Andersons Inc. Chairman, President, and CEO Michael Anderson told analysts Nov. 4 that there is more upside for its Plant Nutrient division in 2011, which already boosted company performance in the third quarter ending Sept. 30, 2010 (GM Nov. 8, p. 14 ).
“There is more upside. I think you all know that in general, the position that we have with our sizeable amount of storage space and the need to have product in a position to deliver to customers.” He said the company tends to operate from the long inventory side, though he did note there is sensitivity to price levels that are now up to or above historic trends. “There is no question that robust grain prices are a factor that help support that and will help support producers’ decisions to be willing to commit to nutrient prices at these levels.”
The only significant issue Anderson sees for the fall season is product availability. “Today we don’t see indications of demand destruction at these prices,” he said, adding that he expects normal NPK applications for the fall.
Anderson also said the company is seeing more pre-buying by farmers as they lock-in corn prices versus input costs and address tax concerns. “We’re also seeing one of the ways that those in our position, in the middle, manage the risk around inventory at high levels, is to try and push for more pre-pay.”
With higher commodity prices for several crops, Anderson said there is going to be a lot of fighting for acreage among crops such as corn, cotton, soybeans, and wheat. “The economics for corn do suggest we ought to get higher acres. We’ve seen a number of people, that are out there in the 91-92 million acres.” However, he said it is going to be hard to get over 90 million acres, thinking it will be more a question of what else gains and what else loses. “We know wheat is going to gain acres,” he said, noting that it lost acres this past year. He suspects cotton will as well. Anderson said his conservative assessment for corn is due to its competition with other crops, and that the government still pays farmers not to plant 32 million acres.