Fertilizer Maker CF Still Bullish as Price Rally Takes a Breather (CF)

ByElizabeth Elkin and Jen Skerritt+Follow

The world’s top fertilizer makers are bullish on key crop nutrients even as prices retreat from multiyear highs.

CF Industries Holdings Inc., the world’s largest nitrogen fertilizer company, said supplies are still tight and doesn’t see much slack in the market despite localized gluts.

Conditions that have supported nitrogen prices for the last year -- chief among them lower operating rates due to high energy prices in Europe and Asia -- show no signs of abating, Chief Executive Officer Tony Will said in an earnings release.

“We expect the global nitrogen supply-demand balance to remain tight with attractive margin opportunities for low-cost producers further into the future,” Will said.

Fertilizer prices are falling as farmers balk at the high costs and postpone purchases, creating gluts that are upending the market for crop inputs. It’s a reversal from earlier this year when prices surged after Russia’s invasion of Ukraine threw the world’s crop-nutrient sector into disarray.

Brazil nutrient prices are tanking as product piles up

Weekly wholesale US cornbelt potash prices and Brazilian spot prices fell to the lowest in more than a year for the week ending Oct. 28, according to Bloomberg’s Green Markets.

Nutrien Ltd. posted disappointing third-quarter results on Wednesday and lowered its global potash shipment forecast due to the impact of “higher-than-expected” inventory and “cautious buying in North America and Brazil,” during the second half of 2022, the company said.

Still, Nutrien expects “robust” agricultural fundamentals will support increased potash use in 2023 and “pent-up demand will emerge” as inventories are drawn down and prices stabilize, according to the company’s statement.

“The underlying demand drivers remain strong and global fertilizer challenges still persist,” Chief Executive Officer Ken Seitz said in the statement.

Nitrogen prices have fallen along with European gas and suppliers are now reportedly dealing with customers who are waiting to buy in hopes of even lower prices, Raymond James Financial Inc. analyst Steve Hansen wrote in a note. “In potash, specifically, international buyers have become strikingly emboldened by six months of persistent price declines, electing to leverage time and defer purchases as long as possible,” Hansen wrote.