TORONTO (miningweekly.com) – Fertiliser products group Agrium lost $60-million in the first three months of this year, compared with net earnings of C$195-million a year earlier, after a significant decline in potash sales volumes, and lower prices for nitrogen and phosphate fertilisers.

However, the company remains optimistic that demand for crop nutrients will strengthen over the course of this year, and is confident that the long-term outlook is positive, CEO Michael Wilson said on a conference call.

The low levels of crop nutrient applications over the last few quarters is “a short-term event,” he told analysts and investors.

“The market is very susceptible to what we call 'currentitis', but one has to look beyond today and separate a structural change in the business from a short-term challenge.”

Demand for food will not be affected to the same degree as other commodities, because “even in these extremely tough times, people still need to eat”, Wilson said.

“For this reason, we remain steadfast in our belief that demand for our product will continue to improve into the fall."

Demand for fertilisers surged in early 2008, boosting prices, but has since softened, as farmers, squeezed by the economic downturn and credit crisis, and hopeful of further declines in prices for phosphate and nitrogen-based fertilisers, defer their use of the nutrients.

In response, producers, including Agrium and larger rival Potash Corpration, have announced production cutbacks.

Calgary-based Agrium is currently operating at 35% of capacity at its potash operations, Wilson said.

The company expects Chinese and Indian buyers to settle key potash contract prices with producers by the end of the second quarter.

Agrium's total sales in the first quarter increased to $1,79-billion, compared with $1,16-billion a year earlier, mainly as a result of the company's 2008 acquisition of North American agricultural products distributor UAP Holding Corp.

The company said that it expects to report diluted earnings a share of from $1,70 a share to $2,10 a share in the second quarter.

Agrium remains committed to acquiring US rival CF Industries, and is prepared to increase its offer if CF can demonstrate additional value, Wilson said.

Shares in the company slid 1,16% on Wednesday, to C$53,05 apiece by 15:56 in Toronto.

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