Good day, ladies and gentlemen, and welcome to the Q4 2010 CF Industries Results Conference Call. My name is Lacey, and I'll be your coordinator for today. [Operator Instructions] I would now like to turn the presentation over to your host for today's call, Mr. Terry Huch, Senior Director of Investor Relations and Corporate Communications. Please proceed.

Thank you, Lacey. Good morning, and thanks for joining us on this conference call for CF Industries Holdings, Inc. I'm Terry Huch, Senior Director of Investor Relations and Corporate Communications. And with me are Steve Wilson, our Chairman and Chief Executive Officer; Rich Hoker, our Vice President and Corporate Controller; Bert Frost, our Vice President of Sales and Marketing; and Tony Will, our Vice President of Manufacturing and Distribution. CF Industries Holdings, Inc. reported its fourth quarter and full year 2010 results yesterday afternoon, as did Terra Nitrogen Company, L.P. On this call, we'll review the CF Industries results in detail and discuss our outlook referring to several of the slides that are posted on our website. At the end of the call, we'll host a question-and-answer session. As you review the news releases posted on the Investor Relations section of our website at cfindustries.com, and as you listen to this conference call, please recognize that they contain forward-looking statements as defined by Federal Securities laws. All statements in the release and on this call other than those relating to historical information or current conditions 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 include those spelled out in the Safe Harbor statement included in yesterday's news release and the slides accompanying the call. Consider all forward-looking statements in light of those and other risks and uncertainties, and do not place undue reliance on any forward-looking statements. Now let me introduce Steve Wilson, our Chairman and CEO.

Thanks, Terry, and thank you all for joining us this morning. For the fourth quarter of 2010, CF Industries reported net income of $200 million or $2.78 per diluted share, compared to earnings of $51 million or $1.04 per share in last year's fourth quarter. Favorable fertilizer markets, good weather in North America, lower natural gas costs and of course, the addition of Terra, enabled us to deliver operating earnings of $435 million, a six-fold increase year-over-year. Operating related cash flow in the quarter was $560 million, which allowed us to continue to reduce our debt quickly. In addition to the benefits of our expanded operating platform, our results reflected the impact of high global crop prices, which support fertilizer demand in two ways. First, they provide upward pressure on planted area as corn, soybeans and other crops compete for acreage to ensure adequate supply to meet demand and rebuild stocks. Second, high crop prices improve farm profitability, making fertilizer more affordable and leading farmers around the world to use optimal amounts of plant nutrients. As you would expect, this has lifted global fertilizer demand and prices. Restrictions on exports of phosphate and nitrogen fertilizer from China have been important factors in world markets. The early start to the high export tariff season for fertilizer was part of a broad Chinese government initiative to slow exports of commodities that will be needed at home as demand continues to rise. This is an especially high priority for commodities that are energy intensive to produce. While we do expect China to return to being a major export of nitrogen and phosphates, the two-month extension of the tariff continues to have a meaningful impact on current global markets. And although the return of Chinese export taxes didn't reduce product availability significantly during the…

Thanks, Steve, and good morning, everyone. As Steve indicated earlier, CF Industries reported net earnings of $200 million or $2.78 per diluted share, compared to earnings of about $51 million or $1.04 per share in the same period last year. Cash flow provided by operations in the fourth quarter was $560 million, which included a $112 million seasonal increase in customer advances. In the fourth quarter of 2010, net sales of $1.2 billion compared to sales of $500 million in the fourth quarter of 2009. The increase was due to the acquisition of Terra, stronger demand and higher average prices. For the full year, we had sales of $4 billion, up from $2.6 billion in 2009. Net earnings attributable to common stockholders of $345 million were lower than 2009 because of business combination costs, net interest expense and higher depreciation associated with the fixed asset write-up in the Terra acquisition. Because of these items, cash flow provided by operations may provide a better comparison of the results in the two years. Operating cash flow in 2010 totaled about $1.2 billion compared to $680 million in 2009. A comparison of earnings before interest, taxes, depreciation and amortization, or as we call it EBITDA, makes the same point. As shown on Slide 7, the company had EBITDA of about $500 million in the fourth quarter, up from $104 million in the fourth quarter of 2009. EBITDA for the quarter included a $31 million mark-to-market gain on natural gas derivatives and $4 million in business combination and integration costs. Earnings before tax included an additional $12 million of accelerated loan fee amortization due to our early repayment of debt, which we consider a business combination cost. For the full year, the company had EBITDA of $1.1 billion, which included $170 million of net charges that primarily relate to the acquisition of Terra but did not include Terra's results from the first quarter. Our cash balance at the end of the quarter was $800 million, not including the $103 million in auction rate securities. We received $19 million in redemptions of these securities at par during the quarter. In the fourth quarter, our net debt declined by $338 million to $1.6 billion. We paid back $300 million of our bank term loan in the fourth quarter, leaving a remaining balance at December 31 of $346 million. We've continued to pay down this loan in the first quarter. The remaining balance is now below $100 million, and we expect to repay it in full by the end of this quarter. Now let me turn it back to Steve.

