March 10, 2012
Viterra boosts Canada''s fertiliser market hopes
Viterra lifted hope for the Canadian fertiliser market even as expectations in Europe have weakened, saying the prospect of a jump in planting this year was set to "support strong demand" for nutrients.
The Alberta-based handling-to-crushing group, which also has operations in Australia, China and Europe, lifted by CAD20/tonne (US$20), to CAD135/tonne (US$135), its forecast for fertiliser margins for its 2012 financial year, which ends in October.
The forecast reflected a double boost of depressed costs for natural gas, a key raw material for nitrogen fertilisers, and buoyant purchasing by Canadian farmers, who, thanks to lower levels of snowpack to melt, look set for a less damp spring sowing conditions than last year.
Indeed, growers in western Canada, which produces the vast majority of the country''s crops, are set to return to crops most of the 6-8 million acres lost to flooding in 2011, Viterra said.
"Barring further widespread adverse weather events, Viterrais forecasting that western Canadian seeded acreage will total approximately 57-59 million acres in 2012," the group said.
Of this, 18.5-19.5 million acres will be put down to rapeseed, putting Canada on track for record sowings of the rapeseed variant.
The forecast compares with an estimate from Canada''s farm ministry that domestic grain and oilseed sowings for the whole country will rebound by 10.9% to 26.1, hectares (64.5 million acres), including rapeseed plantings of eight million hectares (19.8 million acres).
Canada''s farmers are to buy fertilisers not just to cover the extra area, but to replace nutrients lost to leaching during the 2011 and 2010 inundations, Viterra said.
"High grain commodity prices and increased nutrient requirements from excess moisture in the last two years are expected to support strong fertiliser demand as the spring season progresses," the group said. "Fertiliser movement to farm has been strong."
The comments contrast with those from nitrogen giant Yara International, which earlier this week said that it was "cautious" over demand in the January-to-March period, and was being less aggressive on pricing, following a cold snap which had supressed orders.
Earlier on Thursday, agronomy-to-food group Origin Enterprises reported a drop in Irish and UK fertiliser sales, saying buyers had "delayed their purchasing commitments until closer to the main application period".
Viterra''s own Agri-products division, which includes fertiliser and herbicide operations, reported a 45% jump to CAD15.3 million (US$15.3 million) in earnings before interest, tax, depreciation and amortisation (ebitda) in the November-to-January quarter, on revenues up 43% at CAD417 million (US$147 million).
"This increase was primarily driven by fertiliser revenues that rose due to higher average selling prices and volumes, [which] increased as relatively strong commodity prices, combined with favourable fall weather, encouraged fall ammonia fertiliser applications," the company said.
However, group ebitda was dragged 10.4% lower to CAD188.9 million (US$188.9 million) by a weaker contribution from the core grain handling division, hurt by a 20% drop in grain receipts to its South Australia business, following a return in the state''s harvest back towards historic levels from a bumper 2010.