Good day, ladies and gentlemen and welcome to the first quarter 2008 CF Industries results conference call. My name is Stacy and I will be your moderator for today. (Operator Instructions) I would now like to turn your presentation over to your host for today's call, Mr. Charles Nekvasil, with Director of Investor Relations. Please proceed, sir.

Thank you, Stacy. Good morning and thanks for joining us on this conference call for CF Industries Holdings, Inc. I'm Chuck Nekvasil, Director of Public and Investor Relations. And with me are Steve Wilson, our Chairman and Chief Executive Officer and Tony Nocchiero, our Senior Vice President and Chief Financial Officer. Dave Pruett, our Senior Vice President Operations who normally joins us on these calls is on an overseas business trip. Yesterday afternoon, CF Industries Holdings Inc released its first quarter results. As you read our news release posted on the Investor Relations section of our website at www.cfindustries.com, and as you listen to this conference call, please recognize that both contain forward-looking statements within the meaning of Federal Securities laws. Any statements in the release and or all statements in this call or other discussions, other than those relating to historical information or current condition are considered forward-looking statements. These forward-looking statements are subject to a number of risks and uncertainties, many of which are beyond our control and which could cause actual results to differ materially from such statements. These risks and uncertainties including those spelled out in the Safe Harbor Statement included in the news release. Consider all forward-looking statements in light of those and other risks and uncertainties and do place undue reliance on any forward-looking statements. Now, let me introduce Steve Wilson, our Chairman and Chief Executive Officer.

Thanks, Chuck, and thank you all for joining us. Yesterday afternoon, we reported first quarter results that were strong in their own right and I believe point to an excellent spring season for CF Industries. Net earnings totaled $158.8 million or $2.77 per diluted common share, up sharply from the $57.2 million or $2.02 per share that we earned in last year's first quarter. This represents exceptionally strong performance for our first quarter, particularly one that was as wet as it was this year. Driving that improvement was a strong pricing environment for all of our products, an environment that signals robust demand for crops and for the fertilizers required to maximize the yield and health of those crops. For the quarter that strong pricing produced net sales of $667.3 million, a 41% increase over last year. I am pleased with our first quarter performance. But keep in mind that especially in nitrogen, the first quarter is a bit like spring training in baseball. You do put numbers on the board, and its greater for good ones, it certainly were for CF industries. However, the regular season doesn't normally begin until the second quarter, that's when the first quarter's hard work really begins to count. But having said that, during our first quarter we achieved high and cost effective operating rates at our manufacturing operations. Even with the reported outage at the Medicine Hat Nitrogen Complex, we recorded a 96% capacity utilization in nitrogen. Meeting sales commitments and positioning more than a million tons of ammonia, urea, and UAN solution in our in-market terminals and warehouses, ready to serve customers. In phosphate, we achieved a strong 94% operating rate. One key to maintaining that rate was our success in obtaining inadequate supply of sulfur. In what was and remains a challenge in sulfur supply environment, I believe we benefited from long standing relationships with our major suppliers. During the quarter, we had no sulfur related production shortfalls for DAP and MAP. In fact, we actually produced 27,000 more tons of those products than we did in last year's first quarter. During the quarter then, we achieved significantly improved financial performance and thanks to the product positioned in our distribution network, set to stage to meet customers needs, in what is expected to be a robust spring planting season. Now, Tony Nocchiero, our Chief Financial Officer will provide some added detail on our financial performance.

