in the USA from LXU'...

Elroy — 3/9/2026 10:41:49 AM

Here are some comments about fertilizer inventory situation in the USA from LXU's most recent earnings conference call (mid-Feb).

UAN prices dipped slightly in November and December, but have recently improved. This reflects continued low levels of domestic inventory, constrained supply and a strengthening in urea prices.

We began the 2026 fertilizer year with the lowest carryout inventory of UAN in several years. Together with the late start to summer fill, this has created a tight domestic supply situation, and we expect this to continue through midyear. We saw strong full ammonia sales, supported by favorable weather conditions, and we continue to see strong demand domestically with ongoing favorable application weather and higher prices for upgrades supporting demand.

The Tampa ammonia benchmark price remains above year ago levels. Ammonia prices currently reflect reduced supply from the Middle East and Trinidad, higher cost of production in Europe and delays in new production capacity coming online. This is constraining global supply availability. In terms of the outlook for global ammonia, we see prices trending back to mid-cycle levels as new production comes online during 2026. But like the last couple of years, the market remains finely balanced and sensitive to any production interruptions.

--

BTW - LXU is doing maintenance on two of it's US facilities (one in Q2, and the other in Q3). That reduces US supply.

These estimates reflect planned turnaround activity, including the previously communicated El Dorado turnaround, which we have scheduled for the second quarter. In addition, we are accelerating a turnaround at our Pryor location, originally scheduled for 2027, so we can proactively perform work needed to improve reliability at that site. We are targeting the third quarter for this turnaround.

LXU is making AN rather than UAN

where it makes sense for us, we're optimizing our plants and reducing UAN production to make more AN available.

what we're doing at the moment is really tweaking the product balance to maximize and produce more AN, and we're doing that by reducing our UAN production and putting it into the AN market.

General commentary

In ammonia at the moment, it's a very tight market.

The impact of both turnarounds is expected to result in lost ammonia and UAN production tons in 2026 of approximately 60,000 and 50,000 tons, respectively.

[Elroy] UAN benefits from the stoppage of energy flowing out of the ME. Lots of nitroge...

Elroy — 3/9/2026 8:47:20 AM

UAN benefits from the stoppage of energy flowing out of the ME. Lots of nitrogen fertilizer plants around the planet may need to shut down production if they can't get ME natural gas. Nat gas is the starting input to making ammonia. Without it, you can't make ammonia. So without it, you gotta shut the nitrogen fertilizer plant down until natural gas supplies are again available. Those shutdowns will cause the price of nitrogen fertilizers to go up.

UAN is in the USA, and uses US natural gas (which has not been disrupted) at one of it's two plants, and pet coke (which also has not been disrupted) at the other. No slowdowin in inputs for UAN. So as the price of nitrogen fertilizer goes up, and UAN's plants don't shut down, profits will go up, and with them distributions.

It's a great place to be invested in the current environment.

[Elroy] UAN has two plants. The one that is next to CVI's refinery uses Pet Coke rather...

Elroy — 12/10/2025 1:48:47 PM

UAN has two plants. The one that is next to CVI's refinery uses Pet Coke rather than natural gas as the feedstock to make ammonia. The other UAN plant (and all other ammonia plants in the US) use natural gas.

I seem to recall UAN saying that CVI was one of four pet coke suppliers for the plant, but I don't know the details on that.

UAN keeps talking about a modification to the plant to allow it to choose to use pet coke or natural gas, depending on which is more inexpensive, but that change has yet to be implemented.

I don't know the nature of the pet coke supply agreement.

[FIFO_kid2] Elroy can you tell me the relationship UAN has with CVI with regard to obtaining...

FIFO_kid2 — 12/10/2025 12:54:07 PM

Elroy can you tell me the relationship UAN has with CVI with regard to obtaining their petroleum coke for their fertilizer process. Is it a long term contract? My worries here is P.C. has recently become the new gold in the fracking process and is replacing sand as a proppant showing a 20% improvement in the depletion curve of these shale wells.

[Elroy] This sounds good for fertilizer sales...... (Bloomberg) -- China will make ...

Elroy — 10/26/2025 2:33:05 PM

This sounds good for fertilizer sales......

