All posts by mickeybarb@charter.net

Crops/Weather

Crops/Weather, Eastern Cornbelt, Market Watch, South Central, Southeast, Southern Plains, Western Cornbelt

Eastern Cornbelt:

US Drought Monitor

Warm, dry weather stretched across most of Illinois and Indiana during the week, with highs reaching the 80s. A cold front was expected to bring scattered showers and isolated thunderstorms to both states late in the week, however.

By contrast, frost advisories were in effect at midweek in parts of northern Ohio, with an increased chance of rain by the end of the week.

Planting progress continued to track ahead of the average pace in Illinois and Indiana, with corn planting estimated at 77-84% complete and soybeans at 52-56% in both states. Ohio was lagging slightly, with corn planting at 26% and soybeans at 28% by May 14.

“We are winding down on P and K movement and moving into the nitrogen run on corn,” reported one regional contact. “We’ve gotten several rains over the last week or so, and most terminals have gotten caught up on the supply side.”

Western Cornbelt:

Temperatures in the 70s and 80s were common across Iowa, Nebraska, and Missouri during the week, though spotty showers were expected by the end of the week, along with a smoky haze from numerous wildfires in western Canada.

The warm weather continued to push planting progress ahead of the five-year average for all three states. Corn planting as of May 14 was 96% complete in Missouri, 86% in Iowa, and 76% in Nebraska, with soybean planting estimated at 69% complete in Iowa and 62% in Nebraska and Missouri.

Missouri growers also had 92% of the rice and 69% of the cotton planted by May 14, while sorghum planting in Nebraska had progressed to 10% complete by that date.

“We’ve been getting some well-needed rain for the past few days,” said one Missouri source. “While spotty, I think most everyone has had a drink. Corn planting is practically done, but a lot of beans are left to go once it dries back out.”

Southern Plains:

Corn Wheat Soybean Index

Spotty thunderstorms moved through western Kansas as the week progressed, and more general rains were reported across the state over the prior weekend. The moisture will help the state’s ailing winter wheat crop in some areas.

“In most cases it is too late for the wheat, but it will help in northwestern Kansas where the wheat life cycle is later,” said one contact.

Scattered thunderstorms also hit northwestern Oklahoma and western Texas at midweek, while central Texas received a widespread 2-4 inches of rain from May 12-15. A strong system was expected to bring potentially severe weather to both states on May 18-19, including the threat of tornadoes. Showers and thunderstorms also tracked through New Mexico at midweek.

Planting progress in the region was generally on track with the average pace for most crops. Corn planting as of May 14 was 81% complete in Texas, 61% in Kansas, and 40% in Colorado, while soybean planting had progressed to 42% complete in Kansas by that date.

The cotton crop was 35% planted in Kansas, 30% in Texas, and 16% in Oklahoma, with sorghum planting rated at 76% complete in Texas, 23% in Oklahoma, 12% in Colorado, and 7% in Kansas.

Extreme-to-exceptional drought continued to cover most of Kansas and sizable chunks of western Oklahoma and northern Texas. The effect of drought on the winter wheat crop was readily apparent, with poor or very poor ratings assigned to 68% of the acreage in Kansas, 51-52% in Oklahoma and Texas, and 41% in Colorado.

South Central:

A cold front pushed into Arkansas late in the week, with forecasts warning of potentially severe weather across the state. Thunderstorms were also reported across Middle Tennessee and southern Kentucky earlier in the week, bringing large hail and damaging winds to some areas.

Spotty rains across Louisiana during the week were expected to alleviate emerging drought conditions in the state, with Mississippi also experiencing frequent showers in mid-May.

Planting progress was tracking ahead of the average pace for all crops in the region. Corn planting as of May 14 was 88% complete in Tennessee and 75% in Kentucky, with soybean planting estimated at 78% complete in Louisiana, 72% in Mississippi, 71% in Arkansas, 50% in Tennessee, and 48% in Kentucky.

Louisiana growers had 67% of the cotton planted by May 14, compared with 56% in Arkansas, 43% in Mississippi, and 42% in Tennessee. Rice planting was nearly complete in the region, with progress rated at 96% in Louisiana, 90% in Mississippi and Texas, and 89% in Arkansas.

