US farmers are to match this year's huge corn sowings in
2013 to capitalise on high prices, CF Industries said as the fertilizer group flagged
hopes for prospects after a quarter in which its results missed Wall Street
Having taken 75 years to return to 96m acres, US corn
plantings will stay there next year, according to CF, which said its forecast
was implied by the level to which prices of the grain have rallied to.
Chicago's best-traded December corn contract closed at $8.00
½ a bushel on Tuesday, up nearly 60% since
mid-June, when fears for the impact of US drought on yields sparked a rallly in grain and oilseed prices.
"Tight global grain stocks have supported strong prices and
created conditions for continued high crop plantings," Stephen Wilson, the CF chairman
and chief executive, said.
Downside to dryness
With strong US sowings ahead for corn, a nutrient-hungry
crop, CF was upbeat over the region's demand for nitrogen fertilizers, which make
up the great majority of the group's portfolio.
Indeed, demand for ammonia would be accentuated by a
run-down in North American stocks of the fertilizer to "at or near
historically-low level", following a strong spring sowing season.
This shrinkage in inventories had created a "significant
need, as well as potential challenges," to restocking the region's supply chain
for the nutrient.
However, while forecasting "strong demand" too for urea, the
other main form of nitrogen fertilizer, CF also acknowledged a headwind from
the US drought, in its impact on autumn planting plans.
"Dry weather across the US wheat growing regions may delay
fall fertilization," CF said.
In the southern state of Texas, where the autumn sowing
window is opening farmers are awaiting "rain and cooler temperatures as small
grain seeding preparations continued" last week, US Department of Agriculture
The comments came as CF unveiled a 24% rise to $606.3m in
earnings, or $9.31 per share, for the April-to-June quarter.
However, excluding one-off items, earnings per share came to
$8.65, below the $8.91 that Wall Street had expected.
Revenues fell 3.7% to $1.74bn, also missing market
expectations of a $1.95bn figure.
The drop in revenues reflected the impact of the early start
to the US spring sowing season, which squeezed supplies of urea available for
sale in the April-to-June period, when demand for ammonia eased after an unusually
early seasonal rise.
CF shares closed up 1.3% at $206.07 in New York, within range of the record high of $208.43 set three weeks ago.