(Bloomberg) -- China will make “substantial” purchases of US soybeans, Treasury Secretary Scott Bessent said Sunday after talks with Chinese counterparts, in a sign that the relations are thawing ahead of a possible leaders’ meeting.

https://finance.yahoo.com/news/china-substantial-us-soybean-purchases-101725948.html

[Elroy] Bummer - ammonia leak at one of CVR Partners fertilizer plants..... UPDATE:...

Elroy — 10/12/2025 11:56:25 PM

Bummer - ammonia leak at one of CVR Partners fertilizer plants.....

UPDATE: Emergency crews respond to ammonia leak, multiple people hospitalized

fourstateshomepage.com

[Elroy] CVR Partners Reports Fourth Quarter and Full-Year 2024 Results https://financ...

Elroy — 2/21/2025 7:57:16 AM

CVR Partners Reports Fourth Quarter and Full-Year 2024 Results

https://finance.yahoo.com/news/cvr-partners-reports-fourth-quarter-215800239.html

[Area51] Nice writeup on seeking alpha on the UAN value proposition: seekingalpha.com. A...

Area51 — 3/19/2024 2:18:13 PM

Nice writeup on seeking alpha on the UAN value proposition: seekingalpha.com.

An excerpt : So, based on these different methods, I get a range of valuations from $179 to $400 per unit. But no one is building a new plant at those prices and CF's management is screaming to everyone who will listen how underpriced their stock is (which is why they are buying a lot of it back). A more realistic range is $206 (based on cash flow) to $266 (based on recent sale). This is what CVRP's assets are really worth. My own expectation is that they should get at least $225 per unit.

Nice move today. If it consolidates and tests the 9 day ema I would add to my already overweight position. And we know Elroy that you can't guarantee that the future price of UAN (the commodity not the company) will always equal the current price <g>.

[Elroy] If Icahn gets control of 80% of CVR he then has the ability to force the remaini...

Elroy — 3/19/2024 8:26:20 AM

If Icahn gets control of 80% of CVR he then has the ability to force the remaining 20% to sell to him for the then market price.

Icahn owns about 38% currently, so he's got a way to go.

With MLPs, does anyone know whether insiders (ie, Icahn) need to file with the SEC when the change their holdings? If Icahn starts filing purchases of UAN, I'd expect the share price to rocket higher. But if he actually gets to 80%, it would plunge (I think).

Anyways, good to have something to light a fire under this one. I've sold most of mine, but still have a few shares/units lingering around in my Roth.

[RJCogburn64] CVR Energy (NYSE: CVI) disclosed Monday it is considering potential strategic t...

RJCogburn64 — 3/19/2024 5:04:27 AM

CVR Energy (NYSE: CVI) disclosed Monday it is considering potential strategic transactions with Icahn Enterprises ( IEP) involving CVR Partners (NYSE: UAN), which may include the acquisition of additional assets or businesses, including material amounts of refining assets through negotiated mergers and/or stock or asset purchase agreements.

CVR ( CVI) said strategic options involving CVR Partners ( UAN) may include the acquisition of some or all outstanding publicly held common units of CVR Partners by entities affiliated with IEP ( IEP), the company or some combination.

[Elroy] Yes, the results are a real dud. I've sold most of my UAN last summer, and plan...

Elroy — 2/22/2024 7:34:42 AM

Yes, the results are a real dud.

I've sold most of my UAN last summer, and plan to sell the remaining bit fairly soon.

[RJCogburn64] $1.68

RJCogburn64 — 2/22/2024 7:19:34 AM

[Elroy] UAN to report after the close on Tuesday. My guess for the distribution is $4.0...

Elroy — 2/19/2024 6:08:41 PM

UAN to report after the close on Tuesday. My guess for the distribution is $4.00.

[Area51] Actually that seems like a reasonable approach. I hope that is what they would a...

Area51 — 2/5/2024 3:00:54 PM

Actually that seems like a reasonable approach. I hope that is what they would actually do (and no capital gains tax on the position transferred out). I'd vote for it for sure.

[Elroy] if they just lift the units from the IRA and put them in the taxable account wit...

Elroy — 2/5/2024 1:28:17 PM

if they just lift the units from the IRA and put them in the taxable account with the original purchase date.....

I think they lift them out of the Roth IRA, and put them in the taxable account with the transfer date (and transfer date unit price as the cost basis).