Southeast:

Strong thunderstorms moved through parts of the Carolinas early in the week, with reports of hail, strong winds, and locally heavy rain in central Virginia as well.

Heavy rain and thunderstorm activity was also reported across Alabama and central and northern Georgia at midweek. Central Florida was also bracing for potentially strong storms on May 18.

Sources continued to report brisk fertilizer movement in mid-May, with one contact saying his spring volumes would be nearly double last year’s and ahead of the average rate.

Cotton planting as of May 14 was 66% complete in Virginia, 51% in Alabama, 32% in Georgia, and 25-26% in the Carolinas. North Carolina growers also had 32% of the soybeans and 95% of the corn seeded by that date, while peanut planting had progressed to 48% complete in Florida and Virginia, 41% in Alabama, 37% in Georgia, and 25-40% in the Carolinas.

Transportation

Illinois River, Market Watch, Mississippi RIver, Ohio River, Transportation, U.S. Gulf

US Gulf:

Maintenance currently underway at Algiers Lock is expected to continue through May 26, closing the site to navigation Monday through Saturday, 6:30 a.m. to 6:30 p.m. Delays were noted up to 21 hours during the week.

Repairs at Colorado Lock were scheduled through June 2, rendering travel unavailable daily between 7:00 a.m. and 7:00 p.m. Sporadic delays were counted up to 25 hours. Brazos Lock returned from repairs on May 12. Lingering delays were reported up to 10 hours.

Intermittent shutdowns were expected to continue at the Morgan City Railroad Bridge, located at Mile 121 of the West Canal, through the end of June. The Union Pacific Railroad Bridge, located at Mile 64.3 of the Port Allen Route, was scheduled to close to navigation on May 21-22 for repairs. Bayou Pigeon Bridge was shut for repairs on May 13-16, blocking traffic at Mile 41 of the Port Allen Route.

Leland Bowman Lock was expected to close to marine traffic on May 16-18. Repairs at Bayou Boeuf Lock, previously expected through May 19, remained paused for the week due to emergency repairs in the Vicksburg area.

Wait times at Port Allen Lock were clocked as high as 27 hours. Corps data put Industrial Lock delays in a wide 3-17 hour range.

Mississippi River:

Sources reported a return to normal operations on both the upper and lower sections of the Mississippi River, though levels were seen returning to flood stage in the Twin Cities area.

The river gauge at St. Paul, reported at an action-stage 10.22 feet and rising on May 16, was expected to crest at a moderate-flood 16.0 feet on May 21-23. A flood warning posted on May 16 was due to remain in effect until further notice. The Dubuque gauge fell below the 15.0-foot action stage on May 17, however, and was not forecast to return to flood stage in the next seven days.

On the lower river, a flash flood watch remained in effect for parts of Mississippi and Tennessee, including the Memphis area, due to a potential breach of the Arkabutla Dam, located in Mississippi’s Tate and DeSoto counties. The watch was scheduled to expire on June 10. Local news outlets reported emergency repairs underway on May 11.

Rock placement work at Miles 931-932 was said to limit southbound travel daily from 7:00 a.m. to 6:00 p.m. The project was scheduled to last through mid-July. Lock 19 delays were posted up to nine hours during the week.

Illinois River:

Falling water levels on the Illinois River prompted lock operators to raise wickets at Peoria Lock during the week, ending a period of nonlocking navigation at the site. Sources expected LaGrange Lock to follow suit on May 16 or 17.

Planned repairs at Brandon Road Lock, Dresden Island Lock, and Marseilles Lock will begin on June 1, according to a Corps posting, effectively shutting the Illinois River to commercial transport through late September.

Intermittent 5-6 hour waits were reported at Dresden Island Lock. Vessels transiting Marseilles Lock waited up to seven hours to lock.

Ohio River:

Floating mooring system repairs at the JT Meyers Lock main chamber are slated to continue through Aug. 20, necessitating intermittent shutdowns. The site’s auxiliary chamber is projected to shut Aug. 21 through Sept. 10 for miter gate repairs. An additional primary chamber closure is scheduled for Sept. 11 through Nov. 17.

