Los Angeles — If earlier droughts are any lesson, the one this year should keep both corn and nitrogen prices up, Rentech Inc. President and CEO D. Hunt Ramsbottom told analysts Aug. 10. “After the last three drought years of 1983, 1988, and 1991, it took two full years of corn crops to return to normalized inventory levels. Based on these historical precedents, many believe it’ll take multiple years to bring ending corn stocks back above the billion bushel mark. So corn prices should be strong, while stocks are below normal levels.” He said nitrogen usage and prices have historically increased following a drought due to the expectation of higher plantings to replenish stocks in response to higher corn prices. “These pricing patterns held true as ammonia and UAN prices marched steadily higher as the drought progressively impacted the corn crop over the last few months. We’ve seen prepaid sales for fall deliveries of ammonia rise from $600/st in early May to posted prices of $770/st today, while UAN prices increased from $290/st in late June to posted prices of $370/st today.” Ramsbottom added that Rentech Partners LP has begun selling ammonia for spring 2013 delivery at prices that exceed the average ammonia price of $730/st achieved during the spring of 2012. He noted that while low water levels on the Mississippi River may be affecting competitors, it is not impacting Rentech’s East Dubuque, Ill., plant, as its customers typically pick up their product at the plant by truck. Net income for Rentech Partners soared to $41.2 million, versus the year-ago $13.7 million (GM Aug. 13, p. 11).
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