That's how regular equities are done when transferred out of a retirement account. They say MLPs will be done using the same method. It seems odd, but what's the alternative?

[Area51] Right I couldn't find where that partnership debt ratio would be entered on the ...

Area51 — 2/5/2024 1:05:59 PM

Right I couldn't find where that partnership debt ratio would be entered on the 990-T, so if anyone has a 990-T that credited the partnership debt ratio maybe they could let us know.

On the transfer thing: <<The UAN MLP says if the broker tells them the withdrawal is a transfer, it won't produce UBTI as a result of the transfer>> That seems kind of odd to me:| if they just lift the units from the IRA and put them in the taxable account with the original purchase date, it seems to me that that could effect your taxable income for previous years. I think you should transfer out 10 shares this year and see what really happens.

Best Regards, A51

[Elroy] I have a 2022 UAN 990-T. What do you want to know? Which line item?

Elroy — 2/3/2024 9:22:03 AM

[Area51] I would still be interested if you can glean a debt-ratio from any UAN 990-T. Al...

Area51 — 2/2/2024 11:39:24 PM

I would still be interested if you can glean a debt-ratio from any UAN 990-T. Also if anyone has a different mlp 990-t and the debt ratio is utilized in the 990-T I would be interested. I kind of think that some partnerships will include the debt ratio in the K-1 and in those cases the capital gain that is taxed on the 990-T will be reduced accordingly. UAN didn't include a debt ratio in the K-1 so the people doing the 990-T default to conservatively (as far as maximizing the tax due) using a debt-ratio of 1.0?

Regarding transferring shares to a taxable account to avoid the capital gains tax:
The link below considers the transfer of shares out of an IRA (see Q51 and Q53) to a taxable account. Seems like an in-kind distribution to me? If so maybe the transfer is not treated as an effective sale of the IRA shares so the capital-gain might escape the UBTI tax?

Q53: What happens if an in-kind distribution of the UBTI generating investment is taken? A53: IRA owners should determine with their external tax advisors whether the investment can and should be distributed from the IRA. The tax liability up until the date of distribution from the IRA will still need to be paid.

faq-ubti.pdf

[Elroy] If you remind me post Dec 28 I'll look into what my 990T said last year, I've go...

Elroy — 12/22/2023 10:42:53 AM

If you remind me post Dec 28 I'll look into what my 990T said last year, I've got family here and no time to go through papers.

Anything that reduces tax payments is fine with me!

[Area51] Hopefully that will work (transfer shares out). That might work for an IRA accou...

Area51 — 12/22/2023 12:26:56 AM

Hopefully that will work (transfer shares out). That might work for an IRA account as well, right? I guess we'll find out in 2025 for Roth anyway.

Just posting this for future reference on UBTI UDFI
iamlookingforincome.blogspot.com

One thing of interest is
Partnership Debt Ratio (Provided by Partnership separately)
seems to me that my form 990-T didn't reduce the capital gain by this factor. Not sure if this is because UAN debt ratio is 1.0, or if they just conservatively assumed that it is 1.0 because the partnership doesn't provide a value.

[Elroy] I've asked my brokerage what will happen if I remove an MLP from a Roth to a reg...

Elroy — 12/22/2023 12:13:43 AM

I've asked my brokerage what will happen if I remove an MLP from a Roth to a regular account. They say the cost basis of the MLP in the regular account will be the value on withdrawal date, and that the withdrawal itself will not be a taxable event. So I'm going to try to do that next year when I turn 59 1/2.

I don't own any UAN in regular accounts, but will own some when I do this transfer out of my Roth. Lately there has been deal action (Koch bought some OCI fertilizer factories that are similar in propductin volume to to UAN's plants, and the comparitive value implies UAN is worth something like $295 per unit. It doesn't make much sense, but that's what the math says.

I think UAN will pay $10-$15 over the next three distributions, and visibility beyond that is nil. Depends on where fertilizer sales price per ton goes, and so far it seems to not be going up despite heading into the high useage season....

[Area51] Did you ever get an answer to your question (circumvent tax by transferring shar...