The Dashields Lock main chamber was set to return from maintenance and repairs on May 20, seven days ahead of the work’s previous May 27 planned end. The effort was noted complicating travel to and from both the Allegheny and Monongahela Rivers. Delays were counted as high as 67 hours on May 16.

The auxiliary chamber at Melville Lock is closed through Aug. 4 for maintenance, sources said. Miter gate machinery repairs at McAlpine Lock were reported blocking travel through the lock’s north chamber starting on May 15, limiting travel to the south chamber through an estimated June 15.

At Smithland Lock, the land chamber is projected to close Sept. 22 through Oct. 22 for machinery repairs. The Greenup Lock main chamber is due to go offline July 5 through Aug. 14, forcing tows to pass through the secondary chamber. Repairs at Winfield Lock, set to run July 10 through Sept. 15, are not likely to impact navigation, sources said.

On the Tennessee River, sporadic Kentucky Lock delays were noted in a 5-15 hour range through the week. Boats transiting Wilson Lock waited up to 20.5 hours to pass, Corps data indicated.

Compass Minerals – Management Brief

Management Briefs, Southern Plains

Compass Minerals announced the appointment of Jill V. Gardiner to the company’s Board of Directors. The company said she brings significant corporate governance experience serving on both public and private boards, with an emphasis on extractive companies, as well as professional experience in the financial sector.

Gardiner currently serves as Board Chair for Capital Power Corp., a North American wholesale power producer, as well as a member of the board of Hochschild Mining PLC, a leading underground precious metals company. She previously held board positions for Trevali Mining Corp., a global zinc producer, Capstone Mining Corp. (now Capstone Copper), and Turquoise Hill Resources Ltd. (now a wholly-owned subsidiary of Rio Tinto), among a number of other corporate and not-for-profit board appointments.

Retiring as a financial consultant in 2015, Gardiner held various leadership roles earlier in her career in investment banking with both RBC Capital Markets and BMO Nesbitt Burns. She earned a B.S. and an MBA, both from Queen’s University in Ontario, Canada.

Gardiner has been appointed to the Audit Committee and the Environmental, Health, Safety, and Sustainability Committee of the Board. With Gardiner’s appointment, the Board of Directors has expanded to 11 members.

Gensource Potash Corp. – Management Brief

Management Briefs, Potash, Saskatchewan

Long-time fertilizer industry veteran Wayne Brownlee has agreed to accept a membership on the Board of Directors of junior minor Gensource Potash Corp., Saskatoon.

He had a long career with Potash Corp. of Saskatchewan Inc. and Nutrien Ltd. and served as Executive Vice President and CFO of both prior to retiring in 2018. In 1977, after acquiring a B.S. and MBA from the University of Saskatchewan, he began his career as a Budget Analyst with the Saskatchewan Department of Finance and later joined the Saskatchewan Department of Energy and Mines as an Assistant Deputy Minister.

Brownlee is a member of the Dean’s Advisory Council at the Edwards School of Business at the University of Saskatchewan, the Vice Chair of the Wanuskewin Heritage Park, and the Chair of the Saskatoon Public Schools Foundation.

Sylvite – Management Brief

Florida, Management Briefs, Obituary

Sylvite on May 9 reported that Brent Sutton, General Manager of the company’s Sylvite Southeast operations, including both Lakeland and Bartow, Fla., has passed away after being diagnosed with leukemia in October 2022.

Sutton joined Sylvite in 2020 (GM Sept. 18, 2020) after a 38-year career in the industry, including 19 years with Lykes Agri Sales, 17 years as General Manager of Growers Fertilizers in Dade City, Fla., and a brief stint with Diamond R Fertilizer Company. Sylvite said Sutton was a key part of the modernization and growth of the company’s business in Florida.

“Brent was devoted to Florida agriculture and a proud graduate of the University of Florida,” Sylvite said in a statement. “Brent was also an avid Tampa Bay Lightning fan, and true to his nature, stayed loyal to his team win or lose. Brent will be missed by his many friends. Our condolences go out to Brent’s wife and daughters at this time.”