Thanks, Steve and good morning everyone. As Steve pointed out, first quarter net earnings was strong $158.8 million or $2.77 per diluted share. Those results compare to the $57.2 million and $1.02 per diluted share, we reported for the first quarter of 2007. Gross margin was up substantially to $271 million from $105 million in the first quarter of 2007, with strong improvement in both of our business segments. Gross margin in this year's first quarter included the affect of $69.6 million a mark-to-market gains on natural gas derivatives. In last year's first quarter, we recognized $38.5 million of unrealized mark-to-market gains. On our per share basis, the gain was $0.78 in this year's first quarter compared to $0.44 last year. Mark-to-market adjustments on natural gas derivatives are reflected in nitrogen segment results. Let me discuss some financial highlights for the quarter compared to last year's first quarter. Net sales increased by 41% to $667 million. Volume depressed by the word -- start to spring decreased 8% to $1.74 million tons. With a 163,000 tons decrease in nitrogen volume, more than offsetting a modest increase in phosphate volume. Selling prices were substantially higher for all products. In total, average nitrogen fertilizer prices increased by 41% from the year -earlier quarter. In phosphate, the increase was an even stronger 86%. We enjoyed a $107 million increase in nitrogen gross margin including the mark-to-market effect and $59 million increase in phosphate gross margin. Realized natural gas costs increased by just under $11 million. SG&A expenses rose by $4.5 million or 33% compared to last year's first quarter. This was due to a large number of individually small factors relative to last year, the most notable of which were increased incentive compensation and consulting and legal fees. Cash flow from operations totaled $297…

Thanks, Tony. Over the last month or so, I've got into work on many mornings, taking a look at the weather forecast on my computer screen, and wondered when the spring showers would call it quips, long enough to allow farmers to begin field work. Monty Summa, our Vice President of Sales, reassured me more than once, that spring is usually wet. And that more importantly it always arrives. While spring has arrived, from North Dakota to Central Illinois we're seeing good ammonia movement as farmers get into the fields for pre-plant work. By now, most all of you can recite the macro factors expected to drive a strong spring planting season. We have low global stocks of coarse grains, even as demand continues to grow. Strong global demand has driven prices for major crops to record or near record levels. Prices have provide farmers with a significant financial incentive to plant a lot of acreage and to do their best to make sure that acreage yields a bountiful harvest. All of these factors should be reflected in a robust spring fertilizer movement and pricing for nitrogen and phosphate manufacturers and distributors like CF Industries. That's the demand side of the equation. Last week, of course, the supply side experience what many observers consider a positive development for manufacturers when China announced a significant increase in its export tariffs for most all fertilizer. It's estimated that China accounted for approximately 15% of total urea exports and about 17% of total DAP and MAP exports in 2007. It's understandable that following China's announcement, the price of urea moved up substantially in all markets. Has the wet weather dampened our enthusiasm for spring planting and fertilizer application? No, it hasn't. We're well within the window for optimal fertilizer application. In fact, if…

(Operator Instructions). Your first question comes from the line of Steve Byrne with Merrill Lynch. Please proceed.

Hi. Good morning, Steve.

Good morning. A couple of few questions about your forward purchasing program. When we has this -- on your last call you had enough tons booked forward at that time in early February to clearly cover shipments for the first quarter and what look like probably half of the second. When you book a sale forward like this, why is there a weather impact on that?

Steve, I just want to back up to the answer to your question. You said forward purchasing program, I assume you meant forward pricing program, is that correct?

Yes it.

Okay. Well, we book our shipments with in an intended ship month from our customers. The ability of customers to take product is a function of what the product is and what the conditions are on the receiving end. In the case of ammonia, the ammonia sits in our tanks. It is ready to be picked up by dealer and it goes directly from our tank to the dealer to the farm. There is no intermediate storage. So that product will be delivered coincident with the demand in the field for application as is being done right now.

And what happens if weather precludes those deliveries, does the order just slip into the next month?

Yes, in affect and there are provisions in our forward pricing program that will translate into some storage charges paid to us, if the shipments are delinquent by a certain amount into the future.

Okay. That helps. And on the phosphate side, do you have product priced in the second quarter that occurred prior to the run up in sulfur prices?

We spoke to this particular subject, I think at the end of the first quarter about our phosphate forward purchasing appetite, if you will. And when we realized that we're going to be experiencing rapid escalation in raw material prices and at the time, we're seeing higher ammonia cost and higher sulfur cost, we reflected that in the way that we augment our offering into the marketplace. Our appetite changed accordingly and that can be interpreted in two ways. A bit of a reluctance to do forward pricing and substantially more -- substantially higher expectations in terms of the compensation we would get for taking the raw materials, so all those things have been factored into our forward offerings with respect to phosphate.

Okay. And then, lastly regarding your appetite for forward sales on the nitrogen side, jut based on this 3.7 million ton books forward and where we are here in the second quarter, you clearly have sold a significant volume of presumably nitrogen in the third quarter maybe even in the fourth, is that true?