Area51 — 12/21/2023 11:28:43 PM

Did you ever get an answer to your question (circumvent tax by transferring shares out)? Or did Privately convince you that K-1 capital gains won't be taxed? I like what he says and what he says makes more sense to me than what the accountants did with my form 990-T, but I just pulled out my 990-T for my sale in 2021 and it is clear as day that they taxed the capital gain (they specifically attached a form 8949). You had a good comment (since deleted?), about why wouldn't they tax a capital gain in something like CCL similarly. I guess the only reason they don't is they only review it for companies that file K-1? Still it makes no sense to me. But change what you can control and accept the rest I suppose.

I actually have been buying some UAN lately (got some higher, some near the lows and some today). I think 2024 may see the dividend back near $20 per share, and the unit price back over $100. We shall see.

Best Regards,
A51

[Elroy] I've still got a small chunk of UAN which is exposed to short Nov covered calls ...

Elroy — 10/10/2023 8:27:50 AM

I've still got a small chunk of UAN which is exposed to short Nov covered calls at $80 and $85. Naturally, UAN's unit price has been sitting at about $82 for months!

I may still own this guy depending on how these covered calls progress. Oddly, I'm rooting for bad news for the Q3 results, hopefully pushing the price below $80 on Nov expiration, and good news thereafter....

And to make it more interesting, these UAN units are in my Roth account. I've been trying to get answers from my brokerage about what happens if I turn 59 1/2, and then transfer them out of the Roth into a regular account. The question is whether that transfer will be scored for tax purposes as a sale in the Roth and repurchase at the same price in the regular account (which would trigger UBTI in the Roth), or whether it will be treated as a transfer in kind from the Roth to the regular account (which means no sale in the Roth, and no UBTI triggered by selling units in the Roth). I await their response......

[diegosan] Earnings to be released 7-31-23 after the close. Diego

diegosan — 7/24/2023 4:23:46 PM

[Area51] <...

Area51 — 7/1/2023 1:42:33 AM
<<I don't think we can say much of anything about future prices for fertilizer.>>

But as an astute investor once so eloquently stated; ( Message 34159272 ) Sure, it's possible fertilizer prices collapse toward the 2016-2020 lows. But.....why would they?

Significantly lower corn prices might do it (and Friday was another disaster on that front, now sitting percariously close to the $5 per bushel level where I will have to start to worry about it).

[Elroy] But I think if demand for UAN stays strong (which correlates roughly with corn o...

Elroy — 6/29/2023 8:32:46 PM
But I think if demand for UAN stays strong (which correlates roughly with corn over $5 for upcoming crops) the Publius analysis seems like a reasonable extrapolation of what future UAN results might look like.

I don't think we can say much of anything about future prices for fertilizer. They have collapsed over the past six months, as we have been moving through the high demand seasonal period. Whether the future will bring higher or lower prices than today, I have no idea.

So with a stock where I really have no idea about future prices (and therefore revenues), I am more inclined to give it a pass rather than express any confidence in future performance.

[Area51] Well I don't know that the price collapse is over (it's dangerous to make predic...

Area51 — 6/29/2023 1:42:57 PM
Well I don't know that the price collapse is over (it's dangerous to make predictions especially about the future <g>). But I think if demand for UAN stays strong (which correlates roughly with corn over $5 for upcoming crops) the Publius analysis seems like a reasonable extrapolation of what future UAN results might look like.

[Paul Senior] Thanks for the post. I'm still have units, but have reduced position with a v...

Paul Senior — 6/28/2023 4:48:56 PM
Thanks for the post.

I'm still have units, but have reduced position with a view to maybe adding back after 3rd quarter.

[Elroy] DTN Retail Fertilizer Trends Nitrogen Products Lead Retail Fertilizer Prices Low...

Elroy — 6/28/2023 4:47:29 PM
DTN Retail Fertilizer Trends
Nitrogen Products Lead Retail Fertilizer Prices Lower

https://www.dtnpf.com/agriculture/web/ag/crops/article/2023/06/28/nitrogen-products-lead-retail-prices

[Elroy] My concern now with UAN is I have zero confidence that UAN fertilizer prices wil...

Elroy — 6/28/2023 2:35:23 PM
My concern now with UAN is I have zero confidence that UAN fertilizer prices will go up after the "Summer Fill" Q3 price is set.

If UAN fertilizer prices can decline from November 2022 to today, through planting season, what's the reason to believe they will increas from Aug/Sep on? How do we know they won't just keep dropping to the floor for another 6-12 months?

