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US corn sowings to reach 97m acres - CF Industries

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US corn sowings are to hit a 76-year high next year, CF Industries said, raising its estimate for plantings, and forecasting a "strong" autumn for nitrogen applications as farmers prepare seed beds.

The fertilizer group pegged US corn sowings next year at about 97m acres, up 1m acres from the group's last estimate, in August.

"Recent rains across the Midwest and northern plains have been well-timed to alleviate soil moisture concerns," Steve Wilson, the CF chairman and chief executive, told investors.

The group also highlighted the role of "high" crop prices, in boosting the decision to opt for the grain among farmers whose finances had been supported through the US drought by revenue protection programmes.

"Thankfully, many farmers had crop insurance, which protected them financially, and should ensure their liquidity going into next season," he said.

Plantings at the projected level would be up marginally on this year's level, and be the highest since the 97.174m acres in 1937.

However, CF was marginally more downbeat than Informa Economics, which has estimated 2013 corn area at 97.536m acres.

'Strong nitrogen sales volumes'

Prospects of bumper sowings of corn, a nutrient-hungry crop, boded well for demand for nitrogen fertilizers which make up the great majority of the group's portfolio, CF added.

"An exceptionally early harvest, recent rains across key growing regions, and the anticipation of a large corn planting in 2013 should support strong nitrogen sales volumes as we move into next year," Mr Wilson said.

"Our expectations for continued strength in agricultural fundamentals underpin our commitment to spend $3.8bn on brownfield nitrogen projects, as we announced last week."

The company projects capital expenditures of approximately $350m- 400m in 2012, excluding spending on the new capacity expansion projects.

'Desire to secure inventory'

CF Industries reported a 3% fall in ammonium nitrate and other nitrogen products in the third quarter compared with volumes seen in 2011; however net sales were unchanged as higher prices offset lower volumes.

Having seen North American ammonia fertilizer stocks drawn-down to "at or near historically-low level" customers has had a "desire to secure inventory", according to CF.

The resulting tightness led to a 13% increase in average price over the July-September quarter.

CF noted that the global ammonia market remained "very tight", given supply reductions from Trinidad and Russian ammonia producers.

CF also suggested that the urea market would likely benefit in the near term from the closing of the low-tariff period for Chinese exports, as well as gas constraints impacting a number of off-shore producers.

Earnings rise

The comments came as CF unveiled a 21% rise to $403.3m in earnings, or $6.35 per share, for the July-to-September quarter.

Excluding one-time items, adjusted profit was $5.45 per share. Wall Street analysts expected a higher profit of $5.70 per share.

Revenue fell 3% from last year to $1.36bn but did exceed market expectations of a$1.35bn figure.

The improvement in earnings came as CF absorbed $35.1m impairment charge last year due to the decision to shut down and remove the methanol plant at the company's Woodward, nitrogen complex as well as a $14.1m non-cash mark-to-market loss on natural gas derivatives.

CF shares stood 0.9% higher at $207.33 in lunchtime deals in New York,, within range of the record high of $208.43 set three weeks ago.

By James Moore

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