CF, CHS Team Up to Produce and Distribute Low-Carbon Nitrogen Fertilizer

Ammonia, Carbon Dioxide, Eastern Cornbelt, Featured, News, Nitrogen

Nitrogen producer CF Industries Holdings Inc. is working with CHS Inc., the nation’s leading agribusiness cooperative, to accelerate quantifiable and certifiable agriculture and food system greenhouse gas (GHG) emission reductions through the production and distribution of low-carbon nitrogen fertilizer. This initiative was developed as part of the US-UAE’s Agriculture Innovation Mission for Climate (AIM for Climate) program, which seeks to catalyze global innovation in climate-smart agriculture.

One study estimates that nitrogen fertilizer manufacturing accounts for about 30% of the lifecycle GHG emissions associated with the production of a loaf of bread.

To address the GHG footprint of food production, both companies will leverage CF’s investments to produce ammonia with lower Scope 1 carbon dioxide (CO2) emissions. They will also leverage CHS’ distribution network to place low- and zero-carbon fertilizers with growers. The companies expect to work together to promote the use of low-GHG nitrogen fertilizer to help farmers and crop end users, such as consumer product goods companies and ethanol producers, reduce the overall carbon footprint of agriculture.

“Decarbonized fertilizer is the future of how we sustainably supply and produce the goods that humanity needs,” said Bert Frost, CF Senior Vice President, Sales, Supply Chain, and Market Development. “The advantage of using decarbonized fertilizer is that we can measure the reduction in greenhouse gas emissions associated with its production and transfer that attribute to the farmer, who can then provide crops to their customers that have a quantifiably lower GHG footprint. This will enable us to develop a certifiable decarbonized agricultural value chain.”

Frost announced the collaboration in a video prepared for the AIM for Climate Summit, which kicked off in Washington on March 8. CF provided more information on May 11.

“We recognize the importance of helping growers optimize resources as they produce food the world needs,” said Brian Schouvieller, CHS Senior Vice President Commercial Trade and Risk Management. “Nitrogen fertilizer is critical to plant growth; zero or low-carbon fertilizer can be an important tool as we pursue solutions that help growers simultaneously achieve their crop production and sustainability goals.”

Since 2020, CF has advanced projects to decarbonize its ammonia production network and position the company to supply a substantial volume of clean ammonia within the next few years. This includes leveraging carbon capture and sequestration (CCS) technologies at its Donaldsonville Complex, where it is constructing a CO2 dehydration and compression facility to enable the capture and permanent sequestration of up to 2 million tons of CO2 per year, which is expected to begin in 2025. Additionally, CF is constructing North America’s first commercial scale green ammonia capacity at its Donaldsonville Complex, enabling up to 20,000 st of green ammonia production beginning in 2024.

CHS is already a major CF customer. CHS purchased a minority equity interest in CF Nitrogen for $2.8 billion effective Feb. 1, 2016 (GM Feb. 5, 2016) and through the investment it is entitled to semi-annual profit distributions from CF Nitrogen based generally on the volume of granular urea and UAN purchased by CHS pursuant to a supply agreement. CHS is entitled to purchase up to 1.1 million st of granular urea and 580,000 st of UAN annually from CF Nitrogen. Expectations at the time were that CHS would be supplied from CF facilities in Donaldsonville, La., Port Neal, Iowa, Yazoo City, Miss., and Woodward, Okla.

At the time, CHS said the deal with CF would meet about 46% of its annual nitrogen needs (GM Oct. 5, 2015). CHS also opted in 2015 to axe plans to build its own $3 billion nitrogen plant in Spiritwood, N.D., and pulled out of a urea offtake agreement to buy urea from the proposed Summit Texas Clean Energy Project (GM Sept. 14, 2015).

Landus Joins GROWERS Retail Network

News, News Briefs, Western Cornbelt

Landus, Iowa’s largest farmer-owned cooperative, announced on May 9 that it has joined The GROWERS Retail Network, a group of ag retail companies who connect with growers using The GROWERS APP digital platform.

The GROWERS App was developed by Growers Holdings Inc., a North Carolina-based agriculture technology company, as a one-stop shop for farmers to research and purchase inputs, including seed, crop protection, fertilizer, fuel, and services from local retailers who are part of The GROWERS Retail Network.

The company said the platform provides farmers with the convenience of online purchasing and a better way to manage the process of ordering inputs from retailers. Farmers send their purchase requests directly to GROWERS Retail Network partners, the company said, giving customers a more efficient way to purchase inputs and interact digitally with their input providers.