Without increasing fertilizer prices, UAN is a bad investment. How can you or me or we be confident that prices will go up seasonally as they normally do since the past six months was six months of normally seasonally strengthening prices, but prices didn't go up, they instead collapsed.

How do you know the price collapse is over?

[Area51] Interesting post by Publius today (I'll copy it just in case I want to refer to ...

Area51 — 6/28/2023 2:32:00 PM
Interesting post by Publius today (I'll copy it just in case I want to refer to it later) and UAN at least briefly back above that 80 support line. Maybe UAN investors will still do well longer term. The 3rd quarter looks tough ($1 distribution in Q3 maybe), but hopefully that may be the bottom as far as UAN distributions.

I've been buying some ALTO as a bit of a hedge to my UAN position (corn is an input into their ethanol so it tends to do well on days like today where corn sells off, looks like rain coming to many of the corn producing areas this weekend). twitter.com

GRVY, SIMO, NGL all doing well (ok SIMO a little rough today) so you should be happy. I bought a little GRVY at around 60.

Publius
Hi guys. Just got back from vacation in a blissfully internet/cellphone free location. So I have a lot of stuff to catch up here, but let me address a few things now.

Pricing for nitrogen fertilizer has clearly bottomed, even though we won't see the results of these prices in earnings and distributions until November. As usual, urea led prices down, but spot pricing bottomed in early April and Q3 pricing (futures) bottomed about three weeks ago and has rebounded strongly since. And the fact that urea has bottomed and rebounded is the best leading indicator for ammonia and UAN.

Ammonia has been in free fall since December, but retail prices are still really high. The summer fill re-set prices were set so retailers can average down their high cost inventory and drain their tanks at prices farmers will pay. These prices are WAY below what ammonia should be selling for given a whole host of factors. For starters, it looks like urea will sell at a higher price per ton than ammonia this summer. Urea has a little over half the nitrogen content than NH3, so you can see how absurd this is. Secondly, Tampa ammonia at $285 for July would indicate a corn belt price in the $450-$490 range, not $300-$375. Finally European and Asian natural gas prices now show a natural gas cost of ammonia of $400 for this summer and $600 for the winter. This excludes carbon taxes and any other expenses. I think that ammonia prices rebound strongly in Q4. My best guess right now is to $450 (corn belt), but obviously there is a lot of room for error here.

UAN is the most difficult, as pricing information has very limited availability. But based on a few things, it looks like summer fill prices will be in the $225-$250 range. Much as I hate to use CME futures indications (with no actual contracts outstanding or trading), they indicate summer cornbelt pricing in the $230 range. Based on urea summer pricing (which actually has quite a bit of trading activity) on a nitrogen equivalent basis, UAN would sell for about $250 for the summer. Finally, last week there was a significant UAN summer fill pricing in Europe (Belgium ports) for July, August and September delivery of $244 per ton. I wouldn't rely completely on any one of these indications, but the fact that all three give similar numbers, gives me a fair bit of confidence.

Going forward for UAN, those CME futures are indicating cornbelt pricing of $260 for Q4 and $300 for the first half of next year. Again, I would not rely on CME UAN futures alone, but in combination with production costs in Europe and Asia (including India), these numbers look pretty reasonable. In addition recent corn prices can certainly support pricing of UAN at $300, so these numbers will not chase off farmers the way $650 UAN did last year.

What does this mean in terms of UAN distributions? Well, I did some quick and dirty numbers, making a few assumptions. For Q3, if pricing is $225/$325, CVR sells only 80% of its production and they pay the expected capital expenses out of Q3 cash flow, but add no reserves, the distribution would be a little over $1 per unit. Now, they could sell a lot more, and they can draw down from the huge reserves from Q1 (and I expect, from Q2 as well), but this is kind of a worst case here.

In Q4, I assumed prices of $250/$450 and sales of all of production plus inventory from Q3, paying all capital expenses and adding reserves of $5, I get a distribution of about $7.

For the first half of 2024 (total) with prices at $300/$520 and reserving $4MM per quarter, I get distributions of about $12 (for the two quarters combined).

So, after Q2's distribution of $9-$12 (depending on reserves taken), I expect distributions of $20 for the following 12 months. Am I promising that? No. It is just what I expect at this time.