Thanks, Rich. I'd like to discuss our outlook for the next couple of quarters, an outlook that is unlikely to surprise any of you. The fundamentals of our business continue to revolve around the fact that grain stocks are low. Last week, the USDA again lowered its projection of the corn stocks-to-use ratio at the end of this marketing year. This time, to only 5%, in line with the all-time low. We're forecasting that 92 million acres of corn will be planted in the U.S. this spring, which would be only the second time we have exceeded 90 million acres. Even if a large corn crop is planted and harvested this year, U.S. farmers will need to continue to produce at high rates to replenish stocks to normal levels. As a result, we expect corn plantings to be sustained above 90 million acres in 2012 and 2013 as well. When the spring season gets underway, we expect heavy demand for fertilizer in North America. The impact of larger planted acreage is likely to be compounded by higher application rates. Even with fertilizer prices well above year ago levels, fertilizer affordability to farmers as measured by fertilizer cost as a percent of projected farm revenue will be at the second most favorable level for farmers over the last 15 years. For 2010 and 2011, fertilizer costs as a percent of actual and projected revenue for corn are about half the previous five-year average, giving farmers every incentive to fertilize optimally in 2011. When fertilizer starts to move to the fields this spring, we believe it will be evident that stocking practices have continued to be conservative. We expect some fertilizers, notably UAN and phosphates, to be in tight supply. In my 20 years in this industry, I have never seen a…

[Operator Instructions] And our first question will come from the line of Elaine Yip with Crédit Suisse. Elaine Yip - Crédit Suisse AG: Can you give us a sense as to how much of your spring orders has already been booked at this time and how does that compare with last year?

Well, we have a very strong spring order book, as you might expect. I'll let Bert elaborate on that a bit.

I agree with that, Steve. We do have a positive order book, but we're also taking orders for spring for all of our products. We have available tonnage. And as Steve mentioned in the write-up, that when Woodward comes on stream, we'll have additional tonnage of UAN available to the market for the Kansas, Oklahoma, Texas region. Elaine Yip - Crédit Suisse AG: And then you mentioned that you started to field interest for fall bookings from customers. How does that compare with previous years? Do customers often book this far forward?

Bert?

We've had an interesting history at CF with forward sales and the creation of the FPP program and how that program was rolled out and accepted by different levels of the marketplace, whether that be a trader wholesaler or retailer. In 2008, we had people purchasing up to two seasons in advance. We're not sure that's a positive, it may be positive for CF but not necessarily positive for the market because when it collapsed, we had a lot of people with high priced product and inventory, which we benefited from but it delayed those shipments. So we don't really discuss our forward book to the market. We have taken some sales, not a great level of sales. I think what Steve was talking about was the level of interest. We're receiving a lot of inquiries. What we like to see are farmers booking and selling their corn or their produced products and booking their inputs. We see that as a positive indicator and movement for the market relative to risk.

And our next question will come from the line of Don Carson with Susquehanna.

Steve, just some more questions on your Forward Pricing Program and how quickly you expect to close the gap between spot and your realizations. I notice on phosphate, you seem to do a much better job and your realizations were much closer to spot, but you seem to lag a bit on the nitrogen side. So as you look at the forward order book, I mean, do you see closing that gap significantly in the second quarter?