“Joining The GROWERS Retail Network is an exciting milestone for Landus and an important part of our growth strategy,” said Matt Carstens, President and CEO of Landus. “Together with our GROW Solutions Center, our technical agronomy expertise and direct ship opportunities, Landus can serve farmers across the greater Midwest. Technology like The GROWERS App simplifies the process and makes purchasing agronomy inputs more efficient. At Landus, we keep the farmer at the center of everything we do, and this is one more way we are focused on helping them sustainably grow.”

The Landus news follows the announcement on April 19 that Koch Agronomic Services LLC (KAS), Wichita, Kan., will be using The GROWERS App platform to introduce farmers to the KAS product portfolio (GM April 28, p. 29).

“We are thrilled to welcome Landus to The GROWERS Retail Network,” said Steven Valencsin, CEO of GROWERS. “Landus is a well-respected partner to farmers with a growing network across the Midwest. We are excited to work with them to offer farmers on The GROWERS App a more efficient, digitally enabled way to do business with their ag retail counterparts.”

Itafos Reports 1Q Results; Final Steps Reached in Extending Conda Mine Life

Earnings, News, Phosphate

Phosphate producer Itafos Inc. reported first-quarter net income of $28.2 million on revenues of $119.6 million, down from the year-ago $33 million and $149.9 million, respectively. Adjusted EBITDA $43 million, down from $60.4 million.

The company said the decrease was primarily due to lower realized prices off the commodity highs of the prior year, coupled with lower sales volumes at Conda, which were partially offset by higher sulfuric acid sales at its Arraias facility in Brazil.

“We are pleased to report strong financial results and a continuation of our record safety performance in Q1 2023,” said G. David Delaney, Itafos CEO. “In Q1 2023 our reported revenues of $119.6 million and adjusted EBITDA of $43.0 million reflected lower phosphate prices compared with 2022 but remain well above the historical norms. We remain optimistic about the fundamentals of the agriculture sector and fertilizer demand in the North American markets we serve.”

Conda produced 82,145 mt of P205 in the first quarter, compared to the year-ago 89,096 mt. The company attributed the lower output primarily due to extreme winter conditions and unplanned downtime. Conda generated adjusted EBITDA of $47.5 million on revenues of $116 million, down from the year-ago $64.4 million and $147.5 million, respectively.

Arraias produced 20,614 mt of sulfuric acid during the first quarter, up from the year-ago 9,651 mt, with the increase reflecting a full quarter of production and sales as year-ago production did not restart until February 2022. Arraias generated $200,000 of adjusted EBITDA during the first quarter, up from a year-ago loss of $700,000.

“The Record of Decision issued on April 24th for the Husky 1/North Dry Ridge (H1/NDR) mine project (GM April 28, p. 1), followed by the receipt of the Notice to Proceed for H1/NDR, were the final steps to allow us to achieve our strategic goal of extending Conda’s mine life,” added Delaney. “The permit will allow us to work to continue to serve the North American fertilizer market through 2037, with potential to further extend the resource life through leases and third-party arrangements. The Itafos team at Conda is quickly mobilizing resources and operations to begin the development of H1/NDR.

“The process to explore and evaluate various strategic alternatives to enhance value for all Itafos shareholders announced by our Board in Q1 2023 (GM March 17, p. 1) is ongoing. At the same time, we remained focused on running the company to support our customers, maintain our safety performance and deliver on our financial results,” he added.

Although 2023 prices have moderated off the historically high 2022 prices, Itafos expects relatively stable market fundamentals and global agriculture and phosphate fertilizer fundamentals to continue. It noted no significant phosphate supply capacity additions, sustained crop prices, improved phosphate application following lower demand associated with historically high pricing, and ongoing phosphate export restrictions from China.

The company expects the sulfur and sulfuric acid market to remain under pressure globally through 2023 due to increased refinery activity and softer demand from phosphate producers and metals consumers.

Itafos is maintaining its 2023 guidance of adjusted EBITDA of $140-$180 million and net income of $35-$65 million.

