Applying urea

A tractor spreads urea on a tall fescue field near Newberg, Ore. Manufacturers of nitrogen, phosphate and potash fertilizers are seeing their profits soar in 2021.

The surge in fertilizer prices that’s squeezing farm profits is boosting the bottom line of major nitrogen, phosphate and potash manufacturers so far this year.

Several fertilizer producers recently reported bullish financial results to investors and predicted that global economic factors bode well for their continued strong performance — meaning prices will stay high.

“We expect positive nitrogen industry fundamentals will persist at least into 2023, underpinned by the need to replenish global grains stocks and by rising economic activity,” said Tony Will, president and CEO of Illinois-based nitrogen company CF Industries, in a statement.

During the first three quarters of 2021, the company has earned nearly $4 billion in revenues, up from about $3 billion last year. Its net income topped $400 million, compared to $313 million at this point in 2020.

Despite these favorable figures, CF Industries said it took a financial hit due to a halt in operations at its facilities in the United Kingdom. The company suspended operations in reaction to the high price of natural gas, a key nitrogen input.

Soaring natural gas prices in Europe have curtailed nitrogen production on the continent, reducing global supplies of the fertilizer and contributing to its rising price.

CF Industries said it expects the “global nitrogen supply will remain constrained” but believes the farm industry’s economics are strong enough to withstand higher fertilizer prices.

“High crop prices and the need to replenish global grains stocks are expected to underpin global fertilizer demand in the near-term,” the report said.

Nutrien, a Canadian manufacturer of potash, nitrogen and phosphate fertilizers, saw its net income multiply more than 13-fold so far this year. The company reported nearly $2 billion in net income during the first three quarters of 2021, up from $143 million at this point in 2020.

The company’s revenues have topped $20.4 billion so far this year, compared to less than $17 billion in 2020.

Nutrien generated “record earnings” in its most recent quarter and predicted “this positive momentum to continue into 2022,” since U.S. farm profit margins for corn and soybeans remain above average, according to its most recent financial report.

The outlook for growers “supported a strong start to the fall application season” and Nutrien expects they will seek to “maximize planted acreage and yields” next year.

Potash, the company’s top revenue generator, sold for an average of $313 per ton during the most recent quarter, up from $161 per ton during the comparable period in 2020.

Nitrogen sold for an average of $386 per ton, compared to $184 per ton last year, while phosphate sold for $648 per ton, compared to $375 per ton last year.

“We expect to generate significant free cash flow and to meaningfully strengthen our balance sheet through debt reduction, providing flexibility to deliver on future growth opportunities and return cash to shareholders,” said Mayo Schmidt, the company’s president and CEO, in a statement.

Mosaic, a Florida-based potash and phosphate producer, said its recent quarterly financial results were “the strongest in more than a decade,” driven partly by new and revived potash mines.

The company earned $966 million in net income during the first three quarters of the year on revenues of $8.5 billion. To compare, Mosaic lost $162 million at this point in 2020 with $6.2 billion in sales.

Mosaic told investors that it’s on track to complete repairs to facilities in Louisiana and Florida from hurricane damage and mechanical problems. The company also “expects pricing momentum to continue,” with prices for potash and phosphate rising in the final quarter of 2021.

Based on current orders and commodity crop trends, the company said it expects farmers will be able to bear the higher fertilizer costs next year.

“Rising input costs have narrowed grower profitability, but farmer economics in most global growing regions remain attractive as a result of strong crop demand and favorable weather,” the report said.

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I've been working at Capital Press since 2006 and I primarily cover legislative, regulatory and legal issues.

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