Agrium Inc. said late Jan. 15 that it is in the process of restarting its Fort Saskatchewan nitrogen facility and is resuming full rates for urea production at its other Canadian facilities due to the recent improvement in urea demand. It continues to operate phosphate and potash facilities below full rates.
In the meantime, Agrium confirmed last week that its Borger, Texas, nitrogen plant is completely idled until market conditions improve. Borger ammonia capacity is 490,000 mt/y and urea is 99,000 mt/y.
The Profertil nitrogen facility was returned to production this week after an extended turnaround. Agrium reports that the Argentine government announced this week a price agreement for most crop inputs with key agricultural suppliers, including Profertil and Agroservicios Pampeanos (ASP). The agreement requires future crop input prices to be related to an agreed-upon normalized crop input price or margin, and changes in input prices and margins to occur in direct proportion to changes in crop prices. For Profertil, the corresponding maximum urea price under current crop prices is approximately $390 per mt at the warehouse. The agreement is not expected to have any material impact on the earnings profile for ASP or for Profertil at current world urea prices.
Agrium Inc. said it expects to record a write-down in Retail in the fourth quarter of 2008 of approximately $96-million ($0.41 diluted earnings per share), of which $11-million is for its South American Retail operation and $85-million is for its North American Retail operations. The adjustment to its North America Retail operations is primarily related to the difference in the value between anticipated nutrient sales prices and prices that North America Retail has contracted for prepayments and other committed crop nutrient mt in 2009. Agrium also expects a further $21-million ($0.09 diluted earnings per share) write-down in its Wholesale Purchase For Resale (PFR) business. These adjustments are indicative of the unprecedented volatility in global economic and commodity markets, and the decline in certain nutrient prices since early December 2008, when it issued updated guidance. Agrium does not expect any write-down with respect to manufactured wholesale volumes.
The write-downs of $96-million for Retail and an additional $21-million in PFR were not included in the update to guidance issued December 8, 2008. The December 2008 update to guidance did include a write-down of approximately $90-million for PFR business in North America, South America, and Europe.