Nutrien Misses Estimates, Cuts Forecast

Earnings, Featured, News, Nitrogen, Phosphate, Potash, Saskatchewan

Nutrien Ltd. on May 10 posted first-quarter net income of $576 million on revenues of $6.11 billion, missing the average analyst estimates (Bloomberg Consensus). Analysts had estimated $833 million and $6.4 billion, respectively. Adjusted EBITDA came in at $1.42 billion versus $1.69 billion.

Nutrien shares tumbled as much as 8.3% after missing the estimates and cutting its annual earnings guidance. The stock was down 2.4% to C$82.60 as of 9:46 a.m. in Toronto, sinking to its lowest price since September 2021. New York shares closed down 2.56% on May 11.

While adjusted EBITDA was down for all four Nutrien segments, Retail’s declined to a $34 million loss on lower sales and gross margins on crop nutrients and crop protection products compared to record levels achieved in 2022.

Despite the misses, Nutrien noted that it delivered the second highest net earnings of any first quarter on record. First-quarter 2022 net earnings were $1.39 billion on sales of $7.66 billion, with adjusted EBITDA of $2.62 billion. By comparison, 2021 first-quarter net income was $133 million on revenues of $4.6 billion and adjusted EBITDA of $806 million.

“Nutrien delivered adjusted EBITDA of $1.4 billion in the first quarter and continued to demonstrate the advantages of our flexible, low-cost production assets and global distribution network. We invested in initiatives to sustain and grow our asset base and returned $1.1 billion to shareholders during the quarter,” said Ken Seitz, Nutrien President and CEO.

“Crop input demand has strengthened as the spring planting season progresses in the northern hemisphere and higher cost inventory is moving through the channel,” he added. “We are encouraged by the continued stabilization of fertilizer markets following a year of unprecedented volatility, and anticipate increased demand in the second half of 2023 due to strong agriculture fundamentals, improved grower affordability, and lower inventory levels. With fertilizer prices near mid-cycle levels, we expect to generate strong operating cash flows in 2023 and to maintain a balanced and disciplined approach to capital allocation.”

Nutrien noted that the global grain stocks-to-use ratio is projected to end the current growing season at the lowest level in over 25 years. While crop prices have recently softened, Nutrien noted that crop futures are still approximately 15% above the 10-year average and grower margins remain healthy, providing incentives to invest in their crop and boost production.

Nutrien expects an 8 million acre increase in US major crop planted area in 2023, including an additional 3 million acres of corn. It said planting activity is progressing well in North America and fertilizer application rates have been in line with historical average levels and well above rates in the spring of 2022.

“Our second-quarter US retail fertilizer sales volumes are currently up 40% compared to the previous year,” Seitz told analysts May 11. “With product moving rapidly through the supply chain, we have seen some spot shortages in the US, in particular potash and urea. This is highlighting the challenges that can emerge from just-in-time purchasing. Retail fertilizer inventories are projected to end the second quarter down significantly compared to last year, which supports the need for a strong summer refill.”

The company expects a normal season reset for urea and UAN prices following the spring season.

The company said North American nitrogen supply has tightened during the spring season due to strong demand and lower net imports. It expects the ammonia markets to strengthen as demand increases and supply remains challenged with approximately 40% of European capacity currently curtailed and Russian ammonia exports constrained.

Nutrien said potash demand has strengthened in North America as the spring application season has progressed, while engagement in offshore markets have been variable. It anticipates increased global potash demand in second-half 2023 as a result of lower inventories and improved grower affordability compared to 2022.

“The timing of the new China contract remains uncertain,” said Seitz, “but we do not view this as a significant impediment to our recovery in global demand. Global trade flows have evolved over the past year and China’s seaborne imports now represent only 5% of global shipments. For Nutrien, it also represents a relatively small percentage of our total sales, as we have shifted more volume to higher netback markets.”

Nutrien expects potash exports from Eastern Europe will be up approximately 15% in 2023 compared to last year, but still down 30% from 2021. The company retains its 2023 global potash shipment forecast of 63-67 million mt.

