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CF to sell four warehouses to Growmark
CF Industries Holdings Inc. (CF) said Jan. 6 that it has entered into a definitive agreement to sell four mainly dry product warehouses and related assets to Growmark Inc., Bloomington, Ill., and one of its subsidiaries.
CF said that over a number of years its throughput utilization of these facilities has declined significantly, as an increasing portion of the company’s dry product volume has been shipped directly to customers from manufacturing locations.
Terms of the deal were not disclosed. CF did say the price was a good valuation, reflective of the quality of the facilities. The transaction is expected to close in January.
“These are great facilities that support seasonal distribution patterns for dry fertilizers,” said Bert Frost, CF’s vice president, sales and marketing. “This transaction recognizes the high value placed on these assets by a wholesale organization that can utilize them better to serve farmers and retailers.”
CF said its distribution facilities will continue to focus on their strong positions in storage and timely delivery of ammonia and UAN. In addition, the company’s dry products warehouse in the Minneapolis/St. Paul area will continue to play an important role in staging dry fertilizers for seasonal delivery.
The facilities, located in Albany and Mapleton, Ill., and St. Louis, Mo., will be used by Growmark to serve the needs of the organization’s retail customers that provide fertilizer to farmers. A Growmark subsidiary will purchase the Cincinnati, Ohio terminal, also currently owned by CF. Storage capacities are: Albany 36,500 st all dry, Mapleton 61,000 st all dry, St. Louis (Bussen spur) 39,000 st all dry, and Cincinnati 30,000 st liquid and 60,000 st dry.
Growmark said the terminals are all strategically located, and will allow it the ability to efficiently source plant food by barge and load out to railcars or truck. The size and scope of the facilities will further enhance Growmark’s capability to make large scale purchases of both domestic and offshore fertilizer production. It said the terminals are widely recognized for being well maintained, with customer service teams known for providing outstanding service. The acquisition will increase the terminal storage base from which Growmark can continue to pursue its growth plans by providing additional truck outlets along with the ability to economically reach extended rail delivery points.
“This acquisition supports Growmark’s strategy to grow in and from its core businesses,” said Jim Spradlin, Growmark vice president, Agronomy. “We have been sourcing fertilizer to enable optimal crop production for more than 80 years. Providing a reliable supply of products when and where our retailer customers need them is essential to our success as a plant food supplier. As we continue to pursue our growth goals, having strategically located supply points is imperative. This opportunity improves our supply and service capabilities, while bringing increased efficiency to our plant food operations.”
Overall, Growmark said the acquisition represents approximately 226,000 tons of dry and liquid plant food storage. CF confirmed that the Cincinnati facility includes liquid capacity currently used for UAN. CF intends to lease at least a portion of that capacity. The company said that because the net result is a “no change” in the near-term, it chose not to mention it in its initial release about the transaction.
“We will remain proactive in pursuing acquisitions and joint ventures that support our growth and service goals,” said Rod Wells, Growmark director, agronomy sales and operations. “This is the case over our entire service geography, from Colorado to the East Coast.”
Growmark has been a major shareholder in CF. Former Growmark CEO Bill Davisson, who retired Jan. 3 from Growmark (GM Nov. 8, 2010), remains on the CF board. CF said it does not consider him a fully independent board member yet because he still has equity compensation arrangements with Growmark.
Growmark is a cooperative providing agriculture-related products and services, as well as grain marketing, in 31 states and Ontario, Canada. Growmark owns the FS trademark that is used by affiliated member cooperatives.
Mosaic posts $1 B earnings for 2Q; mining resumes at South Fort Meade
The Mosaic Co. reported net earnings of $1.02 billion ($2.29 per diluted share) for the second quarter ending Nov. 30, 2010. This includes an after tax gain of $570 million, or $1.28 per share, on the sale of its interests in Fosfertil S.A. These results compare with net earnings of $107.8 million ($.24 per share) for the second quarter ending Nov. 30, 2009.
Net sales for the quarter were $2.67 billion, up from the year-ago $1.7 billion.
Mosaic cited significantly higher phosphate selling prices and potash sales volumes for the improved results, partially offset by higher sulfur and ammonia prices.
