The fall in corn prices to their lowest in approaching three years will deter some US farmers from growing the grain in 2014, but not many, CF Industries said, as it unveiled earnings ahead of market expectations.
The US fertilizer group acknowledged that ideas of "high planted acres" this year of corn, with US sowings officially estimated at 97.4m acres, and of a strong harvest had "led to a significant increase" in expectations for stocks, undermining prices.
However, "the profits available to North American corn farmers remain compelling", CF said.
And with forecasts for 2014 crop suggesting profits from corn some $80 an acre for soybeans, the group "projects that 92m acres of corn will be planted in 2014 – down from 2013 but still historically high".
Corn is a more fertilizer-hungry crop than soybeans, which fix nitrogen from the atmosphere.
This year is only the fourth since World War II when US corn plantings have exceeded 90m acres.
A figure of 92m acres for 2014 would also exceed the 90m acres that the US Department of Agriculture has pencilled in in long-term projections.
Soybean futures for November 2014 are in fact trading at 2.34 times the value of corn futures for December 2014, a reasonably neutral ratio in terms of incentivising production of one crop over the other.
"Grain futures prices continue to support strong nitrogen demand," CF said.
Ahead of forecasts
The comments came as CF Industries unveiled a drop of 17.8% to $498.2m in earnings for the April-to-June quarter, on revenues down 1.2% at $1.72bn.
Nonetheless, earnings of $8.38 on a per-share basis beat market expectations of a $7.62-per-share result.
CF Industries shares. however, lost early gains to stand 0.8% lower at $187.93 in midday deals in New York.
CF said its profits decline reflected "challenging market conditions" created by a weather-affected US planting season, and the setback to phosphate and urea prices from strong Chinese exports.
While the company achieved $804 a tonne for its ammonia in the latest quarter, a rise of 12.8% year on year, it sold its urea – another nitrogen-based fertilizer, but of which China is hiking exports – at $385 a tonne, a drop of 24%.
The price achieved for diammonium phosphate (DAP), also depressed by raised Saudi Arabian supplies, fell 5.3% to $447 a tonne.
China on July 1 opened a low-tariff export season for urea which "is expected to constrain price opportunities over the remained of the year", CF added.