Well, Don, as you know, the market is a continuous market. We book our business based upon the margins that are available to us. So it's a combination of the cost and the price. We're very comfortable with the margins that we've been able to achieve. We, of course, know that there's more price to come. The business that we have booked recently is at a higher price than the business we booked previously. But the market lags, we lag on the way up, we lag on the way down. I think on average, our results reflect the prices that are generally available.

And then a question on investments, you made an investment at Woodward to increase your UAN capability. I'm wondering do you have more investments like that planned so that you could perhaps shift your mix from not having to sell as much to the industrial markets and have more capability to produce and store product to sell in the season to the agricultural markets. And then just as a continuation on that, I know you've had some comments about the -- I guess you'd like to invest in new capacity but do you think you'd have a permitting problem getting a permit to run say, a new ammonia-urea complex? And do you see any potential for change in that front?

Well, with respect to investment in general, now we have a lot more facilities and we have a lot of levers to pull and we have a lot of opportunities to engage and debottleneck inefficiency projects that will add value to our asset base. Our engineers are pretty creative group. They've got projects that are -- some of them are pretty well-developed, some of them are ideas that are in the early stages. And we're excited about the opportunities that we will have to consider those projects and we're particularly happy that we can be considering them in North America because that's where the strong market is and that's the strength of our business. With respect to the longer term question on let's say, a greenfield or a major brownfield construction of new capacity, the economics of the business are such that, that would certainly appear to be desirable option. Those are things that we will look at in the months ahead. Just a brief anecdote, I spent yesterday in Washington. I met with three senators and four or five House members on one-on-one meetings, and in most, if not all of those meetings, one of my messages to them is that the economics of this business are very attractive in North America and with the right regulatory framework, we would be very interested in considering capacity expansions in North America. And of course, specifically, what I was referring to is the lack of clarity with respect to climate change regulation, particularly within the EPA, and I think those messages resonated. Whether that can result in any action, I don't know because it's really not in the Congress' hands right now, it's in the hands of the EPA.

And our next question will come from the line of Horst Hueniken with Stifel Nicolaus.

I noticed that your capacity utilization rate in your phosphate business went from 89% in the third quarter to 83%. Was that just due to maintenance turnarounds or is there something else going on?

Horst, I'll ask Tony Will to respond to that.

Yes. In the fourth quarter, we had scheduled turnarounds in both our sulfuric acid and phos acid plants. But that said, we did have several operating challenges in the quarter. We believe we've got our arms around those issues going forward, but I'll also say phosphate production is a complicated process with lots of moving pieces. And so we think we've got our hands around it and hopefully that will bear fruit here as we head through the first half of this year.

So would it be reasonable for us to expect it to get closer to the 90% rate in the first quarter or have you got more maintenance turnarounds than planned?

We typically don't announce what our turnaround schedule is, but it's certainly our intent, particularly given the market environment that we see ourselves into run at capacity.

Perhaps a question for Steve, and I read that one of the ammonia units at Ma'aden in Saudi Arabia has in fact started up producing ammonia. I'm wondering what you're hearing the amount of ammonia that they might produce is and what your perception is of what kind of impact that may have on the ammonia market?

I suspect that it's -- yes, it's additional capacity. It's a small amount and it's located in a location that's long way from our marketplace. I expect that to have a minimal impact.

And our next question will come from the line of Michael Piken with Cleveland Research.

There's recently been a couple of announcements with one of your competitors announcing that they're going to reopen an ammonia plant that was previously shut down about seven years ago and there was talk about another week ago that another group was considering building a domestic nitrogen plant. Just wondering kind of, obviously, it won't impact in the near term, but how do you see this impacting your business over the, let's say, the next three to five years?

Well, we keep a list of, obviously, existing operating units as well as formally operating units. And so if we look at what might be available for restart, it's a pretty small list of pretty small facilities. On the other hand, the nitrogen business is good, so you would expect anyone who has a piece of hardware to be considering the sort of action that has been announced with respect to Geismar. Nitrogen demand globally is growing at a rate of about 3%, 3.5% a year, so the capacity in general is needed. And frankly, there are a lot of units in the world and in North America that have debottleneck potential, including some of our own facilities. So I think this is just a natural phenomenon in the marketplace. And I think, overall, our capacity is growing in relationship to demand in a comfortable way.

