Nutrien expects robust fall fertilizer demand; cuts phosphate outlook

Nutrien Ltd., a major player in the crop nutrient and agricultural services market, reported increased demand for crop fertilizers in North America for the fall application season, following a period of reduced field activity in the third quarter. Despite a challenging market, with lower-than-expected third-quarter profit due to softened crop prices, Nutrien remains optimistic about the overall health of North American growers and the robust global demand for essential agricultural commodities.

Favorable weather conditions in the U.S. have fueled expectations of record corn and soybean yields for 2024, leading to significant nutrient depletion from the soil. According to Nutrien, this has sparked a strong push to replenish soil nutrients. The company sees sustained demand for fertilizers like potash, with global shipment forecasts raised to between 70 and 72 million tons for 2024, driven largely by heightened consumption in Brazil and Southeast Asia. For 2025, Nutrien projects potash shipments to rise further, supported by the essential need for soil nutrient restoration and the competitive affordability of potash relative to other fertilizers.

In terms of crop margins, Nutrien observed a decline from the historically high levels of recent years, but it highlighted that growers in the U.S. Midwest remain financially stable, allowing for continued investment in crop inputs. Meanwhile, global grain stock levels continue to lag behind historical averages, sustaining strong export demand for North American crops. Nutrien anticipates firm pricing for key commodities such as rice, sugar, and palm oil, underpinning stable demand in the sector.

Global trends in fertilizer markets have also shown mixed results. Ammonia prices have been pressured upward by supply chain disruptions, project delays, and elevated European natural gas costs. For urea, global market conditions remain tight due to export restrictions from China, production issues with major exporters, and solid demand from India and Brazil. U.S. nitrogen inventory levels ended the third quarter below the average, a factor that Nutrien expects will bolster fourth-quarter and early 2025 demand. Additionally, Nutrien reported continued tightness in the global phosphate market, impacted by Chinese export limits and U.S. production outages, which may dampen demand growth due to decreased affordability compared to other fertilizers.

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The fall fertilizer season in North America has benefited from an early harvest, increasing the demand to restore nutrient levels in the soil. In Brazil, where soybean planting was initially delayed by dry conditions, planting resumed pace in late October, with an expected increase in soybean crop area of 1-3%. Meanwhile, Australia has enjoyed favorable winter crop conditions, with timely rains supporting production outlooks and potential returns for growers.

Nutrien’s quarterly financial performance, however, fell short of market expectations, with adjusted profit per share reaching 39 cents, below analyst projections of 46 cents. The company reported a 70% drop in net profit, totaling $25 million, and a 5% decline in net sales to $5.35 billion. Lower sales volumes and shrinking seed margins affected Nutrien’s retail segment, the largest contributor to its revenue, leading to a 23% decline in adjusted core profit. This contrasts with the stronger quarterly earnings reported by peers CF Industries and Norway’s Yara International, which have also been navigating a fluctuating global fertilizer market.

Despite these headwinds, Nutrien raised its full-year outlook for potash sales volumes, anticipating a rebound in demand. However, it revised down its annual phosphate sales forecast due to reduced affordability and persistent supply constraints. Nutrien, headquartered in Saskatoon, Canada, remains focused on balancing the tightening supply dynamics with the anticipated market demand growth, especially as key agricultural regions continue to experience varied climate and economic challenges.