All Posts from July 23, 2012

Intrepid reports preliminary 2Q results

News, News Briefs

Denver — Intrepid Potash Inc. on July 17 announced preliminary sales and production results for the second quarter 2012. Intrepid estimates that it produced 165,000-175,000 st and sold 180,000-190,000 st of potash during the quarter. On a preliminary basis, Intrepid estimates that it produced 30,000-35,000 st and sold 25,000-30,000 st of Trio® during the second quarter of 2012. The company said it intentionally built a modest level of Trio® inventory during the quarter to accommodate larger bulk sales and manage shipments more effectively. The average net realized sales prices during the quarter were $460-$470/st for potash and $315-$325/st for Trio®.

Indian urea production up, DAP way off

Breaking Industry News

The Indian Ministry of Chemicals and Fertilizers released the May numbers for urea and DAP production and availability. May is the latest set of numbers available.

Urea production was pegged at 1.8 million mt against an anticipated 1.7 million mt. While urea showed a surplus over planned production, DAP output was almost half of what was expected. May 2012 DAP production was 188,000 mt as opposed to a targeted output of 400,000 mt.

The government report added that the country had a supply of 2.6 million mt of urea for May. According to the report that was more than enough to cover the local demand for urea.

All told the government claimed it had 1.1 million mt of DAP available for local farmers. The report called the supply on hand “adequate to meet the demand of the States.”

Pakistan-Iran proceed with barter deal

Breaking Industry News

Pakistan media report an end to the deadlock between Pakistan and Iran over a barter deal that includes urea shipments to Pakistan. The deal was hung up on Iran complaining about the price and quality of Pakistan wheat, but negotiators removed the last roadblock this past week.

Under the barter arrangement Pakistan will send Iran about 1 million mt of wheat at the prevailing international market price. In return, Iran will send iron ore and fertilizers.

The deal has been under discussion since February. The delay was put on Iran’s reservations about accepting any wheat with a fungal disease known as Karnal bunt.

In the end, Pakistan showed that its wheat has a 0.3 percent ration of the disease while international standards allow 1 percent. Iranian negotiators were insisting on zero percent.

No word yet on how many tons of fertilizers Iran will send.

Iran-Pakistan cross-border trade is pegged at US$10 billion. Other arrangements being negotiated include oil and natural gas pipelines and refineries to move Iranian petroleum products through Pakistani ports.

The Week in Fertilizer Stocks

Fertilizer Stocks

The Week in Fertilizer Stocks


Producer Symbol Price Week Ago Year Ago
Agrium AGU 95.16 89.07 90.33
CF Industries CF 203.65 193.49 156.65
CVR Partners UAN 25.03 23.09 24.99
Intrepid Potash IPI 24.02 23.26 32.95
Mosaic MOS 57.62 54.44 68.49
PotashCorp POT 45.31 43.95 60.51
Rentech Nitrogen RNF 29.58 28.33 N/A
Terra Nitrogen TNH 227.95 207.83 138.06
Distribution/Retail
Andersons Inc. ANDE 38.04 39.86 42.55
Deere & Co. DE 75.69 78.26 80.88
Scotts SMG 39.17 38.76 49.82

Yara reports strong 2Q results; Belle Plaine has record performance

News, Northwestern Europe

Citing increased fertilizer sales volumes and improved urea margins, Yara International ASA on July 18 reported second-quarter net income after non-controlling interests of NOK 2,800 million (NOK 9.86 per share), compared with NOK 2,225 million (NOK 7.73 per share) last year. EBITDA was NOK 4,968 million, up from the year-ago NOK 3,455 million.

"Yara reports strong second-quarter results, reflecting a strong nitrogen fertilizer market and a significant increase in sales of Yara-produced fertilizer, especially outside Europe," said Jørgen Ole Haslestad, president and CEO. "Our value-added nitrate and NPK business continues to perform well, and we are also improving our commodity cost position with production growth in Pilbara and Qafco. With these initiatives, Yara’s gas and oil consumption outside Europe increases to almost 45 percent of the Yara total."

Citing strong demand and higher prices, Yara said its Belle Plaine, Sask., nitrogen complex posted record results during the quarter, when urea prices peaked. The complex is currently completing a 30-day turnaround and is returning to production.

Total sales volumes were 6.45 million mt during the quarter, up from the year-ago 6.15 million mt. Of this, some 5.25 million mt was fertilizer, which was up from the year-ago 4.97 million mt. Industrial volumes were 1.2 million mt, up from 1.18 million mt.

While global Yara fertilizer deliveries were up 6 percent, sales of Yara-produced fertilizer increased by 14 percent. Nitrate sales were up 13 percent from last year’s second quarter, reflecting increased sales in Europe and Latin America. Yara’s global energy costs declined 7 percent compared with the second quarter last year.

