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Revision History For: UAN - The variable distribution MLP that could go a long way

14 Aug 2021 05:50 PM
25 Mar 2021 07:28 PM <--
23 Mar 2021 04:09 PM
22 Mar 2021 04:34 PM

Return to UAN - The variable distribution MLP that could go a long way
 
This board is to discuss CVR Partners (ticker - UAN).

CVR partners is a maker of UAN and ammonia fertilizers.

The entity is a Master Limited Partnership (MLP). It pays quarterly distributions based on an internal formula of cash for distribution.

What’s interesting and good about the current UAN story?

1. Least interesting. Congress recently passed a law granting tax credits for a certain type of carbon capture. UAN has been doing this type of carbon capture for a few years. They are researching how best to monetize this new tax credit, and may tell us the result in the Q1 or Q2 2021 conference calls.

2. Quite interesting. UAN has about $665 million in debt which carries a 9.25% coupon. They can refinance this debt in June without pre payment penalty. Analysts estimate they can reduce the coupon to around 6%. That would save a good chunk of money in reduced interest payments going forward.

3. And the most interesting thing. The fertilizers which UAN sells have moved up in price significantly since January 2021, and are now near decade high price levels. The unit price of UAN has NOT moved up significantly to reflect the change in the price of the commodity fertilizer which UAN sells. Earlier in about 2012-2013 when fertilizer prices were at similar levels to where they are today, UAN was distributing about $12 per year, and the unit price was above $200.

That’s the story in a nutshell. Here’s a graph of the price of the main fertilizer which UAN sells.

stooq.com

Here’s a page that appears to show the futures price for UAN fertilizer.

cmegroup.com

UAN the company generally doesn’t produce much news beyond quarterly financial results. I’d expect this board to become fairly quiet outside of the quarterly results. Recently there have been 3 to 4 articles per month on various agriculture web sites that discuss fertilizer price trends. UAN’s two main fertilizers for sale are UAN32 and anhydrous/ammonia. There are also a few articles per week that discuss changes in the price of corn. Higher corn prices = both more corn planting and more incentive to use fertilizer to improve yields on corn acreage. High corn prices per bushel are very good for fertilizer demand.

Feel free to discuss anything fertilizer or agriculture related. My expertise in both subjects is nil, so we will accept any wild corn conspiracy theories as facts, and eat corn, and wait to see the financial results that UAN may produce in a high priced fertilizer environment.