Fertilizer makers bank on U.S. recovery from drought
Some of the world's biggest fertilizer companies are banking that the aftermath of the worst U.S. drought in 56 years will boost sales, as U.S. farmers seek to cash in on high crop prices.
Chicago Board of Trade corn and soybean futures hit all-time high prices this summer, as the drought slashed U.S. harvest estimates to the smallest in 6 and 9 years, respectively.
Those high prices may carry into next spring's North American planting season, depending on how South American crops fare in the meantime, leaving farmers with a strong incentive to maximize crop production by applying yield-boosting fertilizer, the companies said.
"This is a great time to be in the North American fertilizer business," said Stephen Wilson, chief executive of Illinois-based CF Industries Holdings Inc, the world's second biggest producer of nitrogen fertilizer and also a key producer of phosphate, on Tuesday.
Nitrogen, a key nutrient for growing corn and wheat, must be applied every year, because it is not retained in the soil, Wilson said at the Scotiabank Agriculture, Fertilizers and Chemicals conference in Toronto, where several top fertilizer companies discussed the U.S. drought's ramifications.
Potash has more staying power than nitrogen, however, and lower crop production in the Midwest this year could potentially leave enough of the crop nutrient in the soil that farmers can scrimp on applications for next year.
Saskatoon, Saskatchewan-based Potash Corporation of Saskatchewan , the biggest global potash producer, expects U.S. farmers will not risk missing a chance to fully cash in on high grain prices.
Instead, they may take notice of reduced U.S. applications of potash over the past decade relative to the amount coming out of the soil through crops, said Wayne Brownlee, chief financial officer at Potash Corp.
"There's not a big cushion there to rely on. We're not seeing particular signs of caution (from farmers)."
The United States, the biggest grower of corn and second-biggest producer of soybeans this year, is a key consumer of potash, along with China, India and Brazil.
Russia's Uralkali OAO, the second-biggest potash producer by capacity, also expects high prices to motivate farmers, but isn't dismissing the possibility that there will be ample potash left in the ground.
"It's difficult to conclude whether that is true or not," Chief Executive Vladislav Baumgertner told the conference. "Scientifically, that is possible of course."
Unlike North American fertilizer companies, Uralkali depends on U.S. sales for only 10 percent of its total sales.
Self-contained hydraulic system with power cables (hydraulic). Tandem Henschen axles (hydraulic). Hydraulic fenders. Manual or hydraulic tilt. 6,500-gallon tank.
- Dry weather, biofuel mandate to boost palm prices in 2014
- 2014 Farm Bill: Reallocating base acreage
- FAS administrator talks world ag export situation
- The Beige Book is out. The agriculture picture is not rosy
- New precision potassium fertilizer from AgroLiquid
- Ag markets ended the week in decidedly mixed fashion
- Are you in favor of a federal labeling standard for food that might contain genetically modified ingredients?
- Commentary: Barking up the wrong tree
- Water allocation for most drought-stricken Calif. farms to end
- Look at how the rice scheme made Thailand unstable
- Larson Electronics offers 150 Watt LED high bay light fixture
- Growth Points: Big data is about to get even bigger
Speed King Blender
CrustBuster/Speed King, Inc.