And then more shorter term, I mean, what is your expectation for Chinese urea and DAP exports in 2011, particularly when the export tax comes down, I guess, it's a July 1 for urea and June 1 for DAP?

Well, we would expect in general that they would return to kind of their historical levels but we really don't know that. There's a -- FERTECON is out with estimates of perhaps 3 million tons of each in 2011, but that's as good as any estimate we might make.

And our next question will come from the line of Jeff Zekauskas with JPMorgan. Jeffrey Zekauskas - JP Morgan Chase & Co: Your tax rate in 2010 was roughly 38%. Can you talk about why the tax rate was as high as it is and what you expect for 2011? And can you also talk about the difference between your booked tax rate and your cash tax rate?

Sure. I'm glad I have Rich here to answer that question.

Jeff, let me start with, when we talk about taxes, we use pretax income exclusive of the non-controlling interest or less the non-controlling interest because as you know, we have some items that we consolidate that we don't own 100% of. So let me start with that. The second thing is that, as you've known throughout the year, we've had transaction costs that came from the Terra acquisition that we did, and those transaction costs is reduced pretax income but we don't get the tax benefit and because they are included in our tax base in the acquired business. So that's what causes the tax rate in general and what you've seen this year to be higher than kind of what we've normally seen. Now in the third quarter, the quarterly rate was 33.6%, and that quarterly rate included an adjustment at that time because when we're at the third quarter, we look forward to the fourth quarter, thought it was going to be a terrific fourth quarter, and it was. And so what happened was that, we increased our internal earnings estimate and that caused the tax rate to go down a little bit because the impact of those non-deductible items is diluted over a greater amount of earnings. So at the third quarter, the year-to-date rate was 44%. And so at that time, that was our estimate, our best estimate of what the full year rate would have been. The full year rate now for the fourth quarter, fast forwarding now is up about 190 basis points, so 45.9%. So that's the change in terms of the fourth quarter, and that's really due to higher state and some foreign taxes. In terms of next year, because we are not expecting to have a large amount of non-deductible items, we would expect the rate would fall back into a more normalized range. Internally, we're looking at something in the 36% to 38% range for 2011. Jeffrey Zekauskas - JP Morgan Chase & Co: And in your cash flow statement, I think there was about $174 million in cash flow benefits this quarter, $47 million in deferred taxes and $127 million in accrued taxes. Will those be cash outflows in the first quarter? That is, is it a timing issue or is there something else?

If you look at the balance sheet, Jeff, you'll see that there's a current tax payable on the balance sheet, and that's the number that I would use in terms of looking at kind of what's going to get paid out in the near term. The deferred tax amounts that you see on the cash flow statement, what that relates to is the fact that, as you know, Mr. Obama has passed some legislation that allows us to take more immediate tax deductions on certain capital projects and certain equipment that's put in place. So what you're seeing is the fact that the benefit of that accelerated depreciation on the tax side is coming through in the cash flow statement as an increase in our cash flow. The book taxes will catch up over time.

And our next question will come from the line of Ben Isaacson with Scotia Capital.

My question is on the DEF markets and perhaps you could just provide some color in terms of the size of the markets, your position, margins and kind of where you see things going over the next 18 months or so?

I'll ask Bert to cover that.

Well, we're pleased with the developments of DEF, which is under Lynn White, our Business Development person, but we're growing in that business. We're investing in that business. We have additional capacity that we're planning to bring on at additional locations. The 2011 volume, in terms of December on a fertilizer year, was significantly higher but still at a minimal, not material basis for us to report, but we're looking forward to this market. It is growing. The trucks that are being sold with this necessity are continuing to increase also. So we see positive days ahead.

Can you just comment on your DEF economics versus some of your peers?

Ben, we have no idea of what the economics of our peers' DEF business is. The economics of our own business are very attractive. This is a high margin business. It is, frankly, a small part of our business. I think in 2010, our DEF sales were in the range of $5 million to $6 million, and it consumed roughly the equivalent of 8,000 tons of granular urea. So it's a high-margin small sales revenue business right now, but it's ramping up very quickly as the truck fleet begins to be turned over. There will be substantially more truck builds in 2011 than there were in 2010. So it's on a steep curve from a small base and we love the business.

