CF Industries Holdings Inc. reported fourth-quarter net earnings attributable to common shareholders of $26.5 million ($0.11 per diluted share) on sales of $1.11 billion, down from the year-ago $238.3 million ($0.96 per share) and $1.22 billion, respectively. CF’s total tons of nitrogen sold were up at 3.98 million st from the year-ago 3.52 million st. Average natural gas costs dropped to $3.07/mmBtu from $4.07/mmBtu.

Full-year net earnings were $700 million ($2.96 per share) on sales of $4.31 billion, down from $1.4 billion ($5.42 per share). Total tons of nitrogen sold were up at 13.72 million st, an increase from 13.3 million st. Average natural gas costs were $3.07/mmBtu, down from $4.25/mmBtu.

“Our business model demonstrated its resiliency in the face of some of the most difficult market conditions seen in a decade. Even at today’s low prices, we remain highly profitable with a gross margin of over 25 percent, which includes the impact of the unrealized mark-to-market loss on our natural gas hedges. U.S. producers continue to enjoy cash margins of almost 50 percent,” said Tony Will, CF president and CEO.

During the fourth quarter, CF recognized an impairment charge of $62 million relating to its investment in its joint venture Point Lisas Nitrogen Ltd. in Trinidad due to continuing gas curtailments from the government-controlled gas supplier, with expectations curtailments will continue into the future. CF said current Trinidad gas prices do not justify the investment to bring on additional production.

Also for 2015, CF recorded a federal tax receivable of approximately $120 million that is expected to result in a tax refund. This results from the Protecting Americans from Tax Hikes (PATH) Act of 2015, which allows companies to deduct 50 percent of their capital expenditures in the year qualifying assets were placed into service. This receivable is primarily associated with the new urea plant and related offsites that were placed into service at CF’s Donaldsonville, La., complex during November 2015.

Fourth-quarter adjusted earnings were $180.1 million ($0.76 per share), compared to the year-ago $280.6 million ($1.12 per share). Full-year adjusted earnings were $915.7 million ($3.88 per share) versus 2014’s $1.03 billion ($4.02 per share).

Citing a weak fall ammonia application season, CF believes farmers will catch up in the spring, when they will be planting an estimated 95.5 million acres of corn, up 2.5 million acres from 2015. Wall Street welcomed this news and rewarded CF. Company shares moved up 8.42 percent, or $2.67, to close Feb. 18 at $34.37.

CF also told analysts that if the fertilizer supply system is stressed by the demand, CF will be there to take advantage of it due to its storage, infrastructure, in-region production, pipeline points, and barge and rail connections. CF expects rail service to be better this year due to less demand from the coal and oil industries.

Speaking of stress, CF said Chinese urea producers are seeing it, and that there are reports that operating rates from Chinese coal-based urea producers have declined to 66 percent in January from 73 percent in December. CF said fourth-quarter Chinese urea exports were also off 1.5 million mt from year-ago levels.

While noting that NOLA urea prices have recently shot up, CF touted itself as the low-cost producer, and said that even at $200/st FOB urea, the typical U.S. Gulf producer generates roughly 50 percent cash margins.

“Against this healthy backdrop, over the next roughly six months, we are about to grow significantly, adding 60 percent new production capacity to our portfolio with very similar margin structures to our current business,” added Will. CF noted that the new Donaldsonville urea plant began production in November, the UAN plant is in the process of being commissioned, and ammonia is expected to start up in mid-2016. The Port Neal ammonia and urea plants are expected to be mechanically complete in the second quarter, and CF is expected to close on its deal to acquire select OCI NV assets in mid-2016.

CF will pay a quarterly dividend of $0.30 per common share on Feb. 29.

CF Industries Holdings Inc. said Aug. 2 that it has entered into a definitive agreement with Glencore International plc to acquire its 34 percent stake in Canadian Fertilizers Ltd. (CFL), currently owned by Viterra Inc., for total cash consideration of C$915 million, subject to certain adjustments. CFL owns the largest nitrogen fertilizer complex in Canada, located in Medicine Hat, Alberta. This will give CF, already the majority owner, 100 percent of CFL.

“This acquisition is a low-risk expansion of our nitrogen supply capability, as we have operated the complex for over 35 years. It will add approximately 425,000 gross tons of ammonia and 275,000 tons of urea per year to our nitrogen production capacity in a region with low natural gas costs,” said CF Chairman and CEO Stephen Wilson. The Medicine Hat complex has two ammonia plants with 1,250,000 st/y of production capacity and a urea plant with 810,000 st/y of production capacity.

Agrium Inc., which was to take the minority CFL stake as part of its acquisition from Glencore of the bulk of Viterra’s retail assets, said that it reached an agreement for Glencore to make the sale to CF. Agrium said this significantly reduces the amount it will pay for the retail business, and also removes uncertainties on a couple of fronts. One of those was regulatory, as Canadian authorities are still to sign off on Agrium’s purchase of the Viterra assets. Some had objected to Agrium’s stance as both a major producer and retailer, even though the company argues that it operates these two divisions separately.

