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Agrium tops previous Q3 by 600 per cent

Agrium’s quarterly revenues. coming from rising fertilizer prices and from ag retailer UAP, which it now owns, are seven times higher than in the year-earlier period.

The Calgary-based fertilizer and ag retail giant on Wednesday posted net earnings of $367 million (all figures US$) on $3.18 billion in sales in its third quarter ending Sept. 30, compared to $51 million on $1.04 billion in its 2007 Q3.

The company’s nitrogen sales worldwide in the quarter reached 838,000 tonnes at an average selling price of $594 per tonne, compared to 932,000 tonnes at $334 per tonne in its 2007 Q3. Potash sales in Q3 reached 380,000 tonnes at an average $655 per tonne, up from 354,000 tonnes at $184 each in the year-earlier period.

Agrium also moved 240,000 tonnes of phosphate at $1,321 per tonne, up from 223,000 at $484 in the year-earlier quarter. As well, it sold 76,000 tonnes of ammonium sulphate at $391 each, up from 78,000 at $192 in the year-earlier period.

Looking ahead, North America’s late harvest and recent declines in crop prices are expected to result in farmers on this continent deferring relatively more of their upcoming fertilizer application to early next year, “placing that much more pressure on the distribution system next spring,” the company said.

Given fertilizer and crop price volatility, plus North America’s harvesting delays, Agrium expects a deferral of sales volumes, including pre-sold sales volumes, to the first half of 2009.

How big that expected deferral will be is difficult to predict but Agrium has now widened its guidance range for the second half of 2008 to $3.30 to $4 per share.

“Food demand”

Repeating a common refrain in other ag-related companies’ recent quarterly statements, Agrium CEO Mike Wilson said the company does “not believe global food demand will be impacted by a downturn in the economy the way that other commodity and consumer products would, and any reduction in global fertilizer use or seeded acreage will only put more upward pressure on crop prices in the future.

“Global financial markets, particularly commodity prices, have been severely impacted by the global credit crunch and associated economic uncertainty. Commodity prices have been hit almost without consideration for the underlying market fundamentals by product or sector,” Wilson said.

However, “overall we believe that global crop fundamentals remain much more positive than current prices would indicate.”

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