TORONTO (miningweekly.com) – Fertiliser products group Agrium earned $370-million in the second quarter of 2009, compared with net earnings of $636-million a year earlier.

Profit was hurt by lower potash sales volumes, as well as weaker prices for most of the group's products, Calgary-based Agrium said in a statement on Wednesday.

Net earnings before interest and tax were $543-million in the quarter ended June 30, 2009, compared with $972-million in the same period a year ago.

The financial results included gains of $15-million on derivative financial instruments and a $4-million expense in stock-based compensation for the quarter. It also included an inventory write-down of $32-million.

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.

Buyers and producers are also awaiting the results of delayed contract settlements with China and India.

However, Agrium remains optimistic that potash demand will recover in the second half of 2009, said CEO Mike Wilson.

“The outlook for our businesses and products remains strong and we are starting to see signs of improving demand fundamentals as we approach the fall season.”

Wilson reiterated Agrium's commitment to its plan to buy US rival CF Industries.

"We remain fully committed to acquiring CF, with continued conviction that an Agrium and CF combination would create significant value for all stockholders and other stakeholders,” he said.

“We will continue to press CF to execute a mutually beneficial merger agreement.”

Separately on Wednesday, CF Industries said that it is prepared to raise the stakes in its own hostile bid for Terra Industries.

CF is prepared to sweeten its share exchange ratio offer to 0,465 CF shares per Terra share, the company said in an emailed statement.

The proposal represents a premium of 35% over the exchange ratio on January 15, 2009, just prior to when the initial offer was made, CF said.