Slow start to US corn won't dent ammonia - CF

07 May 2008 18:11  [Source: ICIS news]

HOUSTON (ICIS news)--The slow start to US corn planting would not push many farmers to switch to soybeans because market signals still favour the ammonia-intensive corn crop, an official at fertilizer firm CF Industries said on Wednesday.

Farmers already made significant investments months ago in ammonia, and they will not want to give up the chance to capitalise, chief financial officer Anthony Nocchiero told an investment conference.

"We are still in the window (for planting), and economics favour corn," Nocchiero said. "The opportunity for a strong spring is still there."

A US Department of Agriculture (USDA) survey issued on Monday showed that wet weather meant only 27% of the corn crop was planted as of 4 May, up from 10% a week earlier but well behind the five-year average of 59%.

Looking ahead, Nocchiero said the sustained strength of corn prices would encourage farmers to continue to pre-pay for ammonia, even though they would be faced with sharply higher costs.

"We just don't see demand destruction at current prices," he said. Farmers would do what they can to get every extra bushel of corn while commodity markets are so strong, he said.

Front-month corn futures prices on Chicago's CME were up 11.0 cents (€0.07) at 605.4 cents/bushel around 16:10 GMT. That was around 50% higher than a year ago.

The slow start to the ammonia application season in the US midwest has backed up the supply chain and brought barge trading in New Orleans to a virtual standstill for weeks.

Spot ammonia was notionally assessed at $610/short ton FOB (free on board) New Orleans in the week ended 2 May, according to data from global chemical market intelligence service ICIS pricing.

That was close to double the year-earlier value of $308-315/short ton.

($1= €0.64)

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By: Stephen Burns
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