BUSINESS
A GREAT TIME TO MAKE FERTILIZERS
rose 25.2% to $861.0 million. And although the company showed an $11.0 million loss in the period, this result is much better than the $48.0 million loss it posted in the comparable 2006 quarter. PotashCorp, however, reported extremely good results. The company's sales Demand for corn-derived ethanol is SPURRING for the period rose 34.0% to $1.15 billion. GROWTH for nutrients industry Meanwhile, the firm enjoyed earnings of $198.0 million, the highest quarterly amount in its history and a 57.8% increase over the same three months in 2006. FERTILIZER PRODUCERS in the U.S. and Fertilizer makers may not reap the full Canada are glowing as demand for their All four of the producers are optimistic benefit of the increase in corn acreage products soars. The increase in demand, about 2007. "Shipments are strong for both because farmers are cutting back planthowever, is not coming from growers of phosphates and potash," says Mosaic Chief ing of other crops to make room for more crops destined for traditional food and Executive Officer Jim Prokopanko, "as corn. animal feed markets but rather for the ferthe North American spring season is off to USDA says the increase in corn acreage mentation of corn into fuel-grade ethanol. a good start and export demand remains this year will be offset by lower soybean strong." A survey of 86,000 farmers by the Deacreage in the Corn Belt and the Great partment of Agriculture determined that Plains. Soybean plantings will cover 67.1 Terra CEO Michael L. Bennett says his growers will plant about 90.5 million acres million acres, the lowest total since 1996 firm "experienced strong demand for our of corn this year, 14% more than in 2006. and a decrease of 11% from last year. Cotproducts as U.S. growers began to act on The American Farm Bureau Federation is a ton planting will their intentions to little more cautious in its projection, prebe down 20% plant a projected BOOM YEAR dicting only an approximately 10% increase from last year's to 90 million-plus Corn acreage is forecast in planted corn acreage. 12.1 million acres, acres of corn this to soar after years of little change while rice planting growing season." Whatever the increase, it's significant is expected to fall His outlook for for a crop for which planted acreage actuAcres, millions 7% to 2.64 million nitrogen fertilizer ally declined at an average annual rate of 95 acres. producers for the 0.1% between 1996 and 2006. Last year, remainder of the planted acreage was at its lowest point Still, the prossecond quarter is since 2001—78.3 million acres—as higher pect of greater positive as well. costs cut into planting. Harvested corn corn planting is "We expect the acreage also declined in 2006, falling about bolstering North planting season to 6.0% from 2005 to 70.7 million acres. American fertilbe vigorous and According to the USDA's Economic izer producers. likely extended Research Service, ethanol is the reason for The four biggest due to cool, wet the growing corn demand. In 2006,2.15 fertilizer compa199697 98 99 00 01 02 03 04 05 06 07a weather in many billion bushels of corn was used to produce nies—Mosaic and a Estimate. SOURCE: U.S. Department of Agriculture parts of the Corn fuel alcohol, more than triple the 706 milTerra Industries in Belt." lion bushels used in 2001. The figure for the U.S. and Cana2006 was 34% greater than that for 2005 da's Agrium and PotashCorp—all turned in In a statement accompanying its firstand represented 61% of corn going to food, much improved results in the first quarter quarter results, Agrium says the outlook seed, and industrial uses. The demand for of 2007 compared with the same period a for global and North American markets corn to make alcohol fuels in 2006 also year earlier. continues to be supported by strong ecorepresented 20.4% of that year's 10.5 bilnomic activity and rapid growth in demand Mosaic posted sales for its third fiscal lion-bushel total corn production, up from for grain and oilseeds used for biofuels quarter, which ended on Feb. 28, of $1.28 14.4% in 2005 and just 7.4% in 2001. production. It notes that corn prices are billion, up 19% from a year earlier. The up more than 60% compared with prices in The increases in demand are not likely company's earnings from continuing opthe spring of 2006, despite the prospects to stop soon. As of February, according to erations, excluding unusual items, totaled of record corn production in 2007. Growth an article in this month's issue of the USDA $21.2 million, compared with a loss in the in biofuels production is also supporting magazine Amber Waves, the annual capacity year-earlier period. the sugarcane market in Brazil and palm oil of the U.S. bio-based ethanol sector was 5.6 Sales at Terra in the quarter ending markets in Asia. billion gal, and plants under construction on March 31 were $502.3 million, a 25.9% or expansion are likely to add another 6.2 Agrium warns, however, that a risk to increase over the comparable quarter in billion gal of capacity. "If this trend and the the demand outlook in North America is 2006. Earnings, excluding nonrecurring existing and anticipated policy incentives items, totaled $30.3 million, compared with that cool, wet weather could delay plantin support of ethanol continue," the article ing. This would impact total seeded acrea loss of $25.3 million in the same period in says, "U.S. ethanol production could easily age, including the number of acres that are 2006. reach 11 billion gal in 2011." planted with corn.—WILLIAM STORCK In Canada, Agrium's first-quarter sales WWW.CEN-0NLINE.ORG
2Q
MAY 14, 2007
