CF Industries optimistic about US spring ammonia application

09 May 2013 22:32  [Source: ICIS news]

HOUSTON (ICIS)--There has been talk that corn farmers might choose to forego ammonia in favour of other nutrients this spring because of delays in the amount of acreage planted. However, fertilizer producer CF Industries officials said on Thursday they believe ammonia volumes and inputs will still be considerably strong.

Speaking during a first-quarter earnings conference call, CF Chairman Stephen Wilson said the 2013 season is proving to be quite different than the previous year. In 2012, farmers got an early start thanks to favourable weather conditions and helped facilitate a greater surge in fertilizer movement.

“Ammonia is the product that experienced the greatest year over year change in volume. In 2012 we sold 672,000 tons (609,000 tonnes) of ammonia, an unprecedented amount that reflected the exceptional weather conditions that allowed farmers to get into their fields to start applications in early March,” said Wilson.

“This year we sold 334,000 tons of ammonia, a more typical amount. The cool wet weather prevented farmers from starting ammonia applications in the Corn Belt during the quarter, but we did experience good movement in the southwestern states.”

The Illinois-based fertilizer producer and distributor reported that net sales were $1.34bn (€1.02bn), down by 13% from net sales of $1.53bn in the same period last year, primarily due to lower sales volumes in both the nitrogen and phosphate segments.

Wilson said that despite sales fluctuating downward pricing for ammonia has been encouraging and highlighted the overall demand for the crop nutrient.

“Pricing for ammonia was quite strong throughout the quarter. The average price per ton was about even with the first quarter of 2012 in reported average price and increased about 6% compared to the adjusted average price,” Wilson said.

On Wednesday the benchmark Black Sea ammonia price climbed slightly at $515/tonne FOB (free on board) for June loading, up $4/tonne on May business. The price increase is primarily a result of the ever-tightening supply balance due to ongoing natural gas curtailments in Egypt and Trinidad as well as plant turnarounds and unexpected outages.

Company officials said total fertilizer sales decreased to 3.5m tons from 3.7m tons in 2012. Officials said that this is because of the change in plantings from 2012 and the overall amount of fertilizer applications that had been completed a year earlier.

CF is remaining optimistic about the potential crop as it has kept its forecast that farmers will still plant 96m acres (39m ha) of corn. A vast amount of acreage that soon will need nutrients in order to achieve what is expected to be a very sizeable yield with the recent replenishing of soil moisture across most of the key growing regions.

Senior vice president of sales Bert Frost said those who are using ammonia this spring need time for the product to settle into the soil before planting. He said the company is expecting certain farmers will also elect to apply the nutrient well into the middle growth stage of the plant in order to boost yields, considering the high price corn could eventually bring in 2013.

“You need a window to apply and then wait for the product to cure and then plant the seed,” said Frost. “I would expect that side-dress due to late planting will continue into July. We will see positive movement of ammonia, even though we recognize that some ammonia areas may move to UAN [urea ammonium nitrate].”

($1 = €0.76)

By: Mark Milam
+1 713 525 2653

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