Well, certainly, that in order to get to those kind of volumes we have to have sold quite a bit forward in terms of amounts and timing, yes.

Okay. And can you just tell me, who on balance is really being the aggressor here? Is it your interest in selling forward and locking in margins, or is it your customer that is driving this and willing to pay up, to lock in a sale a few months in advance. Which would you say is driving this level of forward selling?

Well, we respond to customers and yes, it's a balance. I mean, we're making the offer. In this kind of environment, we're being what we believe quite aggressive and what we ask for because we know, that the supply-demand balance is pretty tight. If our customers have an appetite for taking product and it shows up in the form of meeting our price, we have a match, and we do the forward sale. The margins on that business we believe are quite attractive. And I would just mention to those who may not be familiar totally with our program, this is a margin management program for us. So we're not only looking at the price of the fertilizer out into the future, we're matching that with our major raw material cost, which is natural gas. And if you follow the natural gas market, you have seen the price curve has gone up a couple of bucks in the last few months, and so product that we booked over that time period has a margin that's determined by the price curve for nitrogen fertilizer and by the price curve at that time for natural gas. So, that's why I can express the pleasure I have about the margins that we have booked on that product.

Okay. Thank you.

Thanks, Steven.

Your next question comes from the line of Brian Yu with Citi. Please proceed.

Thanks. Steve, good morning. And I wanted to start by saying that your teams did an excellent job on cost control during the quarter.

Thank you, Brian. Good morning.

Good morning. I am trying to soften you up a little bit for my next question.

Okay.

So with your FPP bookings at about 3.7 million tons, I mean, those are very much similar to Steve's questions earlier. It does suggest your shipments are well booked into 3Q based on our volume estimates. So first and the last call you provided qualitative commentary on implied margins for nitrogen indicating that they would increase quarter-on-quarter and they did. Can you provide similar color, again? And secondly, you have indicated in the past that CF can lock in margins on nitrogen be a hedges but not phosphates. So it's little bit surprise that FPP accounted for 69% of phosphate sales in Q2, well above lashing the prior quarter. Since spot prices in phosphate are pretty transparent and it appears your are giving pricing guidance and manage the expectations, can you do some thing similar here whether it's a percentage increase quarter-on-quarter, a range of vessel prices or anything that can help us to calibrate our models?

Well, if we go back to your nitrogen question first. I don't remember being quite that explicit three months ago but perhaps I was. I'll just reiterate what I said in response to the earlier questions. We are very comfortable with the margins that we booked under our forward pricing program. We could be proven right in the future, we could be proven wrong in the future relative to what might be available down the road. But we are comfortable with those margins. In terms of phosphate, the percentage of our business that was transacted under the FPP in the first quarter was, of course, a function of transactions that were entered to prior to that. And so that that high percentage was a function of what were very rapid. We thought price escalation in phosphate in the -- particularly, second half of last year. And so that pricing environment was reflected in our FPP business on phosphates. We were surprised by the magnitude of the sulfur price increase, which occurred. And so that as I said earlier has changed our appetite and our approach for FPP in phosphate. We believe in terms of the -- the world really knows what's happening with sulfur prices. We don't publish our sulfur prices that we pay, but there is a fair amount of visibility in to that through industry publications. And the prices that are available for phosphate products are again pretty transparent on a spot basis, what is not quite -- what isn't transparent is the timing in which CF or anybody else books individual orders for future shipment. As we showed this quarter, we have a sequential debt price increase of $73 a ton. And that's on the heels of -- I am going to read these in order. This is Q1 to Q2 last year $87, the next quarter at $39, the next quarter at $32 and then just passed quarter $73 a ton. So these increases roll through our system. The DAP market is very robust right now. You can certainly expect the price increases that have been reflected in the market to show up on our financials in the future.

So, there is nothing you can provide us right now. It does seem like you have pretty good visibility in your pricing for second quarter?

We do.

Yeah. Any numbers, percentages that you could help to just match our expectation?

As I think you know, we're pretty uncomfortable with providing financial guidance. I think, you've a pretty good sense of the direction here.

Okay. Thanks.

Your next question comes from the line of David Silver with JPMorgan.

Yeah. Hi. Good morning, guys.

