04 November 2008 14:51 [Source: ICIS news]
HOUSTON (ICIS news)--US farmers have strong reasons to invest in fertilizer before year-end despite the sharp fall in futures prices for ammonia-intensive corn, CF Industries chairman and chief executive Stephen Wilson said on Tuesday.
"We see a lot of incentive for farmers to spend in next few months," Wilson told a conference in London.
"We believe we remain in a very strong position with respect to the economics of corn farming in the US," he said.
As well as corn demand being projected to remain strong, a jump in farm incomes in 2008 means many farmers will want to reduce their tax bills by spending on fertilizer in the remainder of the year, Wilson said.
The US Department of Agriculture (USDA) projects 2008 farm incomes at $101bn (€80bn), Wilson noted, well above the long-term average range of $50-60bn.
Actual US farm prices for corn have been much more stable than futures prices, holding close to a $4-5/bushel range throughout this year, Wilson said.
The $4.00-5.00/bushel range for farm prices suggests a positive scenario for fertilizer demand, because prices above that level cause demand destruction in the ethanol and livestock sectors, Wilson said.
Corn planting in 2009 may even exceed 90.0m acres, Wilson predicted. USDA has projected corn planting at 85.9m acres.
Wilson also said that although there has been a shift in the political winds formerly pushing the US ethanol industry forward, it would be difficult for Congress to reverse course on the biofuel given the depth of its previous support and the power of the farm lobby.
($1 = €0.79)
For the latest chemical news, data and analysis that directly impacts your business sign up for a free trial to ICIS news - the breaking online news service for the global chemical industry.
Get the facts and analysis behind the headlines from our market leading weekly magazine: sign up to a free trial to ICIS Chemical Business.
|ICIS news FREE TRIAL|
|Get access to breaking chemical news as it happens.|
|ICIS Global Petrochemical Index (IPEX)|
|ICIS Global Petrochemical Index (IPEX). Download the free tabular data and a chart of the historical index|