CF Industries forecast a strong autumn for fertilizer use, helped by farming's "very positive economics", as the nutrients group announced second quarter results ahead of Wall Street forecasts.

The group said that the long-term story of strong demand for crops, coupled with modest farm costs, would foster a renewal in growers' affection for fertilizer after a dismal year for demand.

Even assuming the latest official estimates were right of US corn plantings of 87m acres this year – a figure investors now believe will be revised lower – America would end up with inventories, as a percentage of use, "low by historic standards".

Given... continued strong demand for corn and other crops, and very positive economics for farmers this fall, we believe we're positioned for a good fall fertilizer application season," Stephen Wilson, the CF chairman and chief executive, said.

Market bottom?

A current stabilisation in fertilizer prices may help a rise in demand, by prompting a restocking of inventories by buyers who have been waiting for the bottom of the market, CF added.

"Prices for nitrogen and phosphate have firmed... which could bring customers back into the market," the group said.

Fertilizer groups could also benefit from lower raw material costs, with gas prices down two-thirds in the second quarter from the same period in 2008, while sulphur prices have collapsed to $10 a tonne from $600 a tonne last autumn.

Mr Wilson said: "We have positioned the company to see at what we anticipate will be improved nitrogen and phosphate prices in the fall season, with expected low input costs."

Export boost

The comments came as the group announced earnings for the April to June period down 26% at $213m, equivalent to $4.33 a share.

Analysts had forecast underlying earnings of $2.73 a share. However, CF stock slid 2.1% to $77.12 amid a weak start to Wall Street shares on Tuesday.

The relative strength of earnings, in the face of a slump in US demand for fertilizers, was helped by a rise in shipments abroad.

Phosphate exports rose fourfold to 359,000 tonnes, helping limit to 14.6% the fall in group revenues, which came in at $991.0m.

CF, which has rejected a takeover approach from Canada's Agrium, added that the performance "underscores our view that Agrium's offer does not reflect the intrinsic earning power of this company".