Nutrien Executive Vice President and Chief Commercial Officer Mark Thompson outlined three key potash themes for analysts. First is a constrained market. Second is a shift in trade flows that includes three components – North American production becoming more important in a bigger proportion of buying in markets like North America, Brazil, and Southeast Asia; former Soviet Union production disproportionately moving into China; and product from Laos increasingly finding markets in China and Southeast Asia. Third is demand returning in the second half, with the long-term demand trend intact.

Asked by an analyst whether the company would reconsider its plans to ramp up potash production until demand re-engages, Seitz said yes, the company would consider slowing down, however, he reiterated that the market is growing, and believes that will “carry on for the absolute foreseeable future,” at a rate of 2.5-3% annual growth rate and that new supply is going to be required to meet growing demand.

The company cut its guidance for annual adjusted EBITDA to $6.5-$8.0 billion, down from February’s guidance of $8.4-$10 billion. It also adjusted guidance downward for several additional categories:

  • Adjusted net earnings per share to $5.50-$7.50 from $8.45-$10.65;
  • Retail adjusted EBITDA to $1.60-$1.75 billion from $1.85-$2.05 billion;
  • Potash adjusted EBITDA to $2.65-$3.35 billion from $3.7-$4.5 billion;
  • Nitrogen adjusted EBITDA to $1.95-$2.55 billion from $2.5-$3.2 billion;
  • Phosphate adjusted EBITDA to $550-$700 million from $550-$750 million;
  • Potash sales volumes to 13.5-14.3 million mt from 13.8-14.6 million mt;
  • Nitrogen sales volumes remained at 10.8-11.4 million mt.

Nutrien announced that its Board of Directors has declared a quarterly dividend of US$0.53 per share payable on July 14, 2023, to shareholders of record on June 30, 2023.

Retail (millions) 1Q-23 1Q-22
Adjusted EBITDA (34) 240
Gross Margin 615 845
Total Sales 3,422 3,861
CN Sales 1,335 1,587
CN Margins 141 292
CN Volume (000 mt) 2,040 2,175
Avg ($/mt) 655 729
CN gross margin per mt 69 134
Potash (millions) 1Q-23 1Q-22
Adjusted EBITDA 676 1,406
Gross Margin 697 1,545
Total Sales 1,002 1,850
Sales Volume (000 mt) 2,636 3,043
Avg ($/mt) 380 608
Nitrogen (millions) 1Q-23 1Q-22
Adjusted EBITDA 676 995
Gross Margin 541 860
Total Sales 1,179 1,514
Sales Volume (000 mt) 2,357 2,325
Avg ($/mt) 500 651
Gas Costs ($/mmBtu) 4.85 6.85
Phosphate (millions) 1Q-23 1Q-22
Adjusted EBITDA 137 239
Gross Margin 87 207
Total Sales 446 563
Sales Volume (000 mt) 548 651
Avg ($/mt) 814 865

K+S 1Q Profit Down Amid Higher Costs; 2023 Guidance Cut

Earnings, Germany, News

K+S Group posted a 13% fall in EBITDA to €453.8 million (approximately $497.9 million at current exchange rates) for the first quarter ended March 31, 2023, down from €524.1 million the previous year. However, the result came in 7% above the average analyst estimate of €430.1 million (Bloomberg Consensus).

Adjusted group earnings after tax for the quarter declined 26% to €232.4 million, resulting in an adjusted earnings per share of €1.21, versus €312.7 million, and Revenues dipped nearly 2% to €1.19 billion versus the prior-year €1.21billion.

K+S said higher revenues in the Industry+ customer segment could not fully offset a near 9% decline of revenues in the Agriculture customer segment. It added that earnings were also impacted by higher costs and higher inflation rates in the valuation of mining provisions amounting to around €12 million.

“Overall, we have made a good start into the new year,” said K+S Chairman Burkhard Lohr. “Against the background of the exceptional year 2022, the global potash business has taken much longer in recent months to establish a new price orientation. We now expect overseas potash prices to recover moderately in the second half of 2023.”

K+S has cut its EBITDA guidance for full-year 2023 to range between €1.15 billion and €1.35 billion, down from the previous €1.3 billion to €1.5 billion guidance issued in March at the release of its fourth-quarter and FY2022 earnings (GM March 17, p. 24) and versus a FY2022 EBITDA of €2.4 billion. The revised guidance includes negative valuation effects from mining provisions in “the mid double-digit euro range,” the company said.

