Weak farm commodity prices, and a strong currency, are holding back a recovery in Australia's fertilizer market, Incitec Pivot has said, flagging a 32% slide in profits from nutrients.

Australia's biggest nutrient maker said that "domestic fertilizer demand appears to be recovering" as it unveiled a 20% rise to 1.21m tonnes in sales, by volume, for the October-to-March half.

Growth had been led by a 150,000-tonne improvement in sales to livestock farmers, whose prospects have been improved by strong beef and lamb prices, and rainfall which has improved the condition of pastures.

Dry weather fears 

However, Incitec noted that the overall sales recovery "has been muted by relatively soft agricultural commodity prices and the high Australian dollar".

Among arable farmers, early purchasing of ammonium phosphates ahead of the winter crop plantings were only 45,000 tonnes higher.

And James Fazzino, the group's chief executive, warned that sales recovery was "subject to favourable seasonal weather conditions", amid concerns of a dearth of rain in Western Australia, the country's main grain growing state.

Western Australian authorities warned last week of "low" soil moisture levels in most of the state's wheat belt, noting that some farmers had sowed into dry soil "despite little indication of significant rainfall events for the first half of May".

Forecasts beaten 

Weak fertilizer prices held back Incitec's fertilizer results despite the higher volumes, with revenues tumbling 21% to Aus$547.9m, and operating profits plunging 32% to Aus$96.9m.

However, a solid performance in explosives cushioned the impact of the decline. Group earnings fell by 13.9% to Aus$146.2m, excluding one-off effects.

Analysts at Credit Suisse said the figures "compared favourably" with its forecasts, flagging the raised fertilizer volumes and a "richer Asia Pacific Explosives result".

Incitec shares closed up 4.6% at Aus$3.18 in Sydney.