UPDATE 1-Bleak outlook sparks frenzied dealmaking in nitrogen fertilizer market

Thu Aug 13, 2015 12:23pm EDT
 
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By Rod Nickel

Aug 13 (Reuters) - Sinking crop prices and frenzied output growth by nitrogen fertilizer producers have sparked nearly $10 billion worth of deals in the fragmented sector and signal more consolidation may be ahead in the largest of three crop nutrient markets.

Illinois-based CF Industries Holdings Inc, the world's third-largest nitrogen fertilizer producer, was involved in three of four deals in the past month, taking out two potential competitors in its backyard and locking up sales volumes in the United States, the world's No. 1 corn-producing country.

"What CF is doing is classic corporate self-preservation in a world where there are well-financed people trying to get into their core Midwest and U.S. Gulf Coast nitrogen market," said Chris Damas, editor of the BCMI Report on markets.

Unlike in the potash and phosphate industries dominated by a few players, the top 20 nitrogen companies account for just over one-third of global supply, according to consultancy CRU Group. CF's share is less than 4 percent, it said.

On Wednesday farmer co-operative CHS Inc ditched plans to spend $3 billion building a plant in North Dakota and agreed instead to pay $2.8 billion for a stake in CF's nitrogen fertilizer unit, while securing a supply deal.   Continued...