Yara advances to two-year high on outlook for fertilizer demand

Yara International ASA, the largest publicly traded nitrogen-fertilizer maker, jumped to a two-year high in Oslo trading after saying demand for fertilizers will increase following gains in the price of grain.

Yara rose as much as 2.4 percent to 331.8 kroner, the highest price since September 2008. The stock was at 327.9 kroner as of 12:29 p.m. local time, extending its advance this year to 24 percent.

"Fertilizer demand has picked up strongly this autumn following tighter markets for agricultural commodities,” the Oslo-based company said in a statement before an investor seminar today. “The longer-term nitrogen-fertilizer balance looks healthy as new capacity is limited.”

World grain prices have surged this year as drought in Russia, flooding in Canada and parched fields in Kazakhstan and Europe ruined crops. Russia, once the world’s third-biggest wheat exporter, banned overseas sales in August.

Yara, which makes mineral fertilizers such as urea and ammonia, has the largest urea plant in North America and liquid and dry terminals on the east and west coasts and the Gulf of Mexico. It’s important to “map different opportunities” in areas such as North America and eastern Europe to be prepared for potential acquisitions, Chief Executive Officer Joergen Ole Haslestad said at a presentation in Oslo today.

"Yara’s global business model gives growth opportunities in many regions,” Pareto Securities ASA said in a note to clients. “The presentation looks to be positive.”

Chinese Shipments Drop

Yara and its competitors in Europe and the U.S. are set to benefit from a decline in Chinese exports of fertilizers including urea and diammonium phosphate as the Asian nation seeks to boost local supplies and lower prices.

"All available global fertilizer capacity is utilized, with the exception of curtailments in China,” Haslestad said. “Even more important longer-term may be the extent to which Chinese central authorities will limit urea exports to secure supply to domestic agriculture.”

Yara, which was outbid in a battle to acquire the U.S.’s Terra Industries Inc. this year, is interested in nitrogen- fertilizer investments around the world, Haslestad said Oct. 19. Yara had agreed to buy Terra in an all-cash deal financed with a $2.5 billion rights offer.

The bid for Terra demonstrated Yara’s readiness to use equity offerings to finance large acquisitions if necessary, the Norwegian company said today.