Oh, and yes, I still have my full position in CVR and just added another 1,000 units. I see a lot of gloom and doom here while I was gone, but I think that that is just another indication of a bottom.
UAN (the stock) still may sell off in the second half

[Elroy] DTN Retail Fertilizer Trends Anhydrous, UAN32 Lead Fertilizer Prices Lower htt...

Elroy — 6/21/2023 5:07:47 PM
DTN Retail Fertilizer Trends
Anhydrous, UAN32 Lead Fertilizer Prices Lower

https://www.dtnpf.com/agriculture/web/ag/crops/article/2023/06/21/anhydrous-uan32-lead-fertilizer

Anhydrous was 13% lower compared to the prior month, and the nitrogen fertilizer had an average price of $781 per ton. UAN32 was 8% less expensive than last month with an average price of $476/ton.

[Elroy] DTN Retail Fertilizer Trends Anhydrous Leads Retail Fertilizer Prices Lower, Dro...

Elroy — 6/14/2023 11:34:44 PM
DTN Retail Fertilizer Trends
Anhydrous Leads Retail Fertilizer Prices Lower, Drops to $787 Per Ton

https://www.dtnpf.com/agriculture/web/ag/crops/article/2023/06/14/anhydrous-leads-retail-fertilizer

[Elroy] CVR Energy Provides Update to Potential Spin-Off of its Fertilizer Business, Rem...

Elroy — 6/13/2023 4:53:32 PM
CVR Energy Provides Update to Potential Spin-Off of its Fertilizer Business, Remains Focused on Renewables Opportunities

finance.yahoo.com

“Following thoughtful and careful analysis, the Board concluded that the complexity of a transaction that could accomplish both goals may not deliver the appropriate value under current conditions. We will continue to explore ways to capitalize on the unique assets of each of CVR Energy and CVR Partners, particularly within the Coffeyville complex, including their proximity to the farm belt, excess hydrogen capacity and existing CO2 sequestration capabilities.

[Elroy] The CME UAN NOLA futures quotes aren't pretty...... cmegroup.com I think Q3 mo...

Elroy — 6/7/2023 11:51:36 PM
The CME UAN NOLA futures quotes aren't pretty......

cmegroup.com

I think Q3 monthly quotes may decline over the next few weeks as the markets does price discovery for "summer fill" prices. I don't think UAN stock price does well until fertilizer future prices find a bottom.

[Elroy] DTN Retail Fertilizer Trends Most Fertilizer Prices Lower Again Third Week of Ma...

Elroy — 5/24/2023 11:44:30 AM
DTN Retail Fertilizer Trends
Most Fertilizer Prices Lower Again Third Week of May 2023

https://www.dtnpf.com/agriculture/web/ag/crops/article/2023/05/24/fertilizer-prices-lower-third-week

[Area51] The corn chart has been tanking badly the last several days/weeks. But we had th...

Area51 — 5/20/2023 1:44:03 AM
The corn chart has been tanking badly the last several days/weeks. But we had that nasty decline last summer to 5.60 also (this decline to $5.50 ish so far). I'm hoping this decline resolves similarly or at least corn stabilizes above $5. $5 corn may support $300 UAN, $600 NH3 in the heartland where CVR sells which is good for $20 a year distributions? If it heads below $5 then I'll either panic or do some controlled selling to manage my loses (depending on my mood and the rate of decline at that point).

macrotrends.net

[Elroy] Well, I've given up and either sold or written deep in the money covered calls o...

Elroy — 5/18/2023 3:23:36 PM
Well, I've given up and either sold or written deep in the money covered calls on all my UAN units.

While it's probably going to be a good distribution payer for a while, the possibility that fertilizer prices just continue to decline, resulting in unit price decline equal to or greater than the distributions, is what has me concerned. I don't undestand why fertilizer prices plunged from November 2022 to today, in the face of the highest demand planting season approaching (it's ongoing now). If planting crops can't keep fertilizer prices high, then I don't know what will.

I may be dumping at too close to a low, but the low demand Q3 is just around the corner, and if fertilizer prices decline before planting season, I don't want to wait and see what the do in the slow Q3 season.

I hope I'm wrong!

[Elroy] CF conference call notes about ammonia and UAN fertilizer. So product is tight....

Elroy — 5/2/2023 8:41:11 PM
CF conference call notes about ammonia and UAN fertilizer.

