Canada's PotashCorp enthusiastic about crops despite weather delays

25 April 2013 22:08  [Source: ICIS news]

HOUSTON (ICIS)--Fertilizer distributors and US farmers may be growing increasingly uneasy about the delays in planting corn and soybeans due to persistent wet and cold conditions, but PotashCorp believes the 2013 planting season could end up being very fruitful, company officials said Thursday.

Discussing its Q1 2013 earnings report in a conference call, officials with the Canadian fertilizer manufacturer said they believe that this year is shaping up to be strong for product demand as the economic opportunities for agricultural producers across the world - especially in North America - are still favourable despite recent dips in commodity prices and the lingering end of winter in many corn-growing regions.

“With the market conditions in place today, farmers have considerable incentive to optimize yields, and we are seeing that translate into stronger fertilizer demand. Early projections for our big North American crop is putting some downward pressure on grain prices and correspondingly some people’s assumptions for future fertilizer needs,” said William Doyle, PotashCorp CEO.

“That thinking ignores two important realities of global food production," he said. "First, North America is only one piece of the puzzle. We need a record global harvest to just close the gap left by the work in production last year. Second, we all know that crop production has inherent uncertainties and that an early forecast of a record harvest doesn’t always end with a record crop in the end.”

Evidence of that was witnessed in this week’s crop progress report by the US Department of Agriculture (USDA), which reported that corn planting for the start of the 2013 season is still considerably behind compared with last year, primarily due to the persistence of wet, cold weather.

According to the USDA at the start of week, only 4% of the corn crop was planted in 18 of the major corn-growing states versus 26% at this time a year ago. The US agency said that seven states still do not have 1% of their crop planted.

Some crop forecasters have begun predicting that if this spring’s corn sowing gets delayed much further, the US could start seeing cuts in acreage dedicated to the vital commodity in favour of other crops, most notably soybeans.

One immediate impact if total acreage does dwindle would be a steady rise in the futures price, as a lesser corn harvest would cause an uptick in demand that would go along with a tightening of ending stocks.

Doyle said that beyond the immediate value of the crops farmers hope to reap at the end of summer and into early fall, he is confident that producers recognize the value of restoring soil vitality and keeping a desirable balance of their crop nutrients profile.

“Even if a large harvest is achieved, the prospect of lower crop prices doesn’t change the underlying need for soil fertility," the PotashCorp CEO said. "Crop production is not a one-time event, and the need to replenish nutrients in the soil is ongoing."

By: Mark Milam
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