CF Industries Expects Good Fertilizer Demand

Jul 31, 2023

CF Industries Holdings, Inc. management sees good demand for fertilizer in the second half of 2023.

On positive demand in 2H:

"Management believes that the Northern Hemisphere ended the first half of 2023 with low inventories of nitrogen fertilizer, which, along with expected strong demand from Brazil and India, should support a positive demand environment in the second half of the year."

On production economics challenges in Europe:

"Management believes that production economics in Europe will remain challenging as declining global nitrogen prices continue to make it difficult for European producers to compete with imports despite the decline in natural gas prices in the region."

On North American farm profitability:

"The outlook for farm profitability in North America is strong for all major crops planted in the 2023 spring application season, helping drive significant increases in corn and wheat plantings in the U.S. Management believes that the North American inventory position at the end of the second quarter for all nitrogen products was below average due to lower import levels, higher export volumes and increased planted corn and wheat acreage compared to the prior year."

On Brazil urea consumption:

"The company expects urea consumption in Brazil in 2023 to remain strong, supported by higher corn planted acres and robust farm incomes, with potential for higher import volumes in the second half of 2023 as favorable weather conditions could encourage demand against a backdrop of low inventories."

On global nitrogen prices:

"Global nitrogen prices stabilized during the latter part of the second quarter of 2023 as robust demand for the spring application season emerged in North America and smaller importing regions such as Asia (excluding India) and Latin America (excluding Brazil) returned to average purchasing patterns compared to 2022. Management believes that the Northern Hemisphere ended the first half of 2023 with low inventories of nitrogen fertilizer, which, along with expected strong demand from Brazil and India, should support a positive demand environment in the second half of the year.

"Longer-term, management expects the global nitrogen supply-demand balance will remain positive, underpinned by resilient agriculture-led demand and forward energy curves that indicate a steep cost curve."

Write to Matt Walker at [email protected]

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