And our next question will come from the line of Charles Neivert with Dahlman Rose. Charles Neivert - Dahlman Rose & Company, LLC: Just a couple of quick ones. Can you talk about the nitrogen mix in the first and maybe second quarter between ammonia, UAN and urea? Is that going to make any major changes from what we just saw? And then on the follow-on is on the industrial versus Ag split, is there going to be -- what kind of change are we going to see 4Q, into 1Q and 2Q in terms again of the nitrogen markets, particularly obviously ammonia I guess?

In kind of a broad sense, we really don't know what the nitrogen mix will be moving to the field this spring because we can't predict the weather. We'll be prepared for another strong ammonia season. We'll be very well prepared to meet UAN demand and urea demand. Beyond that, Bert, anything you would want to add?

No, think you're right Steve. We are projecting -- again, when you look at the acreage and the additional end application that we're expecting, the whole nitrogen complex will benefit. If we do have a difficult weather that prohibits ammonia, we'll move right into the UAN and we think then urea would backfill behind UAN. So we're well-positioned to capture whichever direction it goes.

And I guess I'd add that it's unlikely that we could replicate the kind of spring ammonia season we had last year just because everything was perfect last year, but it could be perfect again. So, who knows? With respect to industrial versus Ag, we continue to have industrial contracts come up for renewal. In some cases, we renew those industrial contracts on refreshed terms, if you will. In other cases, we've had a mutual agreement not to renew those contracts and shifted that business. I think we've modestly reduced the amount of industrial business in our mix but it isn't a substantial thing. It's gradually moving in the direction of a little bit more Ag, little bit less industrial. And again, as I think we said before, we don't have an objective of a particular mix. What we want is the best average margin we can get across our whole book of business.

And our next question will come from the line of Mark Connolly with CLSA. Mark Connelly - Credit Agricole Securities (USA) Inc.: Two questions. Steve, you've been consistent in your comments about gas and right about the way you've positioned CF for gas. As you look at this potentially prolonged period of relatively low gas prices, what would it take to get to convince you to start locking in on a longer term basis? I know you've gotten this question before and said you're not interested. Just curious, is there a gas price that would convince you to lock in or is there something else that holds you back from it?

Well, Mark, I think it's a great question and it's a question that gets a lot of consideration here. Because of the success of shale gas and the substantial amount of supply, we continue to believe that there's more potential for lower gas costs than potential for higher gas costs. Having said that, if we saw gas prices out a few months to perhaps more months those that began with a three, we'd be gathering our gas committee together and begin to consider whether we ought to lock in some gas independent of our forward order book. That isn't to say we would do it, but we'd be seriously considering it, particularly assuming that the nitrogen market is as robust as it is now, we would be foolish not to consider base loading some gas at attractive prices. Mark Connelly - Credit Agricole Securities (USA) Inc.: And one more question, your comments say that you see synergies beyond the original 105 to 135. Can you give us a sense of what kind of synergies they are? And also how much this ERP implementation is going to cost?

We have had -- our synergies have really been across several general areas of our business. They have been on ongoing basis, the biggest opportunity bucket has been in supply chain. It is the bucket that we identified from the very beginning as a great opportunity. It's turned out to be true. Example is today, we have about 10% fewer railcars in our fleet than we had a year ago on a combined basis. I think we're not done doing that. We have realized synergies, frankly, on the sales and revenue side by tweaking our mix of business, whether it's on a location basis or on a type of business basis. Procurement is an area where we've identified a lot of opportunities, many of those are yet to be realized because we have multi-year contracts in place and we will be examining those as they come up for renewal. In terms of G&A, we've had a lot of headcount reduction. We haven't seen the full year impact of that but we will have some further streamlining in that regard in the months ahead, and the ERP project will be a facilitator of that I think as we become more efficient in the way we conduct some of our back office functions, if you will. The ERP project, it's just beginning but our estimated cost of that's in the range of $30 million.

