CALGARY - Fertilizer giant Agrium Inc. (TSX:AGU) sees an uncertain finish to the year, with a late harvest in the U.S. and lower global fertilizer prices and volumes, president and chief executive Mike Wilson said Wednesday.
A wet fall stalled farmers in their attempts to bring in their crops and may have forced some to delay plans to apply fertilizer until the spring.
"This has had some impact on our business results in the second half of the year," Wilson told a conference call with financial analysts.
"Additionally, global fertilizer markets have experienced a period of uncertainty and we've seen lower nutrient prices and volumes as a result."
Potash prices have been under pressure since this summer when Russian-based Uralkali, one of the world's largest potash producers, quit the Belarusian Potash Company export partnership and buyer demand stalled.
The move prompted speculation Uralkali could drive potash prices down 25 per cent as it ramped up production.
BPC accounts for about 43 per cent of the global potash market and competes with Canpotex, a Canadian-based cartel that sells potash abroad on behalf of three Saskatchewan producers: PotashCorp., Mosaic Co. and Agrium (TSX:AGU).
In its outlook, Agrium said the potash market has been affected by a delay in Chinese supply agreements and the timing of deliveries on Indian contract purchases.
The company said the market remains challenged with elevated inventories and the expectation that the pace of Brazilian potash imports may decline.
However, Wilson remains confident that a growing world population means a growing demand for fertilizer to produce the crops needed to feed everybody.
"The fundamental drivers of our business remain firmly in place as the world's ever-growing demand for food continues to support the need for a significant expansion of global crop production," he said.
Calgary-based Agrium, which reports in U.S. dollars, reported Tuesday a profit of $76 million, or 52 cents per diluted share, for the quarter ended Sept. 30 compared with a profit of $129 million or 80 cents in the same prior-year period.
Revenue was $2.87 billion, up from $2.83 billion.
Agrium said retail sales increased by 15 per cent to $2.1 billion, however, wholesale sales decreased by 24 per cent to $752-million due to lower realized sales prices across all products.
Also impacting these revenues were lower urea sales volumes resulting from plant outages at Agrium's nitrogen facilities, which lowered product available for sale, and lower phosphate sales volumes.
In its outlook, Agrium said global production of almost all major field crops is expected to increase in 2013-2014, driven primarily by improved growing conditions in the U.S. and former Soviet Union.
Crops in Western Canada are expected to break records this year. Stronger yields help offset the financial impact from lower crop prices and also increase nutrient removal, which is expected to support strong North American application rates in the 2013-2014 fertilizer year.