US CF Industries expects strong fertilizer demand

07 August 2012 17:51  [Source: ICIS news]

HOUSTON (ICIS)--CF Industries expects positive business conditions for the remainder of 2012 into 2013, the US-based fertilizer maker said on Tuesday.

Conditions will improve based on the expectations for the planting of a large corn crop in 2013, strong global demand, tight domestic nitrogen fertilizer supply and favourable natural gas costs, the company said.

"Global population growth, a shift toward higher protein diets, and continued use of crops as source of renewable fuels are all generating a need for more grain and higher use of plant nutrients," said CF chief executive Stephen Wilson on Tuesday during a conference call with investors.

"Additionally, the increased production of North American shale gas and the associated decline in natural gas prices have created a sustainable cost advantage for CF's nitrogen production," Wilson said.

On Monday, CF Industries' reported that second quarter 2012 net earnings rose by 24% year on year to a record $606.3m (€491.1m).

Illinois-based CF said net sales for the three months ended 30 June were $1.7bn, down 4% from $1.8bn in the same period a year earlier.

Wilson said the current drought in the US that has resulted in reduced yield projections and high corn prices implies that 2013 corn plantings will again be about 96m acres (38.9m hectares).

CF projects that US soybean acres in 2013 will be about 77m acres, up from 73m acres in 2012.

"Global ammonia market prices have increased recently on concerns about tight supply as a number of off-shore producers are expected to experience outages. These dynamics should support ammonia prices," Wilson said.

Strong global demand, large wheat plantings expected for 2013, and increased crop plantings in Latin America will support urea prices in the second half of 2012, said Wilson.

CF projected that increased plantings of soybeans in Brazil and corn in Argentina starting in October will create strong demand for both nitrogen and phosphate fertilizers in Latin America.

($1 = €0.81)

By: Frank Zaworski
+1 713 525 2653

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