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CF Industries : Sees uptick in fertilizer demand
Nov. 18, 2016
CF Industries Holdings, Inc.
United StatesFollow
United StatesNorth American farm suppliers are resuming fertilizer purchases although tough market conditions are expected to persist through next year, the chief executive of CF Industries Holdings Inc.
Shares of the maker of fertilizer and other nitrogen products were recently down 6.6%, off earlier lows. They have declined 43% so far this year.
CF's loss came amid a multiyear slump in the U.S. agricultural sector, with low commodity prices pressuring incomes for Midwest farmers raising crops such as corn, soybeans and wheat.
CF said it expects planted corn acreage in the U.S. to drop to around 88 million acres in 2017 from 94 million acres this year.
Amid a global glut in fertilizer production, CF Chief Executive Tony Will said buyers "took a wait-and-see approach" during the latest quarter as low prices and new supplies due next year prompted them to postpone building new inventory ahead of the next planting season.
Mr. Will said sales volumes and prices have since improved, though the weakness is expected to persist. "Buyers are finally moving off the sidelines and beginning to prepare for the application season," he said.
A seasonal lull in demand from farmers was exacerbated by purchasing delays, with buyers slow to snatch up the crop nutrients because of additional fertilizer production due to come online in North America next year.
The company said despite abundant supplies of nitrogen fertilizer globally, demand for the nutrient is expected to grow about 2% a year and the addition of new production plants will also slacken.
CF reported a loss of $30 million, or 13 cents per share, compared with a profit of $90 million, or 39 cents a share, a year earlier. Sales fell 27% to $680 million.
Source: 4-traders.com
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