Collapse in Fertilizer Prices Cause Loss for The Andersons

Fertilizer adds to losses accumulated from ethanol.

Published on: Nov 26, 2008

The Andersons, a diversified ag business in the eastern Corn Belt, is apparently facing even larger than expected losses as a result of the recent collapse in international fertilizer prices.

The company, based in Maumee, Ohio, earlier announced it was taking a $13.1 million adjustment due to fertilizer inventories purchased at higher prices. Today the firm lowered its estimated earnings per share for 2008 from a range of $3.50 to $4.00 to between $2.00 and $2.80, which suggests it anticipates a large loss in the fourth quarter.

The company blamed "volatility in the plant nutrient sector," adding "Although volatility is inherent to the commodities markets, the current unpredictability in plant nutrient product valuation is at unprecedented levels."

Fertilizer prices have plunged dramatically this fall. Anhydrous ammonia, for example, is off 75% on international markets from record highs reached in September, as buyers stepped away from the market due to financial turmoil, uncertain credit and sharply lower grain prices. That's left many supplies holding high-priced inventory they can't sell.

The company earlier this month also reported a $2 million loss in the third quarter from its investment in three ethanol limited liability companies.