Good morning, David.

Okay. I had a couple of questions, and I guess I'd like to go to the Chinese export tariff issue. And I kind of hear you guys as kind of a very good mirror or reflection to that, given your strong representation in both phosphate and urea. Could you give us a sense of what your offshore marketing people, maybe a key trade are assessing here in terms of duration and the impact of the tariffs? And I am thinking in particular on phosphate, where pricing maybe hasn't moved so much since the export tariffs were put in place and as you indicated the Chinese do represent a substantial portion of the market which I view is very tight. So, what do you think the fact that the tariffs are going to be on your business and what type of opportunities might present themselves, let's say, to redirect some domestic DAP that's maybe 1,100 a metric ton and put it in the export market at something closure to 1,300 or 1,400.

Well, it's a complex question and where I am not sure I have a good answer for because you're asking me to get out of crystal ball and factor in what the global response is going to be to a specific action by a government. Clearly, we have an issue in China. This is a pretty draconian action to take, to put tariffs on at that level. They do not want a kind of product to get out of their country. I guess just a general comment in terms of the DAP market. When prices got to $500 to ton, I think a lot of people thought that was going to be a resistance point and it'd really tough to push prices above there. Well, it seems like only a few days and we zoom pass $600, $700, $800 and now people were talking about the possibility of a $1,000 of a ton. I actually witnessed a transaction in Brazil done in $1,000 a metric ton when the customer said to our key trade partner, please don't disclose who brought this cargo. Because he embarrassed by the price. Well, it got past to $1,000. It's more or like $1,100 or so now. It's a little low I think in activity in the international market but there are some markets that are going to have buy. And I think it will be awaken soon. Its really hard to know what -- no one predicated $500, no one predicted a $1,000 but I'm not going to be the one to predict that it won't higher because its really a situation that is way beyond on chartered waters.

Yeah. And I guess just a follow-up, just a moment. Maybe I wasn't clear with my earlier kind of layout. But you guys produce both phosphate and -- both DAP and urea, right on the coast. And in theory, you could direct the product domestically or you could direct the product internationally.

Right

And has the very sharp upward movement in urea changed your thinking there? And do you expect to see -- I mean all things equal, do you think it's reasonable to expect a similar sharp move in phosphate over the near term?

Well, it's not unheard for urea to be exported from the U.S., but it has been rare. Could it happen again? Sure. I mean, prices jumped up $100 a metric ton or more almost overnight, that gets people's attention. Yet we have a good domestic market to serve, we have obviously a lot of product committed. But we can, we can provide some more if the value is there.

Okay.

Are people beating down our doors today to do that? Frankly, no. And phosphate, our philosophy on phosphate is that we would like to have strong long-term relationship with customers in both the export market and in our domestic market. But we'd also like to keep it through a degree of flexibility, so that we could exploit the kinds of opportunities that you're talking about. There is no science to this. It is a bit of art. As we visited with potential customers in Brazil, we emphasized that point that we want to be relationship-oriented with them as we're now with our customers in the U.S. So we're not prone to take huge quantities and move them back and forth between the import -- I am sorry, between the domestic and the export market. Quite like that's enough flexibility to be able to take some advantage of it.

If I could just change the topic, no, no, thanks very much for that. But I wanted to ask you guys something, ask you kind of maybe if you could give us your best thoughts, what you really think about corn acres this year? So, I am taking up several titbits that mentioned including the interesting comment you made about the ammonium movement right now. And that's a product I associate first and foremost with corn planning and I know through your customers and through your extensive distribution network through the Midwest. I mean you probably have the best barometer on corn versus soy movement as much as anybody. But if you really had a guess, Steve, I know in public you've kind of talked around this issue a few times. But what type of upside do you think there could be to that 86 million acre number? In other words economics in the future's market favor corn, but the weather kind of favors or puts a little more pressure on soy I guess moving up. I mean how do kind of assess the pushes and pulls as the planning seasonally moves into the high gear here?

Well, the economics clearly favors corn. The weather so far hasn't exactly favored corn. But we've had a lot of good ammonium days in the last week or so. Upside, you know that this intentions report has been exceeded by significant amounts in the past. Last year was 3 million tons, I think there has been as much as 3.5 million ton swing between the intentions report and the, what's actually planned. We don't know. Obviously, we don't know how the weather is going to play out. To me that's the biggest factor right now.