Nitrogen fertilizer industry deliveries for the 2011/12 season in Western Europe were 10 percent lower than a year earlier, as cold and dry spring planting conditions impacted overall consumption. However, Yara said it continued to take advantage of its ability to export premium products to overseas markets and ended the season with European stocks below a year earlier.

Second-quarter nitrogen fertilizer deliveries in Europe were primarily for immediate consumption, Yara reported, but pre-buying incentives for the new season are stronger than a year ago given the recent strengthening of grain prices.

Six-month net income was NOK 5,820 million on sales of NOK 42,726 million, versus the year-ago NOK 5,114 million on sales of NOK 38,440 million. EBITDA was NOK 9,280 million, up from NOK 7,736 million. Both fertilizer and industrial tons edged up during the period, for a combined 13.1 million mt from the year-ago 12.7 million mt. Fertilizer sales volumes were 10.7 million mt, up from 10.45 million mt, while industrial sales were 2.42 million mt, up from 2.24 million mt.

Going forward, Yara is predicting a continuance of high crop prices and tight grain supplies. It reports that its Qafco expansion is completed and will be onstream starting in July, with limited capacity additions elsewhere.

The Arab Spring-idled Libyan urea plant is in start-up mode, with the company doing extensive maintenance. It allotted NOK 40 million for additional start-up costs in the second quarter, with a like amount in the third quarter.

MosaicÆs 4Q earnings off 22 percent; cash flow allows for dividend boost

News

The Mosaic Co. net earnings attributable to Mosaic were off 22 percent during its fourth quarter ending May 31, 2012, to $507 million ($1.19 per diluted share) on sales of $2.82 billion, compared to the year-ago $649 million ($1.45 per share) on sales of $2.86 billion. The year-over-year decline was primarily driven by lower phosphate pricing.

Gross margins were $833.8 million, down from the year-ago $995.2 million, while operating earnings were $670.8 million, down from $824.9 million.

Despite the earnings drop, Mosaic exceeded its own guidance for the quarter and continues to pump out so much cash it is boosting dividends.

"We completed a fiscal year of significant accomplishments with a strong fourth quarter," said Jim Prokopanko, Mosaic president and CEO. "The extended spring season in North America, along with continuing strong demand for our products in Central and South America, led to solid financial results for the quarter. Despite challenging market conditions for much of the fiscal year, Mosaic made great progress. We improved our operating efficiency in both Potash and Phosphates, made substantial headway on our potash expansion projects, set new records for premium product sales and cash from operations, and, most important, our people delivered our best safety performance ever."

Fourth-quarter cash flow was $1.2 billion, compared to $973 million in the prior year. The year-over-year improvement was primarily driven by decreased North American phosphate inventory and increased customer prepayments.

"Our business continues to generate substantial cash," Prokopanko said. "While we remain committed to our multi-year, multi-billion-dollar investments for growth, we also have the ability to return capital to our shareholders through dividends and future share repurchases. Today we announced that we will double our annual dividend, to $1.00 per share; in fact, our dividend will have increased 400 percent since February of this year. This decision reflects our confidence in our ability to generate strong results over the long term, as well as our commitment to delivering tangible shareholder value."

Fourth-quarter Phosphate operating earnings were $224.1 million on sales of $1.79 million, down from the year-ago $369.9 million on sales of $1.88 million. The fourth-quarter average DAP selling price FOB plant was $494/mt, compared to $574/mt a year ago. Phosphates segment total sales volumes were 2.9 million mt, compared to 2.84 million mt a year ago. Mosaic’s North American finished phosphate production was 2.1 million mt, or 86 percent of operational capacity, flat with the same period a year ago. Curtailments early in the quarter were offset by subsequent high operating rates as the market tightened through the 2012 quarter.

Ammonia was down at $417/mt from the year-ago $476/mt, while sulfur was up slightly at $200/lt from $197/lt.

"Our Phosphates business ended the year on a strong note, with robust shipments worldwide," Prokopanko said. "The phosphate market has tightened, as producer inventories dropped dramatically with global demand more than offsetting lower sales to India. While ammonia prices have increased, we expect these cost increases to be offset by higher finished product prices. As a result, we expect the gross margin percentage in the first quarter of 2013 to remain essentially unchanged from the prior quarter. Increased production at the South Fort Meade mine should benefit our rock costs later in the year."

Fourth-quarter Potash operating earnings were $463.6 million on sales of $1.04 billion, down from the year-ago $469.2 million on sales of $982.4 million. Mosaic estimates sales volumes in the quarter were negatively impacted by approximately 100,000 mt resulting from the now resolved Canadian rail strike in May.

