Lazard Capital Markets "Best on the Street" Analyst Research: Global Demand for Nitrogen Fertilizers Relentless as Need for Increased Corn Yields Continues

Wall Street Transcript

67 WALL STREET, New York - October 22, 2012 - The Wall Street Transcript has just published its Farming Equipment, Chemicals and Products Report offering a timely review of the global agricultural sector to serious investors and industry executives. This special feature contains expert industry commentary through in-depth interviews with public company CEOs, Equity Analysts and Money Managers. The full issue is available by calling (212) 952-7433 or via The Wall Street Transcript Online.

Topics covered: High Crop Prices - Emerging Market Farm Mechanization - Crop Yield Management - U.S. Corn Crop

Companies include: CF Industries Holdings, Inc. (CF), Potash Corp. of Saskatchewan, (POT), Mosaic Co. (MOS), Agrium Inc. (AGU), Intrepid Potash, Inc. (IPI) and many others.

In the following excerpt from the Farming Equipment, Chemicals and Products Report, an expert analyst discusses the outlook for the sector for investors:

TWST: What is the overall picture in terms of fertilizers right now?

Mr. Rodriguez: Right now, fertilizers are probably the best positioned that they have been in a very long time. Farmers are planting a lot of corn right now. They're going to plant a lot of corn next year, and they are probably going to plant a lot of corn the year after that. As a result, fertilizers are well positioned because farmers need to increase the yield of the corn crop, which means they have to use more fertilizers. That means the fundamentals in fertilizers are the best we've seen in a very, very long time.

TWST: And that's primarily a function of demand?

Mr. Rodriguez: Yes, that's primarily a function of demand. As farmers continue to plant more acreage, especially corn, there will be an increasing demand for fertilizer. Basically, there are two ways to increase your crop production. Those two ways are either to plant more in terms of acreage or to increase the amount of crop per acre.

Globally, we are seeing more land in use for agriculture, but there is a limit to how much land is available. Instead of acquiring more land to plant on, sometimes because there isn't any more land available, farmers are looking to increase their yield. That means they are using more fertilizers to get that yield up. Farmers have realized that, globally, the amount of land available for farms is actually decreasing. That helps fertilizers, because the only option then is to use fertilizer. It becomes a question of how to get the most out of what you are planting, and fertilizer is the main thing that is pushing increased yield.

As you said, it's the demand side that's driving the fertilizer sector right now. Last year, farmers in the U.S. planted almost 97 million acres of corn, that's up from 92 million the year before, and next year, they are likely to plant at least the same number of acres. So even if it doesn't increase next year, it is not going to decrease either.

TWST: You said this is a global trend. So are we seeing increased fertilizer use in emerging markets?

For more of this interview and many others visit the Wall Street Transcript - a unique service for investors and industry researchers - providing fresh commentary and insight through verbatim interviews with CEOs, portfolio managers and research analysts. This special issue is available by calling (212) 952-7433 or via The Wall Street Transcript Online.

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