With high prices for all major crops, one of the main themes for outlook speakers at the Fertilizer Outlook and Technology Conference in Savannah Nov. 16-18 was the battle for acreage among those crops, particularly corn, soybeans, wheat, and cotton.

Rich Pottorff of Doane Advisory Services gave an agricultural outlook, saying it would be difficult for corn to get to 91-92 million acres as all crops are doing well. Currently, the Doane corn projection for next year is 91 million acres for corn, 77.5 million for soybeans, 12 million for cotton, and 57.3 million for wheat. 2010 acreage by comparison was 88.2 million corn, 77.7 million soybeans, 11 million cotton, and 53.6 million wheat.

Pottorff noted that high prices might put pressure on the government to cut CRP acres, which are currently 31.2 million.

The Mosaic Co.’s Dr. Michael Rahm continued with the same theme, calling the acreage battle a virtual “donnybrook” between the major crops. Noting the lowest corn stocks in modern history, he is betting that corn can get to 92.5-93 million acres next year, saying that it will need to get that high so as to put grain stocks back at the 1-1.2 billion bushel level.

Rahm said there is a lot of speculative money in the markets right now, and that if the herd gets spooked there could be a stampede. However, he said there is a strong case for fundamental strength for agriculture.

Rahm said the fall season saw a “perfect storm” for application, what with an early harvest, good weather, and high crop prices. Rahm, who gave the potash outlook, estimates that 5 million tons of the product will be put down in the first half of the fertilizer year starting July 1 in North America, and another 5 million will go down in the second half. He said the potash industry has been struggling to keep up with peak fall shipments. Bottom line, he said potash would be tight until additional capacity comes online later in the decade.

Worldwide, he said shipments are expected to move up to 55 million mt in 2011, compared to the 48-49 million in 2010 and the 32 million in 2009.

Asked about demand destruction, he said there are no indications of a pull back, especially in light of crop prices.

Jerry d’Aquin of Con-Sul Inc. told attendees that first-quarter sulfur pricing might settle out at $200/lt and stay there for the second quarter, with a lot depending on the spring and summer demand, as well as China’s decision on exports. He does not believe the Ma’aden facility in Saudi Arabia will impact DAP sales in 2011. d’Aquin said sulfur may get back to a less volatile price if the industry puts more infrastructure in place. Regardless, he does not expect pricing to go back to the boring days preceding the 2008 run-up.

Kelly Davey of PotashCorp gave the phosphate assessment, telling attendees that she expects to see the Ma’aden project to produce a little bit in 2011, but for it to be significant by 2013. By 2014, she says demand will catch up with Ma’aden.

Davey expects strong ag prices for the foreseeable future and reduced producer inventories. China’s export policy is a big question mark, and in the end they may get their exports down to 2.5 million mt/y from the expected 3.2-3.3 million mt of DAP/MAP this year.

Davey says a decision by the Chinese on their export tariff could come very soon Dec. 1 and that current thinking is that they may extend their high tariff by two months or have a flat tariff of 30-40 percent.

John Harpole of Mercator Energy Inc. detailed the significant impact shale gas has had on the natural gas industry. He said gas producers are no longer exploring for gas, but manufacturing gas. He said they know where it is, that the winner now knows how to be the low cost provider.

Gas is now so bountiful that Harpole said prices should be flat-to-lower for the next five years. This was good news to the North American nitrogen industry, and some wondered if the industry might even ponder the possibility of building a new nitrogen plant in North America – assuming it could get a guarantee of long-term low prices.

Tom Blue of Blue Johnson and Associates noted the impact of those low gas prices on North American nitrogen producers, showing the huge margins that they are currently enjoying. Blue sees about a 9 percent increase in nitrogen consumption for fertilizer year 2010-11, to 12.9 million nutrient tons, up from the prior year 11.8 million. He said the industry is getting close to getting back to normal.

Blue notes a close nitrogen correlation to crop prices. He said the industry is still not selling forward too much, and that distributors also do not want the forward risk. He said one question is whether the big potash and phosphate runs this fall will impinge on the spring. He sees no inherent shortage of NPK in the spring season.

TFI President Ford West gave attendees a legislative update. Despite recent election results that might curb some initiatives in Congress that TFI has been concerned about, West said an activist U.S. Environmental Protection Agency is marching forward and that TFI would be there to fight them in court if necessary. And fresh in his mind was EPA’s final rule issued Nov. 15 to establish numeric nutrient criteria for nitrogen and phosphorus for lakes, rivers, streams, and springs in the state of Florida (see related story, page 16).

The conference, put on by TFI and the Fertilizer Industry Round Table, saw a slight uptick in attendance, to around 209. Next year the event will be held in St. Petersburg, Fla.

Agrium Inc. has closed on the purchase of Miles Farm Supply, Owensboro, Ky. Both Agrium and Miles confirmed earlier that the two were in talks, with other sources saying at the time that an actual deal would be concluded (GM Oct. 25, p. 1).

Agrium told Green Markets that the deal includes 19 retail outlets, as well as the company’s wholesale fertilizer business. Agrium put the retail annual net revenues at $165 million. Combined retail and wholesale revenues are $250 million.

BHP Billiton said Nov. 14 that it has withdrawn its offer to acquire all of the issued and outstanding common shares of Potash Corp. of Saskatchewan Inc. This came after Canada’s Minister of Industry Tony Clement issued a statement Nov. 3 (GM Nov. 8, p. 1) saying he was not satisfied with the deal. While he gave BHP thirty days to provide more information, BHP opted instead to throw in the towel.