“Mosaic is on pace for an outstanding year in fiscal 2011,” said Jim Prokopanko, Mosaic president and CEO. “Our second quarter results reflect strong global phosphate and potash demand. Market conditions are excellent and we are beginning calendar 2011 against a backdrop of expected record phosphate and potash demand, lower producer inventories, and a very lean global distribution pipeline. It’s a great time to be the world’s leading producer of phosphate and potash.”
Second-quarter phosphate operating income was $402.3 million on sales of $1.97 billion, versus the year-ago $29 million on sales of $1.33 billion. Total tons sold were 3.67 million mt, up 10 percent from the year-ago 3.34 million mt. The average DAP price was $461/mt, up from $287/mt. The average ammonia price was up 50 percent at $361/mt from the year-ago $241/mt, while sulfur was up 163 percent to $134/lt from the year-ago $51/lt.
Second-quarter potash operating income was $251.5 million on sales of $699 million, compared to the year-ago $150.6 million on sales of $414.3 million. Total potash tons sold were 1.8 million mt, up 75 percent from the year-ago 1.03 million mt. The average MOP price was off 11 percent, to $331/mt from $370/mt.
Six-month net income was $1.32 billion ($2.96 per share) on sales of $4.86 billion, up from the year-ago $208.4 million ($.47 per share) on sales of $3.17 billion.
Six-month phosphate operating income was $580.3 million on sales of $3.55 billion, versus the year-ago $75.5 million on sales of $2.52 billion. Total tons sold were up 8 percent, to 6.75 million mt from the year-ago 6.23 million mt. The average DAP price was up 58 percent to $447/mt from the year-ago $283/mt. While ammonia prices were up 50 percent to $376/mt from the year-ago $250/mt, sulfur was up 249 percent, to $143/lt from the year-ago $41/lt.
Six-month potash operating income was $469.5 million on sales of $1.32 billion, compared to the year-ago $249.9 million on sales of $747.6 million. Total tons sold were up 91 percent, to 3.48 million mt from the year-ago 1.82 million mt. The average MOP price was off 9 percent compared to a year ago, to $331/mt from $363/mt.
Mosaic gives corn, soy projections
“In the U.S., we expect a real contest for acreage this spring,” said Prokopanko. “Our analysis indicates that markets will need to bid for 92-93 million acres of corn and 77-78 million acres of soybeans.” He said 2010-11 demand is expected to rival 2006-07.
“The fall application season was outstanding, and P and K shipments this spring are expected to exceed the five-year average and the totals last fall.”
Mosaic is also buoyed by low inventories. It noted that U.S. producers reported holding just 488,000 mt of DAP/MAP as of Nov. 30, 2010, an all-time record low. In addition, it said North American potash producers reported inventories of 1.6 million mt of MOP, half of the level a year earlier, and down more than 20 percent from a three-year average for this date.
Mosaic estimates global phosphate shipments climbed to a record level of 57 million mt in calendar 2010 and will increase to 59-61 million mt in 2011. It expects use in India to go up 5 percent in 2011/12 based on positive agricultural commodity prices.
Mosaic expects its own sales volumes in the third quarter will range from 2.4-2.7 million mt, and estimates a realized DAP price, FOB plant, of $510-$540/mt for the quarter. Phosphate rate of operations are expected to exceed 85 percent of capacity.
Asked about flat Central Florida phosphate prices, Senior Vice President, Commercial, Richard McLellan told analysts it is a traditional lull after the fall season. He expects prices to improve in January and February as people step back into the market and start making plans for either spring demand in the U.S. or fall demand in South America.
Asked about more phosphate production coming on line by Ma’aden in the next few years and eventually Morocco’s OCP, Prokopanko said that with the phosphate market growing at 2.5-3 million mt per year, those projects could match world demand.
Vice President of Market Analysis and Strategic Planning Dr. Michael Rahm added that Chinese DAP/MAP exports are expected to be off 1 million mt in 2011 – from 4.7 million mt – due to changes in export tariffs.
As for sulfur, Prokopanko sees near-term tightness, as increasing demand for phosphate will mean increasing demand for sulfur. Going forward, however, he thinks sulfur production will rise to meet increasing phosphate demand.
Mosaic estimates global MOP shipments rebounded 59 percent to 49.7 million mt in 2010, and will climb to 53-56 million mt in 2011. It expects increases in all major consuming nations.