Agrium says the resulting net purchase price for the portion related to the retail business is estimated to be about $175 million plus approximately $400 million in retail working capital, or a combined $575 million. This compares to an original $1.65 billion for the retail assets plus the CFL stake.

Agrium noted that Viterra retail EBITDA in 2011 was $100 million. Agrium is buying approximately 90 percent of Viterra’s retail business.

In other news, Agrium says the sale of the CFL stake has provided an opportunity to return excess capital to shareholders. As a result, the company’s board has authorized the making of a Dutch auction substantial issuer bid to repurchase $900 million of its outstanding common shares. The bid is expected to commence in early September and be completed by mid-October. The maximum and minimum price that shareholders may select under the bid will be determined in the context of the market price of Agrium common shares at the time of the commencement of the bid.

Agrium Inc. reported a 20 percent increase in net earnings for the second quarter ending June 30, 2012, to $860 million ($5.44 per diluted share), compared to the year-ago $718 million ($4.54 per share). It was a record second quarter for the company, which said all three of its business sectors capitalized on strong fundamentals. Retail and Wholesale achieved the highest EBITDA in history, both for the second quarter and first half. Overall, sales were up 10 percent, to $6.83 billion from the year-ago $6.2 billion.

Second-quarter Wholesale net earnings were $634 million on sales of $1.71 billion, compared to the year-ago $569 million on sales of $1.71 billion. Nitrogen sales were up, at $743 million from $717 million. Sales volumes were off at 1.3 million mt, but prices were up at $573/mt compared to the year-ago 1.43 million mt and $500/mt.

Phosphates were up at $224 million from $206 million. Sales volumes were up at 313,000 mt from 259,000 mt, while prices were down at $713/mt from $795/mt.

Potash sales were off, at $246 million from $259 million. Sales volumes were 512,000 mt, down from 543,000 mt. Prices were up slightly, to $480/mt from $477/mt.

Second-quarter Retail net earnings were $556 million on sales of $5.2 billion, up from $486 million on sales of $4.65 billion. Within this sector, crop nutrient sales moved up to $2.36 billion from $2.11 billion, with crop protection up to $1.73 billion from $1.46 billion and seed at $712 million from $687 million.

Second-quarter Advanced Technology earnings were $14 million on sales of $178 million, up from the year-ago $13 million on sales of $158 million.

Both income and sales were up 14 percent in the first half. Net income was $1 billion ($6.41 per share) on sales of $10.5 billion, compared to the year-ago $889 million ($5.62 per share) on sales of $9.15 billion.

Six-month Retail earnings led the way at $613 million on sales of $7.67 billion, up from $471 million on sales of $6.47 billion. Crop nutrients were up to $3.4 billion from $2.8 billion, crop protection to $2.56 billion from $2.1 billion, and seed to $1.03 billion from $917 million.

Wholesale earnings were $960 million on sales of $2.93 billion, compared to the year-ago $946 million on sales of $2.95 billion. Nitrogen sales were up at $1.13 billion from $1.05 billion. Nitrogen volumes were 2.1 million mt with an average selling price of $536/mt, versus the year-ago 2.18 million mt and $482/mt.

Phosphate sales were $413 million, down from $444 million. Volumes were down slightly, to 556,000 mt from 565,000 mt. Prices were down at $742/mt from $786/mt.

Potash sales were $385 million, down from $454 million. Volumes were 791,000 mt, down from 1.02 million mt. Prices were up at $486/mt from $445/mt.

Advanced Tech earnings were $9 million on sales of $313 million, up from the year-ago $8 million on sales of $239 million.

CHS Inc. continues to add to its international assets with another purchase, announced Aug. 1 – Atman, a company based in Goiania, Brazil. The acquisition was executed through the company’s CHS do Brasil entity in that country. Atman is an input distribution and grain origination company operating in Goias, the third largest producing state of Brazil.

“CHS is steadily and strategically expanding its South American grain and crop nutrients business. As part of CHS, Atman will accelerate our growth,” said Stefano Rettore, senior vice president, CHS South America, Sao Paulo, Brazil. “This acquisition will help us further fulfill the CHS aspiration for global commodities expansion by providing expertise in barter operations that are key to the business model in the Brazilian cerrado.”

The Atman acquisition rounds out a series of strategic South American business investments CHS has announced in the last six months. In May, CHS announced it had purchased 25 percent ownership of TCN, a Brazilian logistics company, and also signed a long-term agreement with TCN, securing export terminal access at the Port of Itaqui, Sao Luis, Brazil. In July, CHS acquired 50 percent ownership of Andali, a provider of fertilizer storage and blending services based in Paranagua, Brazil (GM July 9, p. 1).

“CHS is committed to the long-term growth and development of its commodities business in Brazil and across the region. These investments and the expertise that our partners and new employees bring will help us further add value to our owners,” Rettore said.

Worsening drought conditions continued to impact water levels on the Mississippi River and its tributaries in late July, resulting in commercial navigation restrictions that are causing concerns for shippers of fertilizer and agriculture commodities.

