|Bid||3.00 x 1200|
|Ask||0.00 x 800|
|Day's range||3.68 - 4.04|
|52-week range||2.71 - 4.35|
|Beta (3Y Monthly)||1.71|
|PE ratio (TTM)||N/A|
|Earnings date||24 Oct 2018|
|Forward dividend & yield||N/A (N/A)|
|1y target est||4.65|
Last week, which ended October 12, global tensions remained high, and natural gas prices spiked as the overall stock market traded in the deep red. An increase in natural gas prices raised the costs for companies (MOO) such as CF Industries (CF), Nutrien (NTR), and CVR Partners (UAN). Let’s look at the movements in natural gas prices and the short-term outlook.
Nitrogen fertilizer companies (XLB) CF Industries (CF), Nutrien (NTR), and CVR Partners (UAN) fell last week due to the broader market sell-off. But their fundamentals remained strong. Urea prices, for example, continued to make new highs last week, which is a continuation of the ascending trend we’ve seen since April.
SUGAR LAND, Texas, Oct. 11, 2018 -- CVR Partners, LP (NYSE: UAN), a manufacturer of ammonia and urea ammonium nitrate (UAN) solution fertilizer products, plans to release its.
Natural gas prices are a key price driver for urea and other nitrogen fertilizers. An increase in natural gas prices can negatively impact margins for nitrogen fertilizer producers (MOO) such as CF Industries (CF), CVR Partners (UAN), and Nutrien (NTR). Natural gas prices are also critical for ammonium-based phosphate fertilizers.
Urea prices continued to strengthen last week, which added to the optimism surrounding nitrogen companies (XLB) such as CF Industries (CF), CVR Partners (UAN), and Nutrien (NTR). Let’s look at the weekly gains in urea prices for the two locations discussed below.
Last week, the week ending September 28, the EIA (U.S. Energy Information Administration) reported that the natural gas prices in the United States were mixed. We have been tracking natural gas for nitrogen players (MOO) like CF Industries (CF), Nutrien (NTR), and CVR Partners (UAN). They have been fairly stable in 2018. Last week, natural gas prices remained higher than $3 per MMBtu (million British thermal units).
In the week ending September 28, the urea prices in NOLA (New Orleans) and Brazil made new highs again. The rising trend started in May. Stronger urea prices favor producers (XLB) like CF Industries (CF), CVR Partners (UAN), and Nutrien (NTR).
In the week ending September 21, natural gas prices remained slightly above the $3 per MMBtu (million British thermal units) level. The level has been important for nitrogen (XLB) fertilizer producers like CF Industries (CF), CVR Partners (UAN), and Mosaic (MOS).
Urea prices continued to rise in the week ending September 21. The prices in the NOLA (New Orleans) region and Brazil increased week-over-week from the week ending September 14.
The week ending September 21 was broadly positive for the fertilizer sector. The VanEck Vectors Agribusiness ETF (MOO) rose 2.3% from the week ending September 14. The overall market S&P 500 Index rose by 40 basis points. Let’s look at how some of the major fertilizer stocks performed last week.
Low natural gas prices in the US have been highly beneficial for North American fertilizer companies (XLB) including CF Industries (CF), CVR Partners (UAN), Nutrien (NTR), and Mosaic (MOS). The lower natural gas prices enable these companies to sit on the lower end of the cost curve, which is good for margins when overall fertilizer selling prices rise.
Urea, the most common nitrogen fertilizer, has been on an upward trend in recent weeks. In the week ended August 31, urea prices made new highs at each of the locations in the chart below. Last week, which ended September 7, urea prices were broadly flat to positive at those two locations.
Fertilizer affordability has been negatively impacted by the direction in which fertilizer prices have been moving in relation to the prices of key fertilizer-consuming crops such as corn, wheat, and soybeans. Lower fertilizer affordability can weigh on companies (XLB) such as Mosaic (MOS), Intrepid Potash (IPI), CVR Partners (UAN), and CF Industries (CF). The index, issued by Mosaic, has been rising lately, which is a similar pattern to the recent movement of fertilizer prices.
We’re looking at natural gas prices in this series, primarily because they make up about two-thirds of the input costs for nitrogen-based fertilizers. Low natural US gas prices have proved beneficial to companies (NANR) such as CF Industries (CF), Mosaic (MOS), Nutrien (NTR), and CVR Partners (UAN). Let’s see how natural gas performed last week, which ended August 31.
Low natural gas prices in the United States have been a significant benefit to companies (XLB) such as CF Industries (CF), CVR Partners (UAN), Nutrien (NTR), and Mosaic (MOS). In the Market Realist article Analyzing the Global Cost Curve of Nitrogen, we saw how lower natural gas prices benefit nitrogen fertilizer producers by increasing their margins. While there are expectations that natural gas prices will remain low, let’s see how they performed last week, which ended August 24.
Urea prices continued to show strength last week, which ended on August 24. Urea prices have gotten a lift from a tighter supply environment on the back of higher energy costs in Europe and China. In its recent earnings call, CF Industries (CF) stated that it expects the supply to remain weak from Europe and China on the back of weak energy prices.
Natural gas is one of the most important inputs required for nitrogen fertilizers. Companies such as CF Industries (CF) that are located in the United States are at a unique advantage with access to low natural gas prices. In its quarterly earnings, CF Industries cited low natural gas as a key driver for improvement in margins.
For nitrogen fertilizer investors, the energy cost is one of the most important considerations because it can account for 60%–70% of the raw materials costs. Companies located in the United States have an advantage compared to companies outside the United States. During the second-quarter earnings call, CF Industries (CF) said, “Increased energy costs, particularly for producers in Europe and China, have raised and flattened the upper half of the global cost curve necessitating higher nitrogen prices.”
With most major fertilizer players done with their second-quarter earnings, we discussed how analysts reacted positively and upgraded stocks like CF Industries (CF), Mosaic (MOS), and Nutrien (NTR). To learn more, read Analysts Are Becoming More Bullish on Fertilizer Stocks. In this series, we’ll discuss why fertilizer stocks received several upgrades from Wall Street analysts.
The current consensus price target for CF Industries stood at $47.95, which rose by almost 9.9% from $43.63 a month ago. The median price target also rose to $50 from $43 a month ago. The stock closed at $48.57 on August 8, which was already above the mean price target and only 2.9% below the median price target.
CF Industries (CF) reported strong second-quarter earnings. After releasing results, the stock popped about 3.8% in the after-hours market session to $45.8 per share. The company managed to beat both top-line and bottom-line estimates during the quarter.
American Midstream Partners (AMID), a midstream MLP involved in natural gas gathering, processing, and compression, was the lowest-performing MLP in the week ended July 27. AMID stock plunged 41.1% last week. It saw a sharp correction following its announcement of a capital allocation strategy, which includes the sale of non-core assets and a distribution cut.
Low natural gas prices have boosted nitrogen fertilizer companies in the US. In the second quarter, CVR Partners (UAN) stated that it experienced a $3 million decline in costs partly due to lower natural gas costs along with lower freight costs.
Urea prices continued to slide last week. Prices reached new highs just a few weeks back. Last week, CVR Partners (UAN) offered insight into urea prices in the first half of this year. Before we discuss that, let’s look at how urea prices fared last week.
Last week, the agribusiness sector inched higher. The VanEck Vectors Agribusiness ETF (MOO) ended the week to July 27 up by 1.2%, while the broader market S&P 500 Index (SPY) increased by 62 basis points over the same period. Let’s look at how fertilizer stocks performed last week.