The fertilizer market's dynamics have entered a "sweet spot" for producers, with farmers set to favour sowing resource-hungry corn at a time of tight supplies of many nutrients, CF Industries said.

The US nutrients group said that corn prices were in an "optimal zone" - neither too high, such that farmers would instead plant soybeans, which require less fertilizer; nor too low, such that they deterred buyers, and could interrupt demand.

Demand would also be spurred by farmers playing catch up from last year, when high fertilizer prices and wet weather sent application rates tumbling.

Meanwhile, supplies of phosphate and nitrogen fertilizers, bar ammonia, were "tight".

"Fundamental drivers are in the sweet spot," Stephen Wilson, the CF Industries chairman and chief executive, said.

"The outlook for demand is robust, while domestic inventories of urea, UAN and phosphates are relatively low across the marketing chain."

Peru hitch

The outlook for UAN, urea ammonium nitrate solution, was particularly strong, with US imports set to rise "significantly" to meet demand, CF said.

Prospects were also healthy for urea, for which a domestic shortfall had during the last three months of 2009 turned the US market from "one of the lowest priced in the world to one of the highest priced".

"We are well positioned to deliver strong results [in 2010], so long as the weather co-operates," Mr Wilson said, while failing to enumerate forecasts for the group's performance.

However, the group announced a setback to its plans to develop a nitrogen complex in Peru, with project costs set to be higher than expected.

"Management is evaluating potential actions that may improved expected project economics," CF said.

Shares jump

For the last quarter of 2009, the group reported a 73% slide in earnings to $51.4m, equivalent to $1.04 per share.

Adding back the equivalent of $0.40 a share in one-off costs, the figure beat the $1.15-a-share result that Wall Street had expected.

The group's revenues, while down 53% at $506.7m thanks to lower nitrogen and phosphate prices, were also narrowly higher than analysts' expectations.

CF shares closed up 3.1% at $103.57 in New York.