Nitrogen fertilizer prices will remain under pressure through 2017 despite rising demand, thanks to increasing supply in an already glutted market, CF Industries warned.
Shares in the US nitrogen producer plunged over 13%, as it reported a an 87% drop in earnings, well below analyst expectations.
And CF Industries said ongoing low prices would pressure high-cost producers, forcing plant shutdowns before prices recover.
"The demand outlook for the 2017 fertilizer season is positive as major nitrogen-consuming markets are expected to see continued increases in product applications," the fertilizer group said.
But CF Industries warned that "abundant nitrogen supply will continue to pressure global pricing," as new North American production comes on line.
CF Industries said the global supply glut, and the resultant low price environment, would "economically pressure high-cost producers, leading to decreases in exports, additional production curtailments, and permanent shutdowns".
This forced reduction in shutdown will set the stage for a long-term price recovery.
"A lack of meaningful new construction activity after the middle of 2017, coupled with capacity closures, is expected to lead to price recovery in 2018 and beyond," CF Industries said.
And North American producers such as CF Industries are set to fare well in a competitive price environment, the company said, as they are "at the very low end of the cost curve due to the plentiful supply of North American natural gas".
CF Industries Holdings reported profits over the April to June period 87%, to $47m.
Adjusted earnings were reported at 33 cents a share, below analysts' estimates of 68 cents a share.
The company's revenues were down 14% over the same period, to $1.13bn, in line with analyst expectations.
CF Industries shares were down 13.3% in morning deals in New York, at $21.26, after touching as low as $20.88, the lowest level since late 2010.
Agrium takes hit
Low nitrogen fertilizer prices trimmed profits elsewhere.
The Canadian agricultural products and services group Agrium trimmed its full year guidance to $5.00 to $5.30 diluted earnings per share, citing the "weak outlook for nutrient prices".
Agrium reported a 16% profit drop over the April to June period, as good returns from its farm retail outweighed the loss from low nitrogen prices.
Agrium shares in Toronto were down 2.1%, at C$115.11.