06 November 2012 17:13 [Source: ICIS news]
"Field conditions are conducive to ammonia application this autumn as the US corn harvest was completed early and adequate moisture arrived when it was needed," said CF chief executive Stephen Wilson in a conference call with investors.
"With US farmers expected to plant 97m acres [39m ha] of corn in 2013, crop nutrients, especially nitrogen, will be in high demand," Wilson said.
The global demand for urea will be strong in coming months, and the demand for phosphate fertilizers should also be good next year as global crop planting intentions for 2013 are high," said Wilson.
The urea market should take off in January-February when the US winter wheat crop comes out of dormancy, he added.
On Monday, Illinois-based CF reported record third quarter 2012 net earnings of $403.3m (€314.6m), a 22% increase from the same quarter in 2011.
Leading to the record earnings was the generation of a 52% gross margin.
Net sales in the third quarter were $1.36bn, down 3% from $1.4bn a year earlier because of lower total nitrogen volume and phosphate product prices.
Total sales volume decreased 2% to 3.5m tonnes in the third quarter largely because of lower urea sales compared with the same period in 2011.
"Global population growth, a shift toward higher protein diets and continued use of crops as a source of renewable fuels all are generating a need for more grain and higher use of plant nutrients," Wilson said.
Additionally, the increased production of North American shale gas and the associated decline in natural gas prices have created a sustainable cost advantage for the company’s nitrogen production.
The global ammonia market continues to be very tight, given supply reductions from Trinidad and Russian ammonia producers, along with robust demand from North American dealers and distributors building inventory in anticipation of a high volume of autumn and spring ammonia application by farmers, CF said.
The urea market is expected to benefit in the near term from the closing of the low-tariff Chinese export season, gas constraints impacting a number of off-shore producers and continued robust global demand.
CF said that at the end of the third quarter, the company had very low urea ammonium nitrate (UAN) inventory, with most of it committed and in the process of being delivered to customers as part of the company’s forward sales programne.
With high planted acres in the US, domestic demand for phosphate fertilizers is expected to be robust in 2013, following the normally slow winter months at the end of 2012, CF said.
($1 = €0.78)
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