The fourth-quarter a

CHS 3Q Wholesale volumes up 25 percent; retail unit reports record quarter

News

CHS Inc. reported that sales volumes from its Wholesale crop nutrient business were up 25 percent for the third quarter ending May 31, 2012. Revenues totaled $1.1 billion, up 43 percent, or $336.9 million from the year-ago quarter. Of the increase, $144.3 million was related to increased average fertilizer prices and $192.6 million was due to increased volumes. The average sales price of all fertilizers sold reflected an increase of $66.38/st, or 15 percent. Income was also up for the unit due to increased volumes and product margins.

CHS Country Operations, which sells crop nutrients, feed, crop protection, and energy products, reported record thirdquarter earnings due to heavy spring fieldwork and retail merchandise operating margins. Revenues were also up. As of May 31, 2012, CHS reported crop nutrient inventories valued at $202.2 million, down from the year-ago $325.2 million. They stood at $389.7 million March 31, 2012.

As of May 31, 2012, CHS had 699,000 st in crop nutrient purchase contracts and 894,000 st in sales contracts, compared to the year-ago 881,000 st and 1,251,000 st, respectively. March 31, 2012 purchase contracts were 1,177,000 st and sales at 1,420,000 st.

Crop nutrients are in the CHS Ag Business segment, which reported third-quarter operating income of $139.8 million on sales of $8 billion, compared to the year-ago $104.8 million on sales of $7.51 billion. Income before income taxes, however, was down at $131.9 million from $209.5 million.

Company-wide, CHS reported net income attributable to CHS was up 13 percent to $405.1 million on revenues of $11 billion, up from the year-ago $358.5 million and $10.5 billion, respectively. CHS attributed the increased earnings to the strong performance of its Energy segment.

Nine-month Wholesale crop nutrient volumes saw a 13 percent increase in volumes. Revenues totaled $2.3 billion, up $582.5 million (34 percent) from the year-ago period. Of this, $357.6 million was related to increased fertilizer prices, while $224.9 million was increased volumes. Fertilizer prices were up $78/st, or 18 percent over the year-ago levels. Again, CHS said Wholesale income was up.

Nine-month Country Operation income was flat, reflecting increased retail merchandise margins and decreased grain margins. Revenues were up.

The Ag Business segment reported nine-month operating income of $314.3 million on sales of $20.4 billion, down from the year-ago $340 million on sales of $18.5 billion. Income before income taxes was $289.5 million, down from $451.4 million.

Cooperative-wide, CHS reported nine-month net income was up 19 percent to $899.7 million on revenues of $29.6 billion, up from the year-ago $754.8 million on sales of $26.3 billion. CHS cited higher values for energy and crop nutrients products for the increase.

Chicago Port to get sulfur prill plant

Midwest, News, News Briefs, Sulfur

Chicago, Ill. — Savage Services Corp. plans to take advantage of an offer for a $175,000 property tax break from the City of Chicago to build a sulfur remelting prill plant along the Calumet River on the city’s South Side. The 3,000-square-foot plant will cost $12.7 million and will be on a six-acre site, according to the Chicago Tribune. The tax break will be received during the 12 years after construction.

Glencore/Viterra deal wins Canadian nod

Eastern Canada, News, News Briefs

Ottawa — Canada’s Minister of Industry on July 15 approved Glencore International PLC’s acquisition of Viterra Inc. under the Investment Canada Act. Glencore and Viterra signed a definitive agreement in March (GM March 26, p. 1) whereby Glencore will acquire all of the issued and outstanding shares of Viterra for C$16.25 per share. The transaction values Viterra’s equity at approximately C$6.1 billion on a fully diluted basis. Glencore reported that it has made a series of commitments to Canada for a five-year period, including increasing Viterra’s projected capital expenditures in Canada by more than C$100 million; investing C$8 million above Viterra’s projected expenditures in R&D; contributing toward grain industry initiatives in the province of Manitoba; working with the Government of Saskatchewan toward establishing a Global Institute for Food Security in the province, and contributing to this initiative should the government initiate the project; increasing contributions toward programs supporting the Western Canadian farm community by 25 percent; and making charitable contributions in support of youth and educational scholarships for First Nations and Metis. Glencore has also committed to maintaining the Regina, Sask., head office and making it the head office for its North American agricultural operations. The Viterra acquisition also involves Agrium Inc. and Richardson International, a privately held grain trader and input retailer based in Winnipeg. Richardson has agreed to acquire more than C$900 million worth of Viterra’s grain handling assets, crop input and processing facilities, and related working capital. Agrium will acquire the majority of Viterra’s Agri-products business, including 232 of Viterra’s Canadian farm-supply outlets, 17 farm outlets in Australia, and a minority stake in the Canadian Fertilizers Ltd. plant at Medicine Hat, Alberta, for C$1.15 billion. Agrium said in June said the Canadian Competition Bureau will begin a 45-day review of Glencore’s deals with Agrium and Richardson as soon as Glencore’s acquisition of Viterra is complete. Agrium’s deal with Glencore is expected to close in the fourth quarter.

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