Okay.

I say tons, I meant acres.

I thought you meant acres. I would just say to Brian Yu, if you really want to soften these guys up, do what I do and that's provide free Starbucks coffee and plenty of pastries. Anyway, I'll get in the queue. Thanks very much.

Thanks, David.

Your next question comes from the line of Mark Connelly with Credit Suisse. Please proceed.

Thanks. Just to follow-on to David's question about nitrogen. I am curious whether the natural gas price hike -- the relative price situation that we're seeing overseas versus the US affects your view of -- not the U.S. becoming an exporter but of the relative competitiveness of ammonia versus UAN versus urea. We have obviously had some funny pricing in the last six months. And I wonder whether you think this is going to have any impact during the seasonal month?

Good morning Mark. Are you talking about the relative world values of nitrogen products or the U.S.?

I am saying about -- has that impact you and the U.S. market?

Well, for us, if you think about our product mix and our location, we have a lot of flexibility in the mix that we produce versus what we purchase because we do purchase nitrogen on a net basis. Gas costs have gone up in Eastern Europe. They have begun to move up in Russia. I think not only industry observers but industry participants, I think are viewing this as a structural change in the industry, and combining those higher gas cost with the inherent freight disadvantage serving our market. It certainly has put North American producers in a much better position than we were a couple of years ago. And perhaps, and we envision we would be in. In terms of the relative values of nitrogen products, I mean, that will change on a regular basis if it is -- you put in place the Chinese export tax. It had an overnight impact on world urea values. And we think of Urea as being the most vulnerable nitrogen product from the standpoint of pricing power because of how much capacity there is around the world. You take the big exporter out and one is generally a tight market and you can see the effect it had very quickly.

At the end of the day, does a meaningful shift in urea versus UAN and ammonia, is that going to make a big difference to you guys? And obviously ammonia is -- I am trying to get a sense of whether these structural shifts are going to make a big difference to you guys or not? Is it going to change what people are buying -- I am trying to look ahead three or four years?

Well, if I think about what people are buying in the U.S., which as today is our principle market, for people, for farmers who have traditionally used ammonia, they love ammonia. It is 82% nitrogen. They know how to put it down. It fits right in to their corn planting. They are reluctant I think to switch. They wait as long as they can before making a decision to apply something other than ammonia. Sometimes the price of product enter into the equation, but I think its going to take a pretty big differential in the cost of nitrogen to just wait ammonia users from using it.

Okay. And if I could just switch to phosphate for a second, again, a big picture question. 94% operating rates are pretty higher, you're putting a lot of stress on equipment. Are you having to change the way you run your facilities to make sure they can stay that way? Are you spending more on them? I am just wondering whether there is a risk out there that these operating rates are going to be tough to sustain.

This is why we have maintained our facility is the way we have through the years. These are opportunities that we are prepared for. Our operating guys are not talking about stress on equipment. I mean, it's running, we are taking, we're in our plans, we take our normal turnarounds that we plan to take. Now, a lot of the work that we have going on in our operations is actually to tweak our capacity. We've been increasing sulfuric acid capacity. We've increased our ability to make P205, both because of improvements in the phosphoric acid process and by having more of our own produced sulfuric acid in the mix. So for us, I would say, this is not an usual operating environment. It's a standard operating environment for us.

Okay. That's what we want to hear. Thank you.

Your next question comes from the line of Mike Judd with Greenwich Consultants. Please proceed.

Hi. Yes, good morning.

Good morning, Mike.

I am not sure if it's too early to really give us a view on this. But if we think about your sales volume mix within nitrogen and also within phosphate, just wondering if you kind of look at this in terms of two buckets. One is the colder than normal weather and how that could impact in the June quarter. What the mix might have been relative, let say, to last year. And then, the second bucket is really, just this international question, and how that could impact the relative of that sales volume of DAP versus MAP in terms of mix in the second quarter? Thanks.

