28 April 2011 20:27 [Source: ICIS news]
HOUSTON (ICIS)--Growing demand for food around the world will prompt growers of all crops to use more fertilizer to increase production, the chief executive of Canada's PotashCorp said on Thursday.
"With rising demand putting pressure on global supplies of a wide range of crop commodities, we believe the need for high-yield agriculture around the world has never been greater," PotashCorp chief executive Bill Doyle said in a conference call.
Earlier, Saskatchewan-based PotashCorp reported a 64.9% increase in first-quarter net income to $732m (€498m) on the back of strong demand and price gains for fertilizers.
"Rising demand from fertilizer buyers around the world is putting pressure on the global potash industry’s supply capabilities and creating an environment of rising prices," Doyle said.
These conditions continue to provide an earnings opportunity for PotashCorp because of its ability to expand operational capability and increase production over the next five years to meet growing demand, Doyle said.
"Since 2003 and continuing through the darkest days of the global recession, we have been investing in new operational capability to prepare for the situation that we believe is unfolding," Doyle said.
PotashCorp recently completed construction of the first portion of a two-phase expansion at its Cory, Saskatchewan, facility and is ramping up production.
The company expects to complete major projects in New Brunswick and Allan in 2012 and at Rocanville, its largest project, by 2014, with new production from all expansion projects ramped up by 2015.
Cumulatively, the projects are expected to raise PotashCorp's operational capability to an estimated 17.1m tonnes annually, an increase of more than 50% from 2011 levels.
"We believe the rising need for potash is not a product of short-term surges or inventory restocking following the deferrals of 2009, but a response to the increasing crop nutrient requirements necessary to feed a growing world," Doyle said.
"Based on current conditions, we continue to anticipate 2011 global potash demand of 55m-60m tonnes," Doyle said.
Potash demand in Latin America is projected to reach a record of approximately 10m tonnes as a result of strong crop economics and limited distributor inventory entering the year.
Rising demand in Asia outside of China and India is forecast to reach 7.3m tonnes in 2011, supporting higher prices, the company said.
The company anticipates that 2011 potash consumption in China could approach 11m tonnes, including imports of approximately 7m tonnes.
In phosphate, the recent settlement of key supply contracts with India is expected to support healthy export demand through 2011, the company said.
Sales volumes and prices for nitrogen products should also remain relatively strong, based on continuing agricultural strength and improved industrial demand.
"We forecast combined 2011 gross margin for our phosphate and nitrogen segments to be in the range of $1.1bn to $1.3bn," Doyle said.($1 = €0.68)
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