Mosaic expects its own MOP sales volumes to be 1.9-2.1 million mt in the third quarter, with realized prices FOB plant of $330-$350/mt. Capacity is expected to exceed 90 percent.
Prokopanko expects China to start buying potash in January and India in April. He said China has low inventories and needs the product to ramp up food production.
Mosaic restarts South Fort Meade mining
Mosaic reported that mining a limited portion of its South Fort Meade phosphate mine resumed in early December as a result of a partial settlement of the legal dispute brought by environmentalists over the mining of wetlands at the site. Mosaic expects to be able to mine the site for four months and produce some 900,000 mt during that period.
Mosaic said a hearing in the case before the U.S. Court of Appeals for the Eleventh Circuit is expected in the first week of April. “We believe that the permit was exhaustively reviewed and validly issued by the Army Corps of Engineers, and we look forward to presenting our case,” Prokopanko told analysts. He said the company is determined to regain full access to the mine.
The company has been using phos rock from its stake in Peru for its phosphate production in Louisiana, supplementing with purchases from third parties. Imported rock has substantially now replaced Florida rock for the Louisiana operations.
Mosaic said the loss of South Fort Meade during the second quarter had about a $30 million cost penalty relative to what could have been had the mine run full-out. The company said this penalty is likely to grow in the second half to the extent that it has to purchase outside rock
Koch plans to acquire J&H Bunn
Koch Fertilizer’s parent company submitted a filing with the U.K.’s Office of Fair Trading on Jan. 7 indicating Koch Fertilizer’s plan to acquire 100 percent of the shares of J&H Bunn Ltd. The transaction is expected to close during the first quarter, pending necessary approvals.
“J&H Bunn is a significant independent fertiliser distributor in the U.K. market,” said Steve Packebush, president of Koch Fertilizer, which is based in the United States. “By adding this business, Koch Fertilizer can integrate J&H Bunn’s terminals, distribution and blending capabilities into our growing market coverage.”
“J&H Bunn shareholders believe this sale to Koch Fertilizer provides a strategic fit and will secure and enhance the reputation our company has developed since the 19th century,” said Michael Fuller, chairman of J&H Bunn. “In the past several years, our business relationship with Koch has highlighted our similar company cultures and shared commitment to customers. I am confident that this business will be stewarded well in the future.”
J&H Bunn was founded in 1816 in Great Yarmouth. It employs about 150 people in its fertilizer businesses which comprise 12 sites throughout Great Britain. Approximately 95 percent of the U.K.’s arable area lies within 100 miles of J&H Bunn’s port-related facilities.
“Koch Fertilizer values our agronomic and blending capabilities,” said David Harrod, co-managing director for J&H Bunn. “The combination of our fertilizer expertise and Koch Fertilizer’s global sourcing and marketing capabilities means J&H Bunn customers should see welcome benefits going forward. Koch Fertilizer also plans to retain the Bunn-related brand names and move forward with the Bunn management and operational teams to ensure customer continuity.”
J&H Bunn’s major fertilizer terminals are in Great Yarmouth on the east coast and Middlesbrough (Teesside) in northern England, with Sharpness on the west coast. Bunn also has six other coastal and inland terminals at Falmouth, Howden, Montrose, Fakenham, Norwich, and Wakefield.
Gavilon completes DeBruce deal
Gavilon LLC said Jan. 3 that it had completed the acquisition of the DeBruce Companies (GM Oct. 25, 2010), expanding the company’s agricultural assets in the U.S. and Mexico.
Paul DeBruce will continue serving as CEO of the DeBruce Companies, Kansas City, Mo., a wholly owned subsidiary of Gavilon, and will join Gavilon’s board of directors. Larry Kittoe will also continue serving as chief operating officer of DeBruce. Upon the closing, DeBruce and Kittoe were also appointed executive vice presidents of Gavilon.
Gavilon said the addition of the DeBruce grain, ingredient, and fertilizer facilities and distribution network will complement Gavilon’s North American footprint and position the company to meet the rapidly growing demand for agricultural resources worldwide.