And our next question will come from the line of Brent Rystrom with Feltl.

You had mentioned 92 million acres of corn. I'm wondering where you see on the demand side, maybe the first place that you might guess price rationing, demand destruction that kind of thing?

Brent, I'm sorry. You were breaking up. I couldn't hear your question.

I'm wondering where you might guess demand destruction will come into play here on the corn side? Do you think the livestock area might be the first to kind of break a little bit? Do you have thoughts on that?

Well, some of the materials I've read suggest that the livestock producers are not consuming as much feed as they were let's say, six months or a year ago. I think the last time that we had high grain prices, that was the first area where some stress showed up. Ethanol right now has been bouncing around between modestly cash positive and modestly cash negative. On the other hand, the mandate is a large mandate and so the ethanol is being produced and is being blended. But I think those are two areas to keep an eye on.

Follow-up question. I know the acres are small in the 12 million, 13 million acre range. But cotton, are guys you positioned for cotton as far as 240 pounds per acre of nitrogen needed there? Is that a big market for you, or are you more mainly in the Corn Belt?

Bert?

Well, I would expand it to say the major crops being corn, soybeans, wheat and cotton. Obviously, corn is most favorable to CF because of the level of nutrients that it consumes. Wheat, probably secondary, and the wheat belt has been dry as of late and there's discussion in Texas that some of those acres will be turned over to cotton because you're right, the cotton price is extremely high and there is a deficit from what happened worldwide not only in Pakistan and what we're seeing in other parts of the world, but we're very positive. I think, again, I would've probably expand it even further to what's going on in South America with additional hectares coming online with probably up to a million. But they're reaching their limit of ease of coming online, not only the economics but the environmental issues of getting those permits and we’re looking at India and Pakistan, also in some of the big demand areas. So I'd say we're favorable N and we're favorably P but what will drive CF Industries.

A final quick question. The drought in China's wheat growing regions, does that have any impact on the possibility and magnitude of Chinese fertilizer exports starting this summer?

It certainly impacts the global supply/demand situation in grain. And to the extent that there are shortfalls in production in any part of the world outside the U.S., it is on the margin of benefit to the U.S. farmers and would be a spur to demand for planting here and improve the economics for American farmers and therefore, the opportunity for us to benefit from that.

And our next question comes from the line of Edlain Rodriguez with Gleacher & Company. Edlain Rodriguez - Gleacher & Company, Inc.: On your priorities for cash, beyond those investments that you've noted, when do you have to make the final decision on Peru? And after debt repayment, I mean, would you ever consider share repurchase?

Let me answer the second question first. Yes, we've done it in the past and certainly, we would consider it. It will be one of the items on our menu as we look at a whole range of opportunities for use of cash. I know I said this before but it's probably the most wonderful problem or challenge that a management team and a Board can have, and that is how to deploy the cash generation in the business. We've been very pleased with our rate of cash generation. We are excited about investment opportunities that we've identified and investment opportunities that we will consider. But returning cash to shareholders in some form appropriately will always be on the menu. With respect to Peru, nothing has changed in Peru other than a continuation of the, let's say, the uncertainty that we've had for at least a year or two, we're probably measuring this in years now. We don't believe that the expansion of the pipeline over the Andes to the coast will be completed soon. It's likely to take two years or more to get to the expanded pipeline. The commitment hasn't been made to undertake that yet. There's been no commitment to build the pipeline from that point down to our plant site. I know, Edlain, you asked a very specific question and that is, is there a deadline by which we have to make a decision? And from a practical standpoint, I would say no. That we certainly wouldn't make a decision without clarity on the availability of the gas and some other things. So if we were to get that clarity, we would refresh our analysis, refresh our capital cost estimates, refresh our view of the market. And in today's environment, frankly, we have to assess the relative cost of the feedstock. The game has changed since we've first looked at this project. The cost of gas, as we've just talked about a few minutes ago, in North America is down substantially and seems to be sustainable at a substantially lower level. So it would take certainly a very sharp pencil for the analysis to come out favorably at this point.

And your next question will come from the line of Mark Gulley with Soleil Securities.