So product is tight. We don't believe there's going to be enough urea. We believe that they will have to be migrating for second and third applications to ammonia and UAN, and we're preparing for that with positioning product throughout the system. And pricing has extended from the normal spread of NOLA, let's say, $30 to the Midwest, it's between $50 and $100 today and will probably go up towards the higher end as we get to peak applications.

the retail sector, I think, has reflected -- prices were falling. I understand that if they bought $500 UAN and the market is now $300, how do they price that to the farmer. And the farmer is reading some of the same materials in -- whether that's the publications or online. And so there's a standoff. What is an appropriate price at the retail level, what should the farmer be paying. And so in effect, they said, I'm going to stop buying because the farmers stopped buying.

Current prevailing prices in the spot market today tend to be a bit below where our average prices were in Q1 as reported.

[Elroy] CVI is CVR parent company. Here are some fertilizer comments from the CVI confe...

Elroy — 5/2/2023 8:09:54 PM
CVI is CVR parent company. Here are some fertilizer comments from the CVI conference call.

seekingalpha.com

Over the next two years, we plan to invest some additional capital in the fertilizer plants, intended to further improve their reliability, lower their carbon footprint and prepare for potential capacity expansions in one or both facilities. We are also continuing to evaluate the potential transaction to spin off our GP and LP interests in CVR Partners, and I look forward to providing you additional details at the appropriate time.

If we do the spin-off, I think we’ll have to look at the dividend again because that’s just the effect of doing the spin-off. No idea what this means.....

---

on the monetization of the tax credits at UAN, how do those work in general? And how do you -- how do they impact future cash flows at UAN in terms of what you’re giving up? And then, following the $19 million payment in 1Q, how should we think about the potential for future payments and timing there?

Dane Neumann

Yes. I’ll take this one. So really, what we had in place previously was an existing CO2 sales contract with a counterparty. And we ended up contributing that sales contract to a JV with the same counterparty. And as a result, it allows the tax equity investor to claim those credits that we’re receiving for the sequestration activity. So what occurred is the contract was deemed a value of $46 million. We put that as deferred revenue on our balance sheet and recognized an equity method investment of $46 million. The cash receipt of $19 million, it was $18 million net of fees, was really just the first payment in the string of payments we expect to receive associated with the JV. And that payment drew down some of the equity method investment.

On a go-forward basis, we will recognize that deferred revenue off our balance sheet into other income for our Fertilizer segment, call it $1 million, $1.5 million each quarter. And there will be periodic payments each quarter as well as opportunity for milestone payments annually.

[Elroy] UAN Q1 2023 call key item notes: Combined plants achieved record production in ...

Elroy — 5/2/2023 11:22:07 AM
UAN Q1 2023 call key item notes:

Combined plants achieved record production in Q1 2023.

He reiterated that most of Q2 ammonia pre-sold in Q4 last year before ammonia prices dropped. So I think Q2 ammonia realized price per ton should be well above current market prices.

There wasn't a lot of meaningful near term information other than that.

[Elroy] Damn. UAN hits it out of the park. CVR Partners Reports First Quarter 2023 Res...

Elroy — 5/1/2023 6:31:41 PM
Damn. UAN hits it out of the park.

CVR Partners Reports First Quarter 2023 Results and Announces a Cash Distribution of $10.43

investors.cvrpartners.com

The two plants produced at 105% of nameplate capacity.

They put 20k tons of ammonia into inventory, and put 7k tons of UAN into inventory. Those likely reverse next quarter, perhaps!

The reserved about $20m for future maitenance projects, so they could have easily paid another $2 distributions this Q.

The main strength was in fertilizer prices per ton, for both ammonia and UAN. For the first time in a long while UAN benefited from their tendency to pre-sell. They sold Q1 production last year before prices collapsed. Good for them.

[Elroy] DTN Retail Fertilizer Trends Anhydrous Fertilizer Price Drops Below $1,000 Per T...

Elroy — 4/26/2023 4:05:31 PM
DTN Retail Fertilizer Trends
Anhydrous Fertilizer Price Drops Below $1,000 Per Ton for the First Time Since October 2021

https://www.dtnpf.com/agriculture/web/ag/crops/article/2023/04/26/anhydrous-drops-1-000-per-ton-first