LAST FALL'S late harvest and short application season for anhydrous ammonia will push more nitrogen application to spring. According to one major ammonia producer, it sold only 60% of the normal amount of fall ammonia in 2009. With that much more spring nitrogen to apply this year, transportation logistics could be the biggest complication for ammonia users, while supply could be a problem for those planning to use urea.

Getting product where it needs to go fast enough will likely be one of the biggest issues for spring ammonia, says Scott Manwarren, CHS ammonia product manager. “Railcars are already showing indications of being in short supply, as well as trucks, so if growers wait too long to make their purchases, the product might not make it to their dealer in time. The biggest bottlenecks could be in Illinois and Indiana, where they had a very limited fall application season.”

The potential good news, he says, is that the National Weather Service is projecting below-normal precipitation for the Ohio River Valley in February and March, so there may be good application opportunities there this spring.

“Because ammonia still is the best N value on a per-pound basis, we do expect strong spring demand,” he adds.

Tight urea supplies

For much of last summer and fall, U.S. urea prices remained below world prices, which kept away foreign cargos. That, along with stalled buying by growers and slowed production, has set up U.S. urea markets to be about one million tons behind typical inventory levels on a 12-month rolling average heading into spring, says Matt Bohan, urea product manager for CHS.

A tightening world market also could keep pressure on supply in the coming months. “Rising gas and coal prices in China have caused the Chinese FOB price to increase to $300. Because the Chinese government has increased the export tax to 110%, there is no Chinese urea flooding the U.S. market,” Bohan says.

Ukrainian prices also have headed higher due to increased gas prices from Russia, he adds. “That is raising the worldwide price floor.”

Bohan says the latest U.S. estimates of 88 million acres of corn crop to be planted this spring are up from the five-year average of 86 million acres. “Current dealer inventories are significantly below last year,” he says. “With two million more acres of corn and one million fewer tons of urea, the potential for a urea shortage is very real.”

Switch to UAN

Due to the current price differentials between nitrogen sources, urea ammonium nitrate (UAN) is more economical than urea. That's likely to cause more early movement of UAN in the Plains states on the wheat crop, says Todd Dysle, UAN product manager for CHS. “That's usually a bellwether for the rest of the spring season,” he says. “Last year the early crops there got urea applications and there was more urea used, in general. This year it's likely to be more UAN.”

There could be an additional 500,000 to 1 million tons of demand for UAN and urea this spring, Dysle estimates. “But there should be adequate supply of UAN,” he says. “Carryover from last year plus current U.S. production, plus imported product from the new Trinidad facility should be adequate to meet spring needs.”