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Retail sales offset lower Nutrien fertiliser revenues as farmers prepare to invest

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US fertiliser manufacturer and ag inputs distributor Nutrien has reported higher distribution sales and lower fertiliser revenues for 2020 trading to date.

 

The company expects farmer confidence across its main country markets to grow in line with the generally good crops this year. That bodes well for enhanced investment in next year’s cropping.

 

Nutrien observes that US crop demand fundamentals have stabilized as a result of a rebound in ethanol demand and strong Chinese purchases due to tight Chinese inventories and rising prices. But good weather there is helping developing crop potential, which is pressuring prices.

 

“North American spring fertilizer application was robust and customer engagement in summer fill programs was strong as wholesale customers replenished inventories,” it continues. “The US corn and soybean crop is progressing well ahead of 2019 levels, which could be supportive of strong fall applications.

 

“In Australia, moisture levels have improved particularly in eastern states which is expected to result in much higher planting year-over-year. In Western Canada we expect that generally good crop conditions will support summer crop protection demand.

 

“Brazilian soybean and corn prices continue to be historically high. As a result, Brazilian growers are realizing record margins and have forward contracts to sell historically high proportions of their anticipated 2021 harvest. Brazilian soybean acreage is expected to increase approximately 5% in the upcoming planting season.”

 

Strong demand for potash

 

Turning to fertilisers, Nutrien reports strong demand for potash products in most key regions, with many producers now sold out through to September 2020. Brazilian prices have rebounded by over $30/tonne from low values in the second quarter of this year. The company projects 2020 global potash shipments of between 65 - 67 million tonnes.

 

Global urea demand has been supported by strong consumption in many key regions, particularly India. “Chinese urea exports continue to be lower year-over-year, but we expect the pace to increase in the second half of 2020. Ammonia prices have continued to be held back by weaker-than-normal industrial demand in the Western Hemisphere, while improved industrial utilization in Asian markets is supporting both demand and prices in that region.”

 

Nutrien has reported net earnings of $730 million on revenues of $12.6 billion in the six months to end-June 2020, compared to $899m and $12.41m in first half 2019. There are respective decreases of 19% and growth of 2%. The company says that record earnings from its Retail Ag Solutions segment were more than offset by “significantly” lower crop nutrient prices in the latest period.

 

Rapid increase for online sales

 

Half year sales through the company’s digital retail platform exceeded $700 million - surpassing its $500m target for full year 2020 online sales. The channel is now on track for annual sales of more than $1bn.

 

The period also saw Nutrien acquire Tec Agro Group, a leading inputs distributor in Goiás, Brazil. This expands the company’s Brazilian operations to 30 retail locations, two large-scale fertilizer blenders, a premier soybean seed business and specialty nutrition and plant health production facilities. The Brazilian operation in now set to generate over half a billion dollars in annual revenues.

 

“Nutrien delivered compelling second-quarter and first-half results supported by strong growth in our Retail Ag Solutions earnings and excellent operational performance across our Potash and Nitrogen business units," commented Nutrien president and chief executive Chuck Magro.

 

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