CF Q3 2026 earnings call transcript, November 5, 2026

Good morning, Kristen.

I would say our view has not changed. I think it's something that we've been talking about for quite a while. Uh, the only part that has changed... Our view, I should say, in the aggregate hasn't changed, is we believe it's going to accelerate from what we thought was a 2030 timeframe with some of those European shutdowns to occur, whether it be 12 months or 18 months, sooner than that, given the current dynamics that you discussed in the, you know, the energy volatility. So today we're seeing the 40% either offline or curtailed in Europe. And additionally, each quarter that... that this goes on makes it more and more challenging to start up that equipment because the capital costs that would be associated. And additionally, you know, to have fixed overhead absorption that continues and the work that's needed to keep that equipment in line to be started up at some unknown date is quite expensive. So I would say our position on the tightening in the global S&D market has been one that we have back all the way to 2020. It's just being accelerated now. That's also being compounded by what we're seeing in, you know, Russia, Ukraine with no true resolution there. And I would even say, you know, what we're seeing in the Middle East, even if there is some sort of resumption, it will take a while in order for that supply to begin flowing.

Thank you for that.

And my follow up is for Bert. I think you said fall application. And among the highest in 10 years, it's been a pretty dynamic year from a commodity price perspective. Obviously, pretty healthy crop this year, but just maybe some indications on how you're thinking about acreage in 2027 would be helpful. Thank you. So good morning. And the positive implications or directions in our fall ammonia program, which is one of the highest in 10 years, one, it has to weather. We always put in the caveat of weather dependent because. We're just starting the program now. We're movement in Canada and that's moving down into the Dakotas. And then we write the indications are with that corn planting in in 2027. What we're looking at is probably in line with what the other recommendations or indications are from the other players. 95 to 96 million acres could be elevated depending on pricing. Right now where corn is settling, one of the positive things for this year and for farm revenue is the settling of the crop revenue guarantee program.

A nice floor. For a farmer in today's economics and then interesting to see what's going to happen globally with yields due to I think some under applications of nutrients which we see as healthy in the ethanol and then therefore dry.

In 2027 which could drive acres even higher than the 90. I appreciate the time. Next question comes from Andrew Wong of RBC Capital Markets. Go ahead please.

remarks we've probably lost nine million tons and it's in our deck of what's been lost and what's been made up with different places and so as we're trending into the back half of this year in q4 i think the market's just in pause as you transition from hemispheres to hemispheres and planting and applications and building of supply but inventories are low i do see a positive movement for urea uan has been trading at a higher differential to urea at this time seven as well ammonia globally is more impacted you're correct on european demand and global demand for ammonia mentioned shutdowns and ammonia up higher in recent weeks

thank you very much taking my question how long do you think that the the northern hemisphere farmer can can wait before buying i mean are they looking at events this week thinking the iran war might end and they can hold on for for some time is that why pricing is only is only 10 higher than last year well i think you're seeing some indications of actual stepping in and buying our uam program from our retail friends has been sold down a lot to farmers and so that's a product we've already shipped and we've talked about the ammonia program has been sold down to farmers and i think ours and the other suppliers in the in united states and canada have also done and or had or have prepared a good program for fall which indicates again farmer uptake we will launch our spring program for ammonia post the application season this fall i think where you've seen some cutbacks in in p and k is a reflection of the higher price again nitrogen is a very good value and it's been reflected in purchasing i think the slowdown if you're taking the whole northern hemisphere and the slowdown in europe is a reflection of of just those natural gas costs and european producers of nitrogen those prices are much higher than in and just as a follow-up can you just expand a little bit more on where you see chinese urea exports going i mean it looks like this is the highest level in in ten years but do you think this could be a new normal or just a one-off we're helping india out

effectively there are two chinas there's the prilled urea producers and the granular urea producers what has helped stabilize the market in india and southeast asia has been the prilled supply which is generally not demanded in first tier first world markets and so if you extract the prilled supply out i would is is market at this point so chinese uh the export authorizations now total almost nine million tons so it is higher well under five million tons but again on a strange year with uh the limits out of the middle east it would make it made sense for china to open up a little bit more but it is consistent with i think what china has focused on is their own food security and food production and supply of fertilizers to their farmers on an economic basis and so i think that's the first and then excess that's next year six million seven million eight million

over ten years it would also require them to station over you know over a decade so i'm not so certain some of the eight to nine million tons of export that you know burp was talking about there don't move a little bit into early part of next calendar year as well and that's where maybe that bumps up against some of the domestic constraints that they're looking at doing there so a lot to keep our eye on with that but it would be quite a bit for them to export before the end of the year here.

