24 September 2013 21:13 [Source: ICIS news]
HOUSTON (ICIS)--Fertilizer markets have been challenged with a lack of refill activity for fall applications, an Agrium executive said on Tuesday.
Presenting at the Scotiabank Global Banking and Markets Agriculture and Fertilizer Conference in Toronto, Agrium chief operating officer Chuck Magro said the downward trend in demand, and subsequently overall nutrient pricing, should begin to pass with a potential high yielding corn harvest about to be fully underway and a market eager for an upswing with the commencement of fall refill.
In a release issued on Monday, the company warned that its quarterly numbers would reflect a reduction in sales by 20% for nitrogen and 30% for phosphate and potash. Magro said that while wholesale business saw a reduction, the retail portion is expected to surpass last year’s Q3 results.
“Despite some short-term headwind that is impacting our wholesale business in Q3, we believe the long-term fundamentals of our business remain very strong, and we expect solid crop input demand as we move into the fall season,” Magro said.
“Our strategy is unique. We are the only publicly traded company that’s integrated across the value chain. We believe that having wholesale production integrated with a retail distribution business provides very significant value for our shareholders," he added.
With the planting season having run later in the US and farmers delaying buying fertilizer for post-harvest applications, demand has lessened as many watch to see when pricing will hit a floor with the recent declines.
“While we are seeing slower volume demand and weaker pricing across all three crop nutrients, harvest is just getting underway in the southern part of the US and many growers are taking a wait-and-see approach to buying fertilizers,” Magro said. “Also, as a result of outages at our nitrogen facilities, we had lower Q3 inventories and are experiencing higher cost as a result."
With all factors considered, the wholesale segment is likely to be down by $200m (€148m) for the same quarter year on year, he said, but long-term there is still room to grow Agrium's share of the US market without having to make acquisitions such as the current takeover of Canadian agricultural products provider Viterra.
“They are still a lot of independent operators that we are able to consolidate over time and that really is the strategy that we have to maximizing our existing network,” Magro said.
($1 = €0.74)
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