Well, in terms of our nitrogen mix, first of all, we plan to provide a lot of each of our products to our customers and we never really know exactly what the mix was going to be. The lead, of course, is ammonia because it's used as a first to be applied. We have made no changes in our plans for this spring to this point as a lot of time left for ammonia to be used as a principal nitrogen product well into May, perhaps since the late May. Could the mix change? Sure. We've had different mixes through the year. And I think we probably have some of that information. Public going back quite a ways, if we go back to our original S1 filing -- we're prepared for that. Of course, we like ammonia. We like our position in that in terms of our production points and our distribution locations. But there is plenty of money to be made in other products too. With respect to phosphate your question about DAP versus MAP. Traditionally, we made a lot of DAP, we make a little MAP. I'll just get into a bit of the make up of those products. There is a bit more phosphate in MAP than there is in DAP. And if we're going to make MAP, we want to be paid for it and that has been shown in the way we have done business in the recent past looking for a differential there. We'll make what our customers want as long as the economics makes sense to us.

Thanks.

Your next question comes from the line of Charlie Rentschler with Wall Street Access. Please proceed.

Yes, good morning. If I did my math right comparing your results against one of your public competitors that reported yesterday, your volumes of nitrogen products was off 11%, their's was off 2%, and I wondered is that because of the Medicine Hat problems or is there something about the way your distribution system is set up, that there is a bit of a lag there?

Good morning, Charlie. Why I can't comment on our competitors business because I don't know his business. I will tell you just a couple of things. Number one the Medicine Hat average had no affect on our ability to ship fertilizer.

Okay.

We had plenty of inventory. It could have taken care of a very robust ammonia run in March had it occurred. In terms of product positioning in the market, we've got product positioned in the market -- plenty of inventory. I would just suggest perhaps as you look at this particular issue. Do you examine the business mix, for us were essentially agricultural nitrogen, others maybe a mix of AG and industrial. And so, that may be a factor of work, but I can't give you quantitative answer to that.

No, I am satisfied with that. In terms of capital projects, of course, you've got the key trade acquisitions done and Peru is underway. But can you give us any information about the Donaldsonville or nuclear possible projects. Are you tiptoeing closer to some of that or can you not comment?

Well, we're working on those projects. If we had news we would be reporting it. Certainly, we're eager to get those to decision points, but they are not at decision points yet. We think the concepts are solid. And we're working in both cases on the capital costs and economics to see if we can bring them forward to a decision point.

And then, just as a final question that kind of revisit over a couple of questioners that already gotten into, but it's the farmers mindset as you perceive it, I mean, is it fair to characterize that your mentality that farmer would like to grow corn despite retail cost of n-hydrate that's $900 or $1,000 a ton? I guess the reality is that things are still something like 2.3 times the price of corn, which typically says that they should plant the corn. But do you think that the mindset is just go for the gusto and plant the corn and go forward despite input cost, is that kind of we are at, you think?

Well, actually, we're talking about 1,000s and 1,000s of independent decisions here. I think corn farmers in Iowa, Nebraska, Illinois, Indiana love to grow corn. And when the economics are the way they are they love to grow corn more than ever. I'll take this opportunity just to show an anecdote with you that I heard from Monty Summa, our Sales VP just yesterday. In this case, you have an indication of how intent they are in growing corn when the opportunities are there and also how fast conditions change in the field. Roll the clock back a week ago, yesterday, Thursday, Monty is talking to this farmer and he has a pretty sizeable operation. And Monty asked him, how it was going and he said, it's raining. We're going to get another two inches of rain. I don't know if I am going to get this corn cropped in. I am just going to get in the car and go to Lincoln and see the Nebraska spring football game. Yesterday, a weak later, Monty dials up the same guy, how is it going? We are working hard. If it doesn't rain we'll be done planting by tomorrow. That's how fast it changed, not only did the weather change, it changes enough time to get him in the field. He needs about five days of field work. He was four days into that five-day period. So I know there is a lot of talk about weather and -- just a lot talk about weather in this building. But a lot of corn can be planted in a two to three-week window. That's about all it takes in the major corn planting states. So, I still can't tell you how many acres are going to planted and nobody will know that till it is on the ground.

Okay. Thank you very much.

Your next question comes from the line of Brian Yu with Citi. Please proceed.

