By Roberta Rampton
WINNIPEG, Manitoba, Sept 17 Potash Corp of
Saskatchewan (POT.TO) continues to see strong demand for
fertilizer at higher prices and has not seen any substantive
changes in business conditions since its July forecast, the
company's chief financial officer said on Wednesday.
The company's stock has dropped more than 30 percent since
it peaked in mid-June because commodities have fallen out of
favor with investors, said CFO Wayne Brownlee at a Credit
Suisse investor conference in New York.
"For all the noise that's out there in financial markets,
agricultural markets and fertilizer markets, our business is
going fine," Brownlee said.
Potash Corp, the world's largest fertilizer company, said
in July that it expected full-year earnings of $12 to $13 per
share, up from an April estimate of $9.50 to $10.50.
Potash shares were up 2.6 percent at C$179.36 on the
Toronto Stock Exchange on Wednesday.
The company said last week it would buy back up to 10
percent of its float because the shares are undervalued.
Potash prices have more than tripled to levels above $1,000
a tonne this year and inventories have been stretched to
At one point last week, there was only 75,000 tonnes of
inventory in North America at a time when there should have
been 1 million tonnes, Brownlee said.
Potash producers are unable to supply 8 to 10 percent of
world demand this year, or a total of 3 million to 4 million
tonnes, mainly in China, Brownlee said.
"We think there's actually a chance that you're going to
see potash be short for the next five years," he said.
Potash Corp plans to boost capacity by 80 percent in the
next five to seven years to try to fill the gap, he said.
The company had expected to mine 10.2 million tonnes of
potash this year, although a strike by about 500 workers at
three of its mines could cut into that total, Brownlee said.
The mines account for about 30 percent of Potash Corp
production and about 6 percent of world supplies.
Workers walked off the job on Aug 7, and the United
Steelworkers union said it has prepared for a long fight by
ordering winterized trailers for the picket lines.
The union passed out leaflets outside the conference urging
investors to tell Brownlee to end the strike.
Potash prices face less risk from capacity expansion than
they would if corn prices dropped by half or if offshore
economies slowed because of price inflation, Brownlee said.
"How much can you charge for iron ore, for oil, for coal,
for soybean oil to China ... and keep ratcheting it up before
that commodity price inflation on a cumulative basis actually
sort of subdues that growth in these offshore marketplaces?" he
The company could look at expanding its nitrogen fertilizer
operations for the right "opportunistic" price, Brownlee said.
A Saskatchewan nitrogen plant sold in July to Norwegian
producer Yara International ASA (YAR.OL) for C$1.6 billion was
priced too high for Potash Corp to contemplate, he said.
(Reporting by Roberta Rampton; editing by Rob Wilson)