Agrium flags significant fertilizer rebound

Fertilizer and herbicide markets are set for a "significant recovery" this year, as relatively firm crop prices improve farmers appetite for raising spending, Agrium chief executive Mike Wilson said.

Mr Wilson said that the Canadian fertilizer and agricultural products group had witnessed "increasing signs that demand for crop nutrients and other crop inputs will be strong in the coming spring".

While the last month had witnessed lower grain markets, on growing estimates for US crop production, prices remained above historic averages, thanks to "record" global demand.

"This strength in grain and oilseed prices has continued to support crop input expenditures," Agrium said.

Pent up demand

In crop sprays, this pick-up in spending would favour sales of generic glyphosate weedkiller and alternative crop protection products which have built up resistance to conventional herbicides.

In fertilizer, "we have seen increasing demand for domestic potash and a tight supply situation for nitrogen and phosphate products", Mr Wilson said.

The group noted reports of "pent up" demand for potash, waiting the signing of a fresh supply deal, which was inked on Monday - between North American producers and China.

"In addition, Brazilian potash inventories are reportedly tight and import demand is expected to rebound," Agrium said.

Mr Wilson added: "Agrium is looking forward to a significant recovery in the crop input markets in 2010," although he failed to give numerical estimates of the groups trading performance this year.

Recovery in place

The comments came as Agrium reported a 76% slide to $30m in earnings for the last three months of 2009.

On an underlying basis, earnings came in at $0.53 a share, higher than the $0.24 a share that analysts were expecting.

"The fourth quarter saw the initial stages of recovery in the crop input sector," Mr Wilson said.

"Wholesale sales volumes were substantially higher this quarter across all products than the fourth quarter of last year," despite a US autumn application season shortened by late corn and soybean harvests.

Agrium shares closed 4.4% higher at Can$64.77 in Toronto.