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PotashCorp posts record Q4

The world’s largest potash player by capacity has unsurprisingly come out of fiscal 2008 with record results and predicts demand will likely climb again come spring.

Saskatoon-based PotashCorp on Thursday logged a record fourth-quarter profit of $788 million on $1.87 billion in sales (all figures US$) and a profit of $3.495 billion on $9.47 billion in total sales for fiscal 2008, ending Dec. 31.

“Potash, our core nutrient, holds unique advantages that enable us to deliver strong performance, even in a very difficult economic climate,” CEO Bill Doyle said in the company’s release Thursday.

PotashCorp said it expects slow demand in all major potash markets early in 2009, but added that the pace of sales should intensify in the second quarter.

“In North America, because farmers deferred fertilizer purchases in the fall when at least 40 per cent of potash applications traditionally occur, we expect above-normal spring applications,” the company said.

“This should draw inventories substantially lower by the end of the spring season and lead to considerable restocking of the system in the second half of the year.”

Similarly, PotashCorp noted, China produced a record crop in 2008, but was short on potash because of its late entry to the market last year.

With potash sales expected to be more heavily weighted to the last three quarters of the year, the company is curtailing production from its 2009 operational capability early in the year by over two million tonnes.

In nitrogen, where PotashCorp has the second-largest capacity worldwide, the company said it expects ammonia demand to remain soft due to economic
conditions, with industrial demand likely to be slow at least through the
first half.

That said, “with substantial capacity offline and questions about
natural gas reliability in some key producing regions, conditions could
improve more quickly,” the company said.

Lastly, the company said, in spite of the high levels of solid phosphate fertilizer inventories worldwide, phosphate rock prices have been in the $250-$290 per tonne range early in 2009, while phosphoric acid prices remain above $1,000 per tonne.

“We expect that the combination of significant capacity curtailments occurring around the world and strong underlying rock and acid prices will strengthen solid fertilizer markets once demand returns,” PotashCorp said.

The company is the third largest phosphate producer by capacity and the world’s largest capacity in phosphate ingredients for animal feed.

Until that demand returns, PotashCorp said, it plans to curtail all
production of finished phosphates at its White Springs, Florida phosphate rock facility through the first half of 2009. It will also run its Aurora, N.C. phosphate and phosphoric acid plant at “reduced rates” through PotashCorp’s first quarter.

PotashCorp, in its Q4 analysis, said the global economic crisis that “accelerated” during the fourth quarter of 2008 affected nearly every industry including global agriculture.

“Even after record harvests
drew large volumes of nutrients from soils, fertilizer distributors and
farmers suspended purchases in the face of the uncertainty of world markets,” the company wrote Thursday.

“We believe this was largely a psychological barrier, as the economics of food
production and fertilizer use remain very attractive.”

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