DeBruce Fertilizer and DeBruce Ag Service provide fertilizer and crop protection products and services. According to its Web site, DeBruce has fertilizer terminals at Creston (24,000 st) and Shenandoah, Iowa; Albany, LaSalle, and Rock Island, Ill.; Wichita, Kan.; Nebraska City, Neb. (40,000 st); Catoosa, Okla. (40,000 st); Amarillo and Tulia, Texas; and Minneapolis, Minn. Retail centers are listed at Benton, Creston, and Shenandoah, Iowa; New Carlisle, Ind.; Nebraska City, Neb.; and Hale Center, Lockney, and Farwell, Texas.
DeBruce also trades feed ingredients, operates a bean crushing plant, and offers freight brokerage services through DeBruce Feed Ingredients Inc., Creston Bean Processing LLC, and DeBruce Transportation, respectively. DeBruce is the fourth-largest privately held company in Kansas City, and employs more than 550 employees nationwide.
Recognized as one of the premier cross-country truck trading companies in the U.S., DeBruce Grain operates 23 high-speed grain-handling facilities located throughout the Midwest.
The transaction increases Gavilon’s licensed grain storage capacity to more than 300 million bushels, making it the third-largest grain storage network in North America.
Gavilon LLC, a unit of The Gavilon Group LLC, Omaha, Neb., is a leading commodity management firm, connecting producers and consumers of feed, food, and fuel through its global supply chain network. Its history dates to 1874, when Peavey Co. built its first grain facility. In 1982 Peavey was acquired by ConAgra Foods, Inc., and later became part of ConAgra Trade Group. In 2008, a group of investors formed Gavilon and acquired the Trade Group, enabling the newly formed, privately held company to focus on growing its commodity business. Today, Gavilon leverages its strategic partnerships and more than 300 facilities and offices worldwide to link agriculture, fertilizer, and energy supply with increasing global demand. The company provides origination, storage and handling, transportation and logistics, marketing and distribution, and risk management services to tens of thousands of customers each year, and employs more than 1,700 people around the world.
Author of paper on Florida fertilizer bans “sick and tired” of fight
University of Florida (UF) Professor George Houhmuth says he is “sick and tired” of attacks on a paper he wrote questioning the unintended consequences of summer fertilizer bans adopted by various cities and counties in Florida. Environmentalists and some elected leaders have accused Houhmuth of bias for taking money from the turf industry, saying that the paper was intended to help pass a state law overriding local fertilizer bans.
Houhmuth, however, said the paper he wrote was not financed by anyone including the turf industry. UF’s Institute for Food and Agricultural Studies (IFAS) published the paper about a year ago, and the uproar has continued unabated. The paper was recently removed from the IFAS Web site.
“I just wanted to see if science was being used in the decision making process,” particularly in regard to turf, said Houhmuth. In the paper he questioned whether banning the use of fertilizers with nitrogen and phosphate in the summer might lead some people to over-fertilize in the spring in hopes of preserving their lawns through the summer, which could aggravate the problem of water pollution and lead to increased growth of algae.
Fertilizer runoff has been a suspect in the increase in red tide, which has been responsible for fish kills along the Gulf Coast of the state. When the red tide algae dies, it depletes oxygen in the water and can increase breathing problems in some people.
Houhmuth said the paper was not a research study, but was based on a compilation of previous scientific research. Turf, he said, grows primarily in the summer, and fertilizing at other times of year could be counterproductive, because turf cannot absorb the nutrients until the roots are better developed. However, he said he had no way of knowing whether people actually would fertilize more in the spring if bans were in place. That information would have to come from social scientists, but no such study has been conducted.
Houhmuth said the attacks on the paper he wrote had become ludicrous. He said he made no criticism of any particular fertilizer ban, “I just wanted to offer some things they may want to consider, when considering bans.”
TFC income up, continues to cross borders, picks Winfield for crop protection
Tennessee Farmers Cooperative (TFC), LaVergne, Tenn., reported a net margin of $10.6 million on sales of $567 million for the fiscal year ending July 30, 2010, a huge turnaround from the near break-even margin of $147,000 on sales of $562 million posted for the prior year. Inventory write-downs and devaluation in fertilizer, feed ingredients, and glyphosate contributed to the year-ago downturn. TFC said that in 2010, all departments were profitable.
Total patronage paid to members in 2010 was $10.25 million, 30 percent of which was cash. The payment, combined with member programs, and retired reserves totaled $6.5 million, compared to the ten-year average of $7.5 million. TFC did not pay patronage for the 2009 year.
