Agrium back into the black as fertilizer markets recover

Allen Baker, PNA contributing writer

Agrium Inc. moved back into positive territory for the third quarter with earnings of $1 million, after a loss of $17 million in the same quarter last year. The company lost $13 million over the first half of this year.

Prices for ammonia and urea fertilizers rose by roughly 25 percent in the U.S. Gulf Coast region, the Calgary-based company reports, while grain prices are up 30 to 40 percent, giving farmers more money for fertilizer.

Sales in the third quarter, traditionally a slow one, were $466 million, up 14 percent from $410 million a year earlier.

Agrium is facing a shortfall in supply for its Nikiski plant, the company notes in its third-quarter earnings report. Agrium says that supplier Unocal has indicated it will probably cut deliveries to the plant to 95,000 to 125,000 million BTUs daily during the winter season so it can meet obligations to other customers. That puts the Nikiski plant short of its capacity of 155 million BTUs daily.

Agrium says it has been trying unsuccessfully to find other suppliers to make up the difference. Executives also say they believe Unocal has sufficient reserves to keep the plant supplied in the near term. Unocal has indicated it will resume supplying 120,000 million BTUs daily next April.

In June, Agrium filed a lawsuit against Unocal, which sold the plant to Agrium in September of 2000 in a deal that included a long-term supply agreement. Unocal countersued, saying Agrium hadn’t made required payments under the sale contract.

Although the company is based in Canada, results are stated in U.S. dollars.