AnalysisPotashCorp looking toward a strong US spring planting season

31 January 2013 23:25  [Source: ICIS news]

HOUSTON (ICIS)--Like many in the fertilizer industry, PotashCorp officials are counting on a robust spring planting season in the US to raise the demand for their products.

Speaking to media and analysts on Thursday during a conference call to discuss their Q4 2012 earnings results, PotashCorp officials said the expectations of higher corn prices combined with lower-than-average fertilizer prices could see North American farmers take as much as 9.5m tonnes of fertilizers for the spring crop.

“The crop prices are very encouraging, and fertilizer cost as a percentage of the crop prices [and] crop revenues are at historic lows,” said Stephen Dowdle, president of PCS sales. “So the expectations are that we will plant again in large acres and there will be an incentive to maximum the yields because of these crops economics.”

The bright forecast for the spring has been supported by the views of agricultural industry insiders who have predicted that US farmers are going to be focused on filling their acreage with corn in light of the recent escalation of futures prices. Earlier this month, the analytical firm Informa Economics raised its estimate on projected corn planting from 99m acres to 99.3m acres. If the forecast holds true, it would mark a rise by 2.4m acres from 2012.

Overall corn futures have responded positively since the 11 January release of the World Agricultural Supply and Demand Estimates by the US Department of Agriculture. On Thursday, corn rose a quarter of a cent to close at $7.40 /bushel (€5.62/bushel).

Counting on that surge in demand, PotashCorp CEO William J. Doyle said the company has staged itself in a good position to handle the logistics of this anticipated increase in volume.

“Our system has been custom-designed to deliver, and we are just finishing up the second bills of a thousand additional railcars," Doyle said. "We have had 2,000 new cars in our system over the last three years, and we have a new large distribution centre in Hammond, Indiana, which is ideal for unit train systems."

“Overall we see the market being quite a bit stronger in the US going from 7.9 to potentially as high as 9.5 million tons," he said. "So we think the US can be a real strong spot for us in 2013.”

By: Mark Milam
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