Under the latest navigational restrictions determined by the commercial barge industry, the U.S. Army Corps of Engineers, the U.S. Coast Guard, and the National Weather Service, draft restrictions on the Lower Mississippi have dropped to 9 feet from Cairo, Ill., south to below Natchez, Miss., compared with 12-12.5 feet at normal river levels. Tow group restrictions on the Lower Mississippi are limited to 36 barges, compared with up to 45 barges at normal river levels. On the Upper Mississippi, Illinois, and Ohio Rivers, typical tows are 15 barges.

Lt. Ryan Gomez of the U.S. Coast Guard’s Lower Mississippi River sector told Green Markets on July 26 that the restrictions are being evaluated on a daily basis.

“The implications of the drought conditions and low-water levels are a one-two punch for the economy, impacting both the agricultural community and one of the major modes of transporting agricultural and other essential products,” said Tom Allegretti, president and CEO of American Waterways Operators (AWO), a 350-member trade association representing the nation’s tugboat, towboat, and barge industry.

Allegretti noted that losing one foot of draft results in a loss of 204 tons of cargo capacity per barge. “When you consider that a typical tow on the Upper Mississippi or Ohio Rivers has 15 barges, a one-foot loss of draft will decrease the capacity of that tow by 3,000 tons,” he said.

A source with Louisiana barge line Sunn Logistics confirmed that drafts for northbound traffic on the Lower Mississippi were limited to a maximum of 9 feet, but the restrictions are changing “every few days.” Temporary river closures are occurring with more frequency as sandbars pop up and tows run aground, he said. These closures range from only a few hours to several days as dredges and tugs are called in to remedy the situation.

The Sunn Logistics source said the primary problem area is the Lower Mississippi. Conditions on the Arkansas River are not as severe, but he noted that access to the mouth of the Arkansas has been a problem due to tows running aground at that point. Lock closures due to maintenance have also limited barge activity on the Arkansas.

Drafts on some sections of the Ohio River were also reportedly limited to 9 feet in late July, and Missouri River sources reported draft limits of 8-8.6 feet last week.

Officials are already comparing this year’s drought and receding river levels to 1988. In that record drought year, river levels at Memphis, Tenn., reached an all-time low of minus 10.7 feet, and low water levels on the Mississippi and other navigable rivers cost the barge industry approximately $1 billion in extra expenses and lost business.

This year, river levels at Memphis had dropped to minus 6.9 feet by the morning of July 26, and were predicted to drop to minus 8 feet by the end of July, a full 56 feet lower than the river level reached at Memphis during the May 2011 flood. The extended forecast calls for the river to continue to drop to minus 9.6 feet on the Memphis gage by Aug. 22.

A source with Helm Fertilizer told Green Markets last week that the company can’t unload a barge at its Memphis terminal if water levels there drop to below minus 5 feet. “We haven’t been able to unload for about two weeks,” he said, adding that barges are instead diverted to an offsite location, where the fertilizer is unloaded and then trucked back to the Memphis plant.

Some terminals that are located directly on the main channel of the Lower Mississippi are still reportedly able

The J. R. Simplot Co. said July 26 that it will expand its Rock Springs, Wyo., fertilizer manufacturing facility, with work commencing on the project immediately to meet increasing demand. The first phase of expansion projects will increase dry phosphate production by more than 30 percent.

While Simplot did not provide specifics, its current ammoniated phosphate (DAP/MAP) production capacity at Rock Springs is listed at 205,000 st/y (P205 basis), according to the International Fertilizer Development Center. The increase would add at least another 61,500 st/y.

Simplot said these expansion efforts will also provide the foundation for future capacity growth in both liquid and dry fertilizers.

“The initial stage is expected to be operational by early 2014,” said Martin Hunt, vice president of mining and manufacturing for Simplot. “This expansion aligns well with our strategic growth objectives, while helping diversify our product offering. A portion of the increased production resulting from these expansion efforts will go to Simplot’s new 40 ROCK™ branded product (12-40-0-6.5-1Zn).”

The company’s Vernal, Utah, mine supplies phosphate ore to the Rock Springs manufacturing facility, and is expected to meet the incremental ore volumes for expansion efforts without further investment. Vernal rock capacity is put at 4 million st/y, according to IFDC.

“The need for expansion in agriculture continues to accelerate as the global demand for food, feed, fiber, and fuel increases,” said Garrett Lofto, president of the Simplot AgriBusiness Group. “This expansion is an exciting opportunity for us, and we are confident employees at both Rock Springs and Vernal will continue to take our integrated phosphate operation to new levels of success.”

“For more than 75 years, the J. R. Simplot Co. has played a key role in various sectors of the global food and agriculture system, and our commitment to this responsibility remains unchanged today,” said Bill Whitacre, Simplot president and CEO.

Simplot has additional ammoniated phosphate capacity at Pocatello, Idaho (210,000 st/y P205 basis), and rock capacity of 2.5 million st/y at Caribou County, Idaho.