Ferts needed even with cheaper corn – Agrium

06 August 2008 18:45  [Source: ICIS news]

HOUSTON (ICIS news)--The CEO of Agrium sought to assuage analysts’ concerns on Wednesday over falling corn prices, saying fertilizers would still see strong demand from farmers even as commodities prices fall.

Corn prices have retreated significantly since peaking just shy of $8/bushel a month ago, and lost another 16 cents Wednesday morning on the Chicago Board of Trade (CBOT) to trade at $5.08/bushel.

When corn prices are high, farmers have a greater reason to apply fertilizers like ammonia, urea, phosphates and potash to increase yields, analysts said.

As corn prices have fallen over the past few days, Agrium’s stock price has taken a hit, along with other North American fertilizer companies.

Shares of Agrium increased $3.84, or 4.82%, to trade at $83.49 (€54.27), but the price was still off an all-time high of $113.88 set on June 18.

But even though commodity prices have slid over the past two weeks, Agrium president and CEO Mike Wilson said strong incentive still exists to apply fertilizers to crops.

“We’ve always maintained we don’t need $8 corn…. We think corn prices in a $5-6/bushel range provide healthy returns for farmers,” Wilson said in a conference call.

Earlier in the day, Agrium announced it had nearly doubled its profits on the heels of high fertilizer prices.

Richard Gearheard, head of Agrium’s retail business unit, said farmers were going to continue to consume more fertilizers as consumers demanded more food.

“Fertilizer remains an outstanding return on investment. The progressive growers are going to continue to want to get that higher return on investment,” Gearheard said.

($1 = €0.65)

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By: David Rosen
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