Thanks. Steve, given your higher phosphate capacity of 2.1 million tons, are there any major plant turnaround that would keep you from hitting that level this year?

Well, we have normal set of turnarounds. I don't know if I can give you an estimate on our volume for this year, but I don't think we really have any turnaround impediments to running flat out.

Okay. Thanks. Operator Your next question comes from the line of John [Crouse] with Anchorage Capital. Please proceed.

Hey, morning. Two quick questions I guess on volume and price. I guess volume, first, just a follow up to, I guess, what Steve Byrne's first question was. Is it fair to assume given what you said about the timings on the FPP that there were some orders and deliveries that would have shaped in March if you had good weather, but instead due to the rains within the April? Is that what you're implying?

Sure. That's a fair conclusion.

Okay. And then, on the pricing side, I know you've talked about on prior calls about sort of the evolution of the swing cost producer moving the prices. And I remember, a year ago it was Europe moving out and then it was gas problem raising cost, the former Soviet Union and I know they've been sort of having higher and higher gas cost which is why the higher nitrogen prices. With this new Chinese tariff, is there affectively a new high cost producer in town or is -- who is the swing cost producers in this?

Well, I actually think in today's market, especially in light of what the Chinese have done that urea prices are decoupled from gas cost at the moment. I think today the high cost producer -- remember when you talk about who is a high cost producers, you have talk about with respect to some particular end market. And given that we are in North American, we always use North America as a reference point. I think the high cost producer delivered to the U.S. today would be -- yeah, probably they're out of black sea or somebody producing with marked up Russian gas, Eastern Europe and so forth. That's assuming that the Chinese don't try to export after paying the tax, which I don't think they probably even can't get to the market price today.

And was their product primarily going to India or where was it going before that you, sort of, have to make it up from somewhere else?

Their product would go wherever they could get the highest price on the day they were shipping it. There are natural markets in Asia for them.

I guess I was trying to get, are they effectively -- then is some new bidder now bidding for the same urea that used to be going to the U.S. years back.

I'm sorry. They have been serving Latin America also, certainly, the Western….

And America.

…and America. And some maybe a bit to the West Coast of the U.S.

Okay. Thanks.

Thanks, John.

Your next question comes from the line of Robert [Pollock] with Citadel. Please proceed.

Hi, guys. How are doing?

Good morning, Rob.

I just want to dive into and explore the competitive advantage you have on the phosphate rock side a little bit more. You mention the 1.6 ratio. Could you just -- I am getting actually like about $500 cost advantage that you guys have on the rock side, is that -- I just wondering if I had numbers in term of looking at your cash cost of rock relative to what the global rock prices you're seeing right now? And then just -- from 1.6 what is that dynamic right now you are seeing in the marketplace?

Well, I think phosphate rock is north of $400 a ton on the world market. And I won't give you our specific cost but I mean I think domestic rock cash cost are 30 to 50 bucks a ton.

So that would imply, I mean, if you must know that 1.6 -- $640 if that price of DAP is $1,100, it looks like the rock is about approaching 60% of the cost for the global producer, or the non-integrated producer, is that correct?

I think that's right.

So in line of this, I mean, when we think about the dynamics going forward, I mean there has been a lot of, I know is on sulfur and the pressure as per your margins, but shouldn't we expect to see significant margin expansion towards all this given your vertically integrated situation?

I think the answer is clearly -- it's a conclusion that you need to come to on your own. But you know in general, what the cost structure is and you know what the price is. There is a lot of difference between $1,000 as a short-term debt and an integrated producer using $30 to $50 rock.

What's process of the…

Lot of [wins] there to make money?

Just what process of the industry, DAP capacity is non-integrated and how do you view the sustainability of rock price. I know if rock has been driving a lot of it, but how do we think about sustainability of rock prices?

I don't have that split for you. We could provide that to you in a subsequent call.

Okay. And then, finally, just sitting on the cash here, north of $1 billion, I mean, it seems the rock is really the, because of value, large value component here. What is the opportunity to spend money to expand your reserve base and perhaps sell rock on the market, would you explore that? Or are there other interesting acquisitions out there to acquire rock reserves, how do we think about that?