TFC continued to grow in 2010, with new business across the border into other states. New associate members include Limestone Farmers Cooperative, Athens, Ala., which now operates the former Giles Farmers Cooperative in Pulaski, Tenn.; Arkansas Valley Farmers Association, Russellville, Ark.; and Augusta Cooperative Farm Bureau Inc., Staunton, Va.
In addition, TFC subsidiary ADI Agronomy added five new locations in 2009, and now operates 11 full-service retail agronomy centers in highly concentrated row-crop areas of Missouri, Arkansas and Kentucky.
TFC expects a new Stockdale’s retail store to open in Bowling Green, Kentucky, this spring. The two existing Stockdale stores are in Hixson and Covington, Tenn. TFC said these two recorded a 5.21 percent sales increase in 2010 over 2009 while recording a positive net margin. Stockdale’s is TFC’s foothold in the farm and home store market, focused on consumer products and the growing “hobby” farm market. It expects to locate these stores in areas without a co-op presence or where a co-op wants to join forces with TFC in the business.
TFC said it has also added a new 3,000 st liquid fertilizer storage tank and loading facility at LaVergne to better serve its middle Tennessee members.
TFC has also announced that it has inked a new crop protection supply agreement with Winfield Solutions, a unit of Land O’Lakes Inc. Winfield is the parent company of Croplan Genetics seed brand, which TFC has been selling for the past two years.
TFC said the new deal will give members access to a larger selection of products and makes TFC more of a source to be reckoned with in this highly competitive market.
Under the deal finalized in December, TFI will source the majority of its crop protection products through Winfield. The deal will change TFC’s relationship with traditional crop protection supplier Universal Crop Protection Alliance (UCPA), where it has been obtaining most of these products. However, TFC says while it will remain an active UCPA member and continue to support it regarding animal health, twine, and the Heritage Trading Co., UCPA will no longer be the primary source for crop protection products.
Growmark acquires Seneca, Ill., fertilizer terminal
Bloomington, Ill.-Growmark Inc. and George Lamb have entered into an agreement whereby Growmark will acquire Lamb’s Seneca Terminal at Seneca, Ill. Details of the transaction, announced by Growmark Jan. 7, were not disclosed. The acquisition includes 45,000 st of dry fertilizer storage, dock, and acreage. Growmark plans to add liquid nitrogen storage at the site. Rod Wells, director, agronomy sales and operations for Growmark, said the acquisition will enable Growmark to sustain its ability to supply fertilizer products to local FS companies and other customers throughout the region into the future, expand storage capacity, and expand product offerings from Seneca with the addition of nitrogen solution storage. “This acquisition is a strategic location for our member cooperatives and other customers,” said Wells. “With this addition, we can better serve the needs of our customers while investing in one of our core businesses. Our customers can have the confidence that Growmark will be at Seneca long into the future to competitively supply their product needs.”
Pryor meeting expectations, says LSB
Oklahoma City, Okla.-LSB Industries Inc. CEO and Chairman Jack Golsen said Jan. 6 that the company’s Pryor, Okla., nitrogen facility is up and running and meeting expectations. “We believe that Pryor is a valuable asset to LSB as it is strengthening our agricultural market presence.” For the month of November 2010, the plant produced and sold approximately 16,500 st of anhydrous ammonia. For December, Pryor produced approximately 16,500 st of ammonia. Approximately, 4,700 st of the ammonia was converted into 11,500 st of UAN, with most of the balance sold as ammonia. Throughout November and December, LSB said market demand for ammonia was strong and most ammonia produced at Pryor was sold rather than converted to UAN. LSB expects to be able to satisfy customer demand for UAN as it converts more ammonia to UAN to meet seasonal demand. LSB has been working to get the long-idled Pryor plant to full production. It was well on its way last summer when a fire halted production (GM July 5, 2010). The facility began start-up in the fall (GM Oct. 18, 2010).
Phosphate ship gets stuck near Tampa
Tampa, Fla.-The Pollux, a 575-foot-long ship, became stuck near the Port of Tampa on Jan. 3 after it ran aground during heavy fog. The vessel was inbound from Galveston, Texas, to load phosphate at a private terminal at the Port, according to various local news reports. The ship was freed by tugs on Jan. 4, and suffered no damage. The destination of the vessel was not available.