UPDATE 4-Agrium profit down, but gets regulatory ruling

* Q3 EPS $0.16 vs $2.31 a year ago

* Analysts forecast EPS $0.16

* Remains committed to acquiring CF Industries

* Shares down 8 Canadian cents at C$51.23 (Adds Competition Bureau ruling)

By Euan Rocha

TORONTO, Nov 4 (Reuters) - Agrium Inc (AGU.TO) (AGU.N) reported a 93 percent plunge in its quarterly profit on Wednesday, but the fertilizer maker and agricultural products retailer expects sales to rebound in 2010.

Calgary, Alberta-based Agrium, which is locked in a lengthy battle to buy U.S. rival CF Industries (CF.N), said the sharp decline in profit was due primarily to lower prices and margins for nitrogen, phosphate and potash -- the three main crop nutrients used by farmers around the world.

Fertilizer producers reported record profits a year ago as grain prices soared, driving a huge increase in fertilizer demand and a big spike in pricing. But the economic slump, tight credit markets and weaker grain prices have hit the sector, crimping both production and fertilizer company profits.

But farmers cannot put off fertilizer application indefinitely, and this, coupled with recent increases in foodgrain prices, means Agrium and its peers are confident that sales volumes and margins will improve in 2010.

"We anticipate that North American nutrient demand at the farm level will rebound in late 2009 and early 2010," Agrium Chief Executive Mike Wilson said on a conference call.

Wilson expects North American nitrogen demand to increase 5 percent year-on-year, phosphate demand to rise 20-25 percent; and potash demand to climb 30-35 percent over 2009 levels.

But he said a key potash contract with Chinese buyers is unlikely to be settled until the first quarter of 2010. Potash Corp (POT.TO) the world's largest producer of the crop nutrient, had expected this deal to be settled before the end of this year. [ID:nN21344922]

Excluding one-off items, Agrium expects fourth-quarter earnings of 14 cents to 44 cents a share, well below the current forecast of 60 cents from analysts polled by Thomson Reuters I/B/E/S.

"The degree of weakness in the guidance was surprising ... Although the unpredictability of weather is likely a major factor," Credit Suisse analyst Elaine Yip said in a note to clients.

Shares of Agrium closed down 8 Canadian cents at C$51.23 on the Toronto Stock Exchange on Wednesday.

CF INDUSTRIES BID

Agrium said it remains committed to acquiring CF Industries, and Canada's Competition Bureau said on Wednesday it had reached an agreement with Agrium to address some of its antitrust concerns.

Under the deal, Agrium would sell a 50 percent stake in its its nitrogen-based fertilizer plant in Carseland, Alberta, to Terra Industries (TRA.N) and sell additional fertilizer product to Terra, the regulators said.

CF is itself waging a hostile battle to take over Terra, a smaller U.S. rival, which on Wednesday rejected a sweetened $4.1 billion CF bid as inadequate. [ID:nN04543202]

CF's proposed bid for Terra has received regulatory clearance.

Agrium earned $26 million, or 16 cents a share, in the latest quarter, compared with a year-earlier profit of $367 million, or $2.31 a share. That matched the 16 cents a share profit forecast by analysts.

Agrium said earnings from its retail business were hit by lower fungicide application rates and weak fertilizer demand.

Quarterly sales fell 41 percent to $1.89 billion.

Agrium had previously said that it expected third-quarter earnings to be 90 percent to 95 percent below those of the year-ago period. [ID:nBNG237646]

($1=$1.06 Canadian) (Reporting by Euan Rocha, Allan Dowd; editing by Rob Wilson)