The adjusted outlook now implies postponement of a moderate increase of overseas potash prices compared with the current level into the second half of the year, the company said.

“We expect potash demand to pick up in the second half of this year, and this is base for our outlook,” Lohr told analysts at a company earnings call on May 9.

K+S shares fell as much as 6.1% after the company cut its EBITDA guidance for the full year, a move that analysts suggested would cause consensus estimates to be revised downwards, Bloomberg reported.

Baader’s Markus Mayer, as cited by Bloomberg, believes K+S’ guidance cut would suggest a need for an approximately 8% downward revision to consensus, and said “the cut may not come as a surprise after peers reported their latest trading update,” adding that it should nevertheless weigh on the May 9 price.

In terms to individual customer segments, K+S’ Agriculture customer segment posted a near 9% year-over-year fall in revenues, to €861.4 million in the first quarter of this year, down from €944.1 million. The company cited lower selling prices and lower sales volumes due to delayed deliveries due to “still strained logistics” and a continued wait-and-see attitude on the part of customers.

The segment’s overall sales volumes were down 3% from a year earlier, to 1.73 million mt versus 1.79 million mt.

Of that total, potassium chloride sales volumes dipped 0.5% year-over-year to 1.10 million mt from 1.11 million mt, while fertilizer specialties sales volumes saw a bigger decline – down by 9%, to 0.63 million mt from the first quarter 2022’s 0.69 million mt.

Volumes sold in Europe were down by 18% year-over-year, to 0.62 million mt from 0.76 million mt. But Overseas sales volumes in the first quarter of 2023 increased by 8% compared with the same year-earlier quarter, to 1.11 million mt, up from 1.03 million mt.

K+S Segment Revenues, Sales Volumes, Prices

  1Q-2023 1Q-2022 % change
Revenues € million 861.4 944.1 (9)
Potassium chloride 545.6 625.3 (13)
Fertilizer specialties 315.8 318.8 (1)
       
Sales volumes million mt 1.73 1.79 (3)
Potassium chloride 1.10 1.11 (0.5)
Fertilizer specialties 0.63 0.69 (9)
       
Revenues      
Europe (€ million) 340.1 349.9 (3)
Overseas $ million) 559.3 666.5 (16)
       
Sales volumes million mt 1.73 1.79 (3)
Europe 0.62 0.76 (18)
Overseas 1.11 1.03 +8
       
Average price (€/mt) 498.9 527.0  
Europe (€/mt) 548.3 462.1  
Overseas ($/mt 505.6 644.3  

K+S reported its Industry+ customer segment saw a 23% year-over-year increase in revenues in the first quarter of the year, to €330.6 million, up from €268.2 million, boosted by higher average prices for potash-containing products as well as the company’s salt products.

The company said while higher prices for industrial products and de-icing salts in particular caused the increase in revenues, higher volumes for pharmaceutical, chemical, and consumer products also had a positive impact.

Overall sales volumes for the segment dipped 2% to 1.79 million mt year-over-year, down from 1.83 million mt, while de-icing salt sales volumes fell 3% to 0.59 million mt from the year-ago 0.61 million mt.

Looking to the remainder of 2023, K+S said it now expects an average price in the Agriculture customer segment for the year as a whole that should be “tangibly lower” than the figure for the first quarter of 2023 (Q1 2023: €499/mt previous forecast, which is more than 20% below the full-year 2022 figure of €628/mt).

It said this assumes a moderate recovery in overseas potassium chloride prices for the second half of 2023 compared with current levels. For fertilizer specialties, the company also expects a declining price level on average for the year.

The company expects sales volume of all products in the Agriculture customer segment to range between 7.2 and 7.4 million mt in FY2023, particularly due to the easing of logistical bottlenecks, it said. It assumes an improvement in sales volumes in the second half of 2023

This latest guidance compares with its previous forecast of 7.3 to 7.5 million mt of sales volumes for FY2023. Sales volumes in FY2022 were 7.11 million mt.

For the de-icing salt business, K+S continues to expect sales volumes of about 2 million mt in the FY2023 financial year versus a previous forecast of “a good 2 million mt.” FY 2022 sales volumes were 2.1 million tons.