Thank you very much.

Talk through a little bit more of the timing of insurance payments. Yeah, and hi, Joel. So the way that I would think about it is I would take a longer view, both the capital build and the timing of when the cash payments will go out at the end of this year and into next year, relative to the insurance pieces. What we expect is that the two are going to offset. So if you take a longer-term view and you kind of go through once we're complete with the rebuild and this is all wrapped up, we see that the two will largely offset. We're not trying to give guidance on what it's going to be. It's going to look like quarter over quarter, but I would say, you know, feel assured that that longer-term view will largely offset.

Probably some good opportunities in the forward market relative to the impact of El Nino around the world, the impact of lower nutrient levels utilized for the crop that's being put in the ground, and the stocks to use ratios that are in the market relative to demand being strong with ethanol and protein production. So in line to support crop prices, which then therefore support farmer income. And that's a knock on wood. Yeah, and I would just say from CF's perspective, you know, the area that we focus as we can globally by our production, and that's utilization rate at 97%, making consistent investments over the year.

And then increasing, you know, production. Whether it be through de-bottlenecks at our plants or even our distribution network in order to make certain that we can get the product to the farmer at the lowest cost and when they need it for application. The focus is really on the supply side of the S&D balance here in order to assist, you know, our end customer, the farmer.

Freeing, it gets planted generally late January through early March. And, but we are seeing constrained issue with the suppliers of, of nutrients have to, uh, you know, have long dated credit and getting prepaid that is delayed purchasing from the importers, which has delayed sales to the farmers. And so our estimates today is that probably a million tons compared to 2025. And overall with NPK, uh, probably down seven to 9 million tons of total fertilizer demand cut due to an inability to pay for it. And, and. in terms of being competitive and again, these credit, I think one of the. What the indicators are predicting is the impact when it's.

So the total global supply is lower. And I think you've seen some deferred purchasing around the world that is also probably not impacted. Supply hasn't had to move into those positions yet. So when you combine demand deferral globally with prompt demand in Europe, I think that's why we're not escalating in price to the level that probably you would expect.

Thanks for that.

and really their... capital cost per ton that could happen. And then on some of the other announcements related to fields, you're looking at some pretty small bottlenecks, things that we look at through our network all the time to increase efficiency. And obviously, we believe, given our technical expertise, we can do that on a lower cost per ton than anybody else. But in the end, you know, those announcements, you're looking at sizes that are in the 50,000 to 150,000 ton. ranking here, where our blue point at minimum is going to be 1.5 million tons. So you're kind of, you know, just nipping around the edges from what it's going to do from the overall supply standpoint. And I think that just really touches why our view both near mid and long term on nitrogen, we're seeing demand, as Bert said, yes, there's some deferral effects yield with. The lack of nitrogen. So demand continues to grow. But we've seen not only what's happening with geopolitical, but European shutdowns occur. And then this lack of new supply being bid into the market. And then add on top of that, as I mentioned earlier, the duration to startup, you know, even though we hear these announcements of these smallers are not moving the needle to the tightness we're seeing in the global. and debalance, not only this year, but over the next several years. That's good. Thank you.

now they seem to be holding back on that. Any thoughts on what's going on there?

Good morning, Vincent.

That was a surprise, I think. On top of the amazing amount of ammonium sulfate that has gone out in the world, over 20 million tons, and it's just been a replacement for urea, but I think it's related to sulfur and the cost of sulfur, the cost of production, and the need for sulfuric acid for other applications, and so that was just a tightening and a restriction of the ammonium sulfate to be produced or exported.

Thanks everyone.

Hey, good morning, Chris.

