CF Industries -- NPK Inventory and Outlook

February 26, 2013 09:59 AM


CF Industries Senior VP of Sales and Market Development addressed the Goldman Sacs Seventeenth Annual Agribusiness Conference on February 26, 2013. While demonstrating CF's success compared to its peers in the technicals, VP Bert Frost also offered a glimpse of the upstream supply situation.

CF expects tight stocks-to-use ratios and increased planted acres to corn to support strong N demand this spring and into the early summer. The company sees attractive returns for farmers and sets pricing resistance at 20% on a ten-year average. CF's forecasts for 2013 put actual pricing resistance closer to 16.5% which is close to where the Inputs Monitor has observed it through much of the winter.

Demand --

CF expects total United States N demand for 2013 to total 13.3 short tons. That assumes planted acreage to corn at USDA's projected 96.5 million acres. Phosphate demand is projected to move slightly higher over last year at 4.5 million short tons and K is expected to follow, adding 100,000 short tons over the previous year to 4.8 million.

Inventory --

Ammonia stocks are still very tight and below the five-year average, but made strong gains in November and December 2012 production runs. The outlook labels Urea 'attractive' as inventories are currently running right down the middle of the five-year average. UAN32 is also comfortably centered in the five-year average suggesting lower pricing ahead downstream.

DAP/MAP inventories had lagged behind the previous year until November 2012. December inventories fell against the previous year, but production estimates suggest phosphate inventories are increasing.

The outlook from CF is good for NPK in 2013. Strong inventories amid favorable new-crop returns coupled with an NPK pricing estimate at 16.5% of expected new-crop revenue reveal that CF believes U.S. farmers are well positioned in 2013.


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