Well, phosphate rock doesn't exist in exploitable form very many places in the world. We'd love to be able to expand our rock reserves in Florida, but that's a relative -- in terms of big opportunities that's not likely to materialize for a couple of reasons. Florida is running out of rock and also the permitting process in Florida. As you may know, if you have watched the difficulties, our large competitor has experienced. It's difficult place to try to permit. We have a good match today between the size of our mine and our chemical plant. We have 15 years of permitted reserves. We got another nine years that we intent to permit in the near future at current rates. Would we try to mine that rock at a faster rate and sell them on the world market? That's all comes down to net present value calculation. Would we accelerate the rate of mining and invest a lot of money to do that? I think it would be hard to find a payback. And you got to assume these rock values go for the life of your property before you do that. In terms of our longer-term strategy, phosphate is a nutrient that we like. We know how to do phosphate. We'll certainly be interested in talking to anyone who wants to talk with us about future investment in phosphate anywhere in the world.

And then, lastly, just any update on the uranium opportunity, any developments there?

No. Our partner is working hard on putting together long-term contracts and utilities, that's kind of a linchpin of this. And when that's finished, we'll able to move on to the next phase.

Thank you very much.

Thanks, Rob.

Your next question comes from the line of Bob Goldberg with Scopus Asset Management. Please proceed.

Good morning, guys.

Good morning, Bob.

Steve, I apologize if I missed this earlier, but did you breakout the split between nitrogen and phosphate in terms of the FPP bookings, the 3.7 million tons?

No, we didn't. And then, we haven't done that in the past.

But I gather from listening to the call that it's virtually -- virtually maybe too strong, but it's mostly nitrogen?

Well, we're in terms of iron we're mostly a nitrogen company. So, that's a reasonable conclusion.

I am still trying to put together the pieces here and I think everyone hasn't in terms of try and understand what the phosphate realization look like. So I am just trying to get at -- when did the company make that change in terms of getting less aggressive on the forward selling of phosphate, was that just recently, was it back in January, I am just trying to understand that how to look at this pricing dynamic for you?

Well, we spoke about this at our February conference call. So, we had already made that change in direction, prior to that, so it's probably in January that we -- and I want to make sure that when you use the term less aggressive, that we all understand what's meant by that. In terms of our margin expectation, we became more aggressive. In terms of our willingness to do forward pricing for the sake of doing forward pricing, we became less aggressive.

Operator, we're running over an hour here. We probably got time for one more question. Could you do that please?

Your next question comes from the line of [Mark Lengsfeld with Gallon]. Please proceed.

Good morning, guys. I just wanted to ask on the nitrogen side regarding the forward program. What the customers -- what was the driving factor wanting to be more aggressive and what the timing of that during the last quarter or so?

Well, my belief is and our customers like the security of supply. That's part of our -- its part of our offering here in terms of our forward pricing program. They also want to the certainty of price, of course. And many of them are working downstream to lock in their own economics and some of their customers are locking in their economics. A $6 corn environment I think one is in which everyone in the chain wants to make sure they get a piece of this economic pie. And by locking in elements of cost, they are able to increase a chance that they're going to realize the economics down the road.

Was there some limit though that the percentage is much higher right in last year? Is there some limit because you're definitely leaving some price on the table? How far, how much are willing to go? It seems like it is more than I would have thought in terms of locking in.

Well, I think there is a bit of a misconception out there that we are pricing our forwards equal to today's spot market or something like that. And while there maybe occasions when that's the case. In a very strong market what we're issuing here is a price curve and embedded in that curve are our expectations about future prices, just like the forward curve that you see for the [nymax strip embeds] expectations of the marketplace in terms of future economics for natural gas. So we are building in our expectations for margin in this analysis and we're being, I think, aggressive in that regard. And whether or not, we're leaving money on the table will only -- can only be determined by looking at hindsight when you compare what we did with what others might have done who approach the business differently from the way we approached it.

Okay. Thanks.

Thanks, Mark. Operator, that should do it.

With no further questions in the queue, I'd like to turn the call back to Mr. Steve Wilson for closing remarks.

Thank you, Stacy and as always thanks to all of you for your continued interest in the company. We look forward to talking with you again in the future. Thanks.

Thank you for your participation in today's conference. This does conclude your presentation. You may now disconnect. Have a great day.