Nutrien CEO Sees Farmers Spending Big on Fertilizer
Top Fertilizer Firm’s ‘Greatest Challenge’ Is Filling Demand
(Bloomberg) -- Fertilizer demand is so strong that farmers are lining up for the crop nutrients, even as prices soar, according to Nutrien Ltd., one of the world’s largest producers.
Growers won’t be deterred by the company’s pricey products because corn is also expensive, said Chief Executive Officer Mayo Schmidt.
“We’ve had very good pricing and we’re continuing to see very good strength,” Schmidt said Tuesday in a phone interview. “Our greatest challenge is getting the tanks filled because the lineups are significant.”
Fertilizer costs have skyrocketed as high natural gas prices, a key input, forced some European production plants to halt or curtail production. That’s threatening to raise the cost of producing food at a time when energy and commodity inflation are already a concern.
The company is trying to boost potash output to keep prices from getting too costly for growers.
Mosaic Co., the world’s largest phosphate producer, is also seeing a huge leap in demand, Chief Executive Officer Joc O’Rourke said on a third quarter earnings call Tuesday.
“Persistently low inventories and capacity constraints are underpinning the tight supply-demand balance,” he said.
Sales for both phosphate and potash dropped lower than expected in the third quarter from 2020. That’s even after adjusting for issues related to closed and damaged facilities, Scotiabank analyst Ben Isaacson said in a note.
Shares across the fertilizer industry fell Tuesday after major companies reported earnings. Nutrien shares fell as much as 6% to $83.10 per share. Mosaic shares fell as much as 11.7% to 36.60 per share, while CF Industries Holdings Inc., another major nutrient producer, saw shares fall as much as 3.4% to $55.65 per share.
U.S. spot prices for potash and urea, a form of nitrogen fertilizer, have more than doubled this year, according to Bloomberg’s Green Markets. The rally is stoking fears farmers may pull back on purchases or shift more acres into crops that require less nutrients.
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