The conventional wisdom gleaned from major fertilizer executives for 2013 is that it should be another good year for nitrogen, but that the jury is still out for phosphate and potash. This comes from various analysts conferences in the past few weeks, where executives have given presentations.
While P&K producers were generally hopeful their products would see good movement in 2013, the outcome for those products may ultimately be decided by soil testing, as was indicated by Nicholas Conrad, treasurer, vice president, and head of investor relations with The Andersons Inc., Maumee, Ohio, speaking at the Scotiabank Global Banking and Markets, Agriculture, Fertilizers and Chemicals Conference on Sept. 18. “Our sense aligns with the market that the application of nitrogen should be strong next year, and we feel good about that. We’re a little agnostic on P&K as to whether there will be some carryover or not. I think the agronomists have to figure that out.”
Conrad said the market expectation is that 96 million acres of corn will be planted in 2013, as it was in 2012. While the optimism is guided by high corn prices, and a large crop could eventually depress prices, he does not see a reversion to $2.50 per bushel corn. Conrad posed the current situation as the best of times and the worst of times – the best being a long-term demand curve for protein consumption and the need for major grains, with the worst of times being the current drought. Unlike previous droughts, Conrad said this time there is not an abundance of grain in storage. Instead, grain stocks are at historic low levels, requiring good acreage in 2013.
Conrad said the bulk of the drought has impacted Missouri, southern Illinois, southern Indiana, and Ohio. He said the company is benefiting from grain diversification into Nebraska. While the state has had drought conditions, it is heavily irrigated.
He said the company is very close to the farm gate, and in addition to providing inputs it has sold farmers the crop insurance that so many of them will use this year to manage their risk. On the fertilizer side of its business, he noted that in the past few years the company has expanded from its Eastern Cornbelt base to Wisconsin, Minnesota, and Florida, and has acquired Ohio-based micronutrient company New Eezy Grow Inc. and a pelletized lime operation.
CF Industries Holding Inc. Chairman, President, and CEO Stephen Wilson told the Scotiabank group that while the Cornbelts could use some more rain this fall for better fertilizer application, that he is not too worried if it doesn’t come. “…we will make up for it with ammonia or other nitrogen products in the spring and over the intermediate longer term, it’s just a blip.” He touted the company’s flexibility as the largest supplier of the three major nitrogens – ammonia, urea, and UAN.
And as for all the recent news about nitrogen greenfields in North America, Wilson said CF’s brownfield plans are more economical. He hopes to make another brownfield announcement by the end of the year, and said the company’s $2 billion expansion plans could add some 1 million mt/y of ammonia production and 3.5 million mt/y of UAN and/or urea. Most of this investment would occur from 2014-2016. He noted the company’s past permitting and brownfield experience.
On the logistics front, which has been somewhat stressed by low Mississippi River water levels, Wilson said he feels CF is ready for the fall and spring seasons. He noted that the company has recently invested in Palmyra, Mo., to allow that ammonia terminal to be used as a staging area for taking ammonia north.
Agrium Inc. President and CEO Michael Wilson told Scotiabank attendees that farmers are financially strong, and that when they are making this kind of money on corn, wheat, and soybeans, they will maximize yields.