There was an explosion that sent one worker to the hospital Tuesday evening at the Cherokee Nitrogen plant in Colbert County, Ala., according to local press reports. While local officials said it was a relatively small explosion, it was loud and heard for miles away. A high pressure line was reported to have ruptured as ammonia was being produced. The cause of the accident and extent of damage is still be accessed. Cherokee is owned by LSB Industries Inc., Oklahoma City, Okla.

For more details, see the Green Markets Web-Edition Nov. 16.

In advance of upcoming investor conferences, starting today—Nov. 14, The Mosaic Co. announced updates of the near-term price and volume guidance, as well as an update of the company’s full year effective tax rate guidance. Since the company announced its fiscal second quarter guidance Oct. 2, 2012, international crop nutrient market demand has weakened, primarily as a result of distributors delaying purchases to avoid price risk. The company believes this demand is simply delayed, but that sales volumes may not pick up until calendar 2013.

"The long-term positive outlook for crop nutrient demand has not changed; high commodity prices are driving record farm returns and making our products more affordable than ever before. These strong fundamentals are expected to drive record global phosphate and potash shipments in calendar 2013," said Jim Prokopanko, president and CEO. "In the short term, however, we are seeing lower than expected shipments to the export market, in spite of very strong demand in North America for the fall application season. As a result, we have lowered our volume guidance for both the Phosphates and Potash segments in the second fiscal quarter of 2013 while also tightening the price forecasts to the upper end of the previously announced ranges."

In potash, the delay in signing long-term supply contracts with China and India has resulted in weakening price expectations, leading other international buyers to delay purchases to avoid price risk. The midpoint of the company’s previous guidance for second quarter potash volumes of 1.6 to 1.9 million mt already excluded shipments to China and India. The current guidance range of 1.3 to 1.4 million mt reflects lower near-term demand in other international countries as well. In part because of the decline in international shipments and changes in product mix, Mosaic’s realized price expectations are now at the high end of the prior range, at $435 to $450 per mt.

In phosphates, international distributors’ cautious sentiment with respect to potash is spilling over as buyers are avoiding phosphate price risk, and delaying purchases in spite of low reported producer inventories. The company has lowered second quarter volume guidance to 2.9 to 3.1 million mt from 3.0 to 3.4 million mt. Realized prices are expected to be in the upper end of the prior range, at $535 to $550 per mt.

Additionally, the company will decrease the amount of unrecognized tax benefits reported on the balance sheet by approximately $200 million in the second fiscal quarter, due to the resolution of tax audit activity. As a result, the company now expects its effective tax rate for full year fiscal 2013 to be in the mid-teens, including the impact of this benefit, and in the mid 20 percent range for the second half of fiscal 2013.

Mosaic continues to expect the gross margin rate for phosphates to be approximately flat with the first fiscal quarter. Assuming no benefit from foreign exchange in the potash segment cost of goods sold, low operating rates will continue to pressure the gross margin rate in the second quarter, currently expected to be in the low to mid 40 percent range.

All other guidance is unchanged.

Consistent with Potash Corp. of Saskatchewan Inc.’s practice of matching supply with market demand, notice has been given to Allan and New Brunswick employees of the following potash inventory adjustments:

Allan will not operate between Dec.16, 2012 and Feb. 9, 2013 (eight weeks).
New Brunswick will not operate between Dec. 30, 2012 and Feb. 23, 2013 (eight weeks).

LSB Industries Inc. today announced that the facility of its subsidiary, Cherokee Nitrogen Co. suffered a pipe rupture causing damage to the heat exchanger portion of its ammonia plant. The company is determining whether damages extend beyond the area where the rupture occurred. No serious injuries, or environmental impact, resulted from the pipe rupture.

Management preliminarily estimates a three to five month outage at the ammonia plant, depending on lead times for repair parts. Until the ammonia plant is repaired, LSB believes that the Cherokee Nitrogen can produce, on a limited basis, nitric acid and ammonium nitrate solution to be produced from purchased ammonia.

LSB has notified its insurer of this event. The company’s insurance policy, which provides replacement cost coverage, has a $2.5 million deductible for property damage. The company’s business interruption insurance covering certain lost profits and extra expense has a 30 day waiting period.

CHS Inc. reported record fiscal net income of $1.26 billion for 2012. It’s the first time a U.S. agricultural cooperative has surpassed the $1 billion earnings mark.

Net income of $1.26 billion for the year ending Aug. 31, 2012, increased 31 percent from the $961.4 million reported for fiscal 2011, which was also a record. Largely as a result of increased values for the energy, crop nutrients, grains and other commodities that comprise the majority of the company’s business, CHS also set a new mark for revenues at $40.6 billion in fiscal 2012. That figure represents a 10 percent increase from the previous record of $36.9 billion, also set in fiscal 2011.

"The strength of our diverse CHS business portfolio, along with a strong domestic and global footprint, combined in fiscal 2012 allowed us to successfully navigate continued market volatility and deliver record results for the U.S. farmers, ranchers and cooperatives who own us," said Carl Casale, CHS president and chief executive officer.
"Continued strong performance has allowed CHS to invest in growing our business, maintain a strong balance sheet and – most important – return direct economic value to those who own this cooperative."

Based on fiscal 2012 earnings, CHS expects to return a record nearly $600 million in cash to its owners during fiscal 2013.

For the fourth quarter of fiscal 2012 (June 1 – Aug. 31, 2012), CHS reported earnings of $360.9 million, compared with $206.5 million for the same period a year ago. Revenues for the fourth quarter of fiscal 2012 were $11.0 billion, compared with $10.6 billion for the final quarter of fiscal 2011.

Strong petroleum refining margins at the company’s refineries at Laurel, Mont., and McPherson, Kan., helped drive record performance within the Energy segment which led overall CHS earnings. CHS also reported strong performance for its propane and transportation businesses, while lubricants and renewable fuels marketing results were behind those of fiscal 2011.

The company’s Ag segment earnings were led by record profitability for the CHS Country Operations unit. Earnings for Country Operations – which consists of local retail facilities, livestock nutrition and sunflower processing – were largely due to strong local crop nutrients movement and solid grain volume during fiscal 2012. The overall CHS crop nutrients business also recorded strong performance driven by significant product movement in spring 2012. The company’s own grain marketing operations performed well under challenging fiscal 2012 market conditions, while processing and food ingredients results declined largely due to acquisition and investment expenses.
Overall Ag segment earnings for fiscal 2012 declined from fiscal 2011 which included a pre-tax gain of $119.7 million on that year’s sale of the CHS investment in Multigrain S.A., a Brazil-based joint venture.

Agrium Inc. reported a 56 percent drop in net earnings for the third quarter ending Sept. 30, 2012, to $129 million ($0.80 per diluted share) on sales of $2.96 billion versus the year-ago $293 million ($1.85 million) on sales of $3.14 billion. Excluding major one-time charges, third quarter earnings were $215 million.

Agrium said its Wholesale nitrogen and Retail businesses delivered solid earnings. Gross profit from nitrogen was the highest for a third quarter in history, while Retail EBITDA nearly matched year-ago results. Potash results were impacted by downtime at the company’s mine due to its major expansion as well as a weaker potash market stemming from delayed contracts to India and China.

For more details, see the Green Markets Web Edition November 12.