Tailwinds Into 2013 for Fertilizer Producers?

Companies that produce nitrogen-based fertilizers experienced a tough third quarter this year, after the record droughts plagued the Midwest and imports challenged domestic companies in the urea and ammonium nitrate market. The downward pressure affected both CF Industries (NYSE: CF  ) and its subsidiary Terra Nitrogen (NYSE: TNH  ) over the past three months, leading to decreases in year-over-year revenue for both companies. Thankfully, lower natural gas prices than a year ago propped up margins, leading to positive earnings growth.

Moving forward, though, CF management believes the industry could be in for a nice ride through 2013. Because of the drought, it's likely that corn demand will be much higher this year, as inventories were depleted to meet demand this summer. Those in the know also predict low domestic supply of the nitrogen necessary for fertilizer production. If these two situations play out, look for CF and Terra Nitrogen to benefit, along with larger competitors such as Agrium (NYSE: AGU  ) and PotashCorp (NYSE: POT  ) .

See more in the following video.

Low natural gas prices can have the reverse effect on companies in other energy industries. Investors in SandRidge were startled after its shares plummeted when natural gas prices reached 10-year lows, but with the company halfway through its ambitious three-year plan to profitability, the future looks bright. If you're unsure about the future of this emerging oil and gas junior and are looking to find out more about its strengths and weaknesses, you should view this brand-new premium report detailing SandRidge's game plan and what to expect from the company going forward. To get started, click here!

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Related Tickers

10/26/2016 3:47 PM
TNH $104.25 Down -0.56 -0.53%
Terra Nitrogen CAPS Rating: ****
AGU $93.34 Up +0.61 +0.66%
Agrium CAPS Rating: ****
CF $25.55 Up +0.01 +0.02%
CF Industries Hold… CAPS Rating: ****
POT $16.79 Up +0.14 +0.84%
PotashCorp CAPS Rating: ****
SD.DL $0.00 Down +0.00 +0.00%
SandRidge Energy CAPS Rating: ***