In short, the story was that volume was lower but sales prices were higher. So, ultimately, the rise in revenue was primarily due to higher average selling prices across all segments.
More specifically, in the third quarter, total sales volume was slightly lower compared to the same periods in 2017; lower ammonia and ammonium nitrate sales volume was partially offset by higher sales volume for granular urea.
For the third quarter of 2018, the company's average selling price for ammonia was $292 per ton compared to $235 per ton in the third quarter of 2017.
In urea, the average selling price was $259 per ton in the third quarter of 2018 compared to $195 per ton in the prior year period.
In UAN, the average selling price was $167 per ton in the third quarter of 2018 compared to $144 per ton in the prior year period.
CF Industries is largely known as a nitrogen fertilizer play in the agriculture industry. So, in any given year, when farmers plant crops that are more nitrogen-intensive, CF benefits.
For example, it's positive that in 2019, in the U.S., farmers are projected to plant 93 mln acres of corn, approximately four mln more acres than in 2018. Together with expected increases in wheat plantings, this expansion will drive stronger nitrogen demand in North America.
Given this, the company is forecasting that the global nitrogen demand outlook is positive for the first half of 2019. Of course, heading into the next crop year, if there is any news that farmers are deciding to plant less corn than current estimates, for whatever reason, this will be negative to the company's current earnings forecast.
Separately, anticipated demand for urea in India and Brazil should continue to support a tighter global nitrogen supply and demand balance into 2019 as well. Also influencing the global supply and demand equation are energy prices and enforced environmental regulations compliance, which are expected to continue to have a tightening influence on supply available for export in key regions, particularly in China.
In other news, the company continues to monitor the impact of sanctions on Iran. In the short-term, outlets for the estimated 3-4 mln metric tons of Iranian urea exports appear to be more limited than in recent years. Most significantly, India did not purchase any product from Iranian sources in its most recent urea tender in October.
CF expects that the global market fundamentals that drove global nitrogen prices higher during the third quarter will persist through the fourth quarter of 2018 and into the first half of 2019.
Following these results and outlook, shares of CF are trading two points higher at $50/share.