“BHP Billiton has determined that the condition of its offer relating to receipt of a net benefit determination by the Minister of Industry under the Investment Canada Act cannot be satisfied, and accordingly, the offer has been withdrawn,” the company said in its statement. “A total PotashCorp-related transaction cost of approximately US$350 million, of which approximately US$250 million related to the US$45 billion acquisition financing facility, will be recognized as an exceptional item in the December 2010 interim accounts.”

“BHP Billiton continues to believe its offer would have resulted in a significant net benefit to Canada, Saskatchewan, and New Brunswick. As a package, the proposed undertakings offered by BHP Billiton in a signed, written submission to the Minister of Industry were unparalleled in substance, scope, and duration, reflecting the importance of potash to Canada and Saskatchewan. The company had offered to commit to legally-binding undertakings that would have, among other things, increased employment, guaranteed investment, and established the company’s global potash headquarters in Saskatoon, Sask.

“The investment commitment included US$450 million on exploration and development over the next five years over and above commitments to spending on the Jansen project. An additional US$370 million would have been spent on infrastructure funds in Saskatchewan and New Brunswick. BHP Billiton would also have applied for a listing on the Toronto Stock Exchange.

“In addition, BHP Billiton was prepared to make a unique commitment to forego tax benefits to which it was legally entitled and, as a condition of the Minister’s approval, BHP Billiton was prepared to remain a member of Canpotex for five years. Both of these undertakings were intended to allay any concerns the Province of Saskatchewan may have had regarding potential losses in revenues.

“Further, to give the company an even stronger Canadian presence, BHP Billiton undertook to relocate to Saskatchewan and Vancouver over 200 additional jobs from outside Canada. BHP Billiton would have maintained operating employment at PotashCorp’s Canadian mines at current levels for five years and would have increased overall employment at the combined Canadian potash businesses by 15 percent over the same period. BHP Billiton also made a number of additional undertakings in relation to Saskatchewanian and Canadian participation in senior management roles within the combined potash business, within a new Potash Advisory Board and also on the Board of BHP Billiton.

“Local suppliers would have been guaranteed a full and fair opportunity to provide goods and services, and BHP Billiton undertook to spend at least US$8 million per annum on community programs, primarily in Saskatchewan and New Brunswick, while raising overall community spending from PotashCorp’s current levels to BHP Billiton’s levels. BHP Billiton also offered to invest in the University of Saskatchewan to create a Mining Centre of Excellence to enhance the province’s mining capabilities and to raise the international profile of both the University and the province.

“BHP Billiton was prepared to accept an unprecedented monitoring and compliance regime that would have provided the Government with additional assurances that the undertakings would be complied with, including making available a US$250 million performance bond.

“During the investment review process, BHP Billiton engaged extensively with officials from the Investment Review Division of Industry Canada. In view of the reasons underlying the Minister’s interim decision of Nov. 3, the company believes that the Minister of Industry would have required additional undertakings beyond those BHP Billiton had already offered, which would have conflicted with BHP Billiton’s business strategy and been counter to creating shareholder value.”

BHP CEO Marius Kloppers expressed disappointment at the outcome while emphasizing the company’s commitment to Canada and disciplined approach to shareholder value. “Unfortunately, despite having received all required anti-trust clearances for the offer, we have not been able to obtain clearance under the Investment Canada Act and have accordingly decided to withdraw the offer. We remain committed to Canada and we plan to develop a significant presence in the potash industry in Saskatchewan. As part of those plans we will continue to progress our Jansen Project and other development opportunities.

“Our core business strategy of diversifying our investments across geographies and commodities differentiates us and, more importantly, continues to deliver value to our shareholders and the communities and countries where we operate. We have an unparalleled portfolio of tier one assets, which we believe can sustain decades of increased production. We plan to invest US$15 billion in our global business this financial year and expect our ongoing capital commitment to continue to deliver robust production growth,” Kloppers added.

Despite Kloppers’ assertions about the Jansen project going forward, PotashCorp was able to raise serious doubt as to whether BHP’s earlier intentions were to actually build Jansen, implying that they were instead to drive down the value of PotashCorp’s stock (GM Nov. 15, p. 1).

BHP also announced its intention to continue the company’s strong track record of returning excess capital to shareholders by reactivating the remaining US$4.2 billion component of its previously suspended US$13.0 billion buy-back program.

“The decision to reactivate the buy-back program is entirely consistent with our commitment to maintain an appropriate capital structure while we continue to make substantial investments in our growth projects,” said BHP Chairman Jac Nasser. “BHP Billiton has a strong track record of returning capital to shareholders. From 2005, BHP Billiton has completed buybacks totaling US$12.7 billion, or 11 percent of issued capital, and has also paid out US$17.9 billion in dividends.”

PotashCorp quickly responded to the BHP decision, issuing its own statement. “BHP Billiton’s decision to withdraw its offer underscores the PotashCorp Board of Directors’ unanimous belief that the BHP Billiton offer substantially undervalued PotashCorp and failed to reflect both the value of our premier position in a strategically vital industry and our future growth prospects. We believe our opportunity for growth in the industry is unmatched and we are excited about the future. As the food requirements of our growing global population continue to increase, we believe PotashCorp has the right strategies in place to enhance earnings in the strong market conditions we see unfolding. Building further value continues to be our primary focus, and with our world-class asset base and proven business strategies, we believe we are well-positioned to exceed the expectations of our customers and deliver compelling value to our shareholders.”