05 November 2013 23:36 [Source: ICIS news]
HOUSTON (ICIS)--CF Industries (CF) said on Tuesday that throughout the Q3 period, there has been a delay in purchasing for fall applications by US farmers, partially to uncertainty over pricing but that the fertilizer producer expects those volumes to see an uptick in movement over the next month.
Speaking during a Q3 earnings conference call, Illinois-based CF said the Q3 time period is traditionally the slowest of the year, impacted by the slower-than-normal pace of harvesting of crops, which have subsequently dragged down purchasing at the farm level and caused distributors to be extra cautious in refilling their inventories.
“Consistent through the third quarter, we’ve have seen a delaying in purchasing or a desire not to purchase to build inventories due to uncertainty in the pricing structure of the world market,” said Bert Frost, CF senior vice president.
“If the farmers will start stepping in once the harvest is complete and ammonia is applied and put down in Q4, we expect then people to step up and prepare for their spring purchases. So yes there has been a delay or a deferral in forward purchases. We expect that to mitigate and get back to normal trends here in the next few weeks to month.”
CF CEO Stephen Wilson said looking beyond the fall going into spring 2014 that the company is projecting 92m acres of corn will be planted and that the slightly reduced acreage will be a result of declining pricing for the vital commodity.
The second largest crop for nitrogen consumption in North America is wheat, and CF predicts 56.5m acres will be planted next year. Total nitrogen use for 2014 is being placed at 13.3m tons by company officials versus its projections of 13.5m tons in 2013.
In regards to ammonia, Wilson said it is expected that fall ammonia shipments to be below last year but that overall demand is calculated as remaining strong especially if farmers continue planting large amounts of corn. He said ammonia volumes for the company remain on pace with the five-year average.
Frost said the company is seeing a positive growth trend in the use and demand for urea ammonia nitrate (UAN). He said the trend of split applications by which farmers apply ammonia either in late fall or early spring, followed by variable nitrogen inputs during the growing cycles has been very beneficial to the consumption rates of UAN.
“What we see is a consistent trend on UAN because it’s such an easy product to use. It’s preferred, we think, by farmers,” Frost said. “So therefore that is why we have interested in future capacities in UAN.”
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