And when you look at the summer fill program, Mike and the team have done a great job putting that out in early July, and the roll-up was very fast. We took over probably over 2 million tons of orders and have been shipping against that. And then in parallel, building the book through Q4, and now we're sold into Q1. And the pricing on that was, we started in the high, like $280, $290, and you saw that reflected in the positive price of $322 as an average price for Q3, and that has continued to escalate. One is a reflection of just the need for nitrogen. Two is a reflection of the global market and a kind of a

migration to UAN. Parallel to that, we've exported a lot less of UAN and have kept a lot more. One of our decision earlier in the year to keep tons for the North American farmer or the American farmer. We always compare between the nitrogen products and try to stay in relation, but we're seeing a very positive spring demand. I think coming, again, back to the corn acres that are going to be planted and applied, as well as what we expect to have a better corn price.

And just a quick follow-up, perhaps a slightly longer-term question, but, you know, a couple years ago, India, there were very brief talks about India trying to be, you know, independent on the Rhea side, which has been anything but over the last two years, and obviously have, I'd say, disappointed. production, obviously, a period of times, you know, over that frame. How are you kind of thinking about that market over the longer term in terms of market growth versus perhaps U.S. LNG contracts towards the end of this decade? Is that something where you're looking at it sustainably, let's say, in the high, you know, high singular millions in terms of the market, in terms of the import market? Do you see that declining slightly? Do you see it growing? Just trying to get kind of a grasp on how you're. Viewing the longer-term supply-demand dynamic based on them. Thank you. Yeah, so today India is, you know, approaching 40 million tons of total consumption and production of around 30 and imports of around 10 million tons. So imports have ranged between 5 to 10 million tons over the last several years. The Modi government has directed a Made in India program. They have built new plants. But those. Some of those that are gas supplied are expensive. So if you're paying the world price for natural gas today at $25 to $30 and you're competing against import urea, it makes much more economic sense to not operate those plants and import urea, especially from China, which is the cheapest source.

And they're a big buyer of prilled urea. So I would look at it in that range. There is a new plant coming on in 2027, about a million ton plant in India. That is slated to come into production. So I would make that range, or think about that range in that six to nine million tons into 2027. And then if gas prices are expensive, it should be on the high side.

Yeah, it's been a difficult road for the phosphate producers because of sulfur. The price of sulfur elevating to over $1,000 a ton. As an ammonia supplier, and we do supply some of the major producers and have very good relationships with them, and both contractually and spot tons we sell. And through conversations with them, we're expecting demand for ammonia to increase in 2027 based on two drivers. One, we expect sulfur to come back in line, maybe not back to historical values yet, but trending that way. As well as just overall demand for phosphates, which globally have been cut 20 or 30%. You've had under applications in all the major markets for phosphate, and that, again, eventually will have a yield impact and then an ability then to pay for phosphate. Probably more positive going into 2028 for ammonia demand from the phosphate.

Thanks. I'll pass it back.

and are applied, but also higher rates, as we've shown year after year.

location by location, to distribution facility by distribution facility, that there's never any type of curtailment from, you know, directly into our distribution system.

Perfect. And I wanted to ask a little bit about low-carbon ammonia. Can you refresh us firstly on where you stand with, you know, any sales commitments or volume commitments from Donaldsonville for whether it's ammonia or urea and the premiums that you had first disclosed a year ago? And are you seeing any new markets gaining traction? It seems like there have been some ammonia-powered vessels now that have been manufactured. Are you seeing anything there or the energy market incremental versus a few months ago? Yeah, so I'll start with the first part of your question. You know, Burt's team has done just a month-by-month significant volume, moved through a little over ammonia, applications that we're working through on UAN. So we're beginning to see UAN come through. Not only because of the sequestration we're doing with the CO2 on the ammonia production side, but also so that's a market that we just continue to see that once again just, you know, demonstrates the differentiation between our network and others in our space and really the leaders. That we're doing through the low carbon network. So we continue to build that book. Our expectation is next year with CBAM and some of the pending details on certification process getting worked out. We'll see that expand quite a bit more next question. Yes, our next question comes.

from Mazahir Mamadli of Rothschild & Company. Go ahead, please.

Great. Thank you.