I want to come at the 92 million acres of corn from a different perspective, that is of competitive economics for the crops. It seems to me that the soybean economics look awfully strong. So to that extent, is that 92 million perhaps a little bit too aggressive?

Well, Mark, our model, which we update on a regular basis suggest that if you look at returns over variable costs, which we think is the right way to look at it on a marginal basis, that the returns available to an acre planted to corn are about $200 an acre higher than for beans. So we think there's a wide gap there. That doesn't mean that the competition might not heat up and the bean prices may rise and beat some of that acreage away, but it will take a pretty big increase in soybean prices for that differential to be close.

I know you can't be specific, Steve, but certainly fertilizer costs will weigh a lot in that equation. Can you give us some feel for what fertilizer costs are embedded in that $200 per acre differential between corn and soy?

I don't have a specific dollar amount but I can give you some indication of what fertilizer cost is as a percent of projected revenue. The 10-year average and again, this is with respect to corn, is about 19%, that's fertilizer cost as a percent of revenue. For 2010, we think it was about 11% and for 2011, our projection is for it to be about 14%. So fertilizer is eminently affordable, in fact, it is highly desirable for the farmer to maximize his yield. And on top of that, when we ended the last harvest year with about a 5% stocks-to-use ratio. That's incredibly low. It's certainly an uncomfortable level for U.S. agriculture and the food supply. So we think all that, frankly, the stars and the planets are aligned here to support corn planting.

And then if I could wrap up to Slide 4, thanks for the information, the graphic information on prices and of course, your realized price, how should we think about closing the gap between the ammonia realized price and the spot prices, the delta is by far the biggest for ammonia versus urea and UAN?

Well, we have to keep in mind that we've got a mix of industrial and Ag in there that affects it. And beyond that, what drives it is the timing of our orders being booked. Those of you who follow this business closely know the direction and the rough magnitude of pricing going into the spring and those kind of prices will be working their way into our realized mix in the next quarter or so.

And our next question will come from the line of Vincent Andrews with Morgan Stanley.

Just if you could give a little more sense on sort of the psychology of the channel as it relates to inventory and what you're sort of been seeing sequentially maybe as far back as a year ago through the fall season now as we head into spring, both in nitrogen and phosphate, if there's any difference in the desire to hold nitrogen versus phosphate inventory or anything, any thoughts you have would be helpful?

Sure. Bert Frost?

Well, we are paying a significant amount of attention to inventory because you're right, it does drive the decisions of the retail sector, as well as on the production side for what we do. And so we've been to a number of locations domestically as well as internationally to determine that level. We've traveled recently to South America. Steve and I were in India and Vietnam recently in January, meeting with some people to discuss and see what their opinions are going forward relative to negotiations. And then we spent January going around the United States and recently at the TFI. We're fairly confident that the inventory levels in the United States are low and as well as low worldwide for N&P. And for the fall, a lot of discussion on was spring pulled into fall or will spring be as big. Actually, we're very confident on spring, again, relative to acreage increase and end applications that will be increasing. We think spring will be very positive and strong for both products.

But big picture, do you think the channel's going to get back to holding a normal level of inventory at some point during 2011 or do you think we're just -- the spend amount that we're seeing is going to continue?

The magic word is normal. Define that and then we could define what reality is, because what you saw on 2010 was a significant decrease in inventory levels of all products. The goal at the end of June 2010 was to be at zero inventory. That drove decision-making on purchases for February, March, April and May relative to that then we priced into the second half of 2010. I think because crop prices are so positive, the chain is accepting the wholesale retail trader and then users accepting the prices relative to returns, as Steve mentioned, and therefore, willing to probably hold more inventory at this time than they were last year.

On the other hand, I guess I'd just add that one of the comforting factors of where we are today versus 2008 is that in 2008, everybody was buying way ahead. They were stocking up because they felt prices were always going to go up. And so the physical side of the business got way ahead of where the future economics were in the field. And so we don't see that happening now. I think the discipline that's being practiced now is good for everybody in the chain. And so even if there's a modest increase in stocking, I don't think it's likely to approach what we saw in 2008.

This concludes our question-and-answer portion for today's call. I would now like to turn the call back over to Mr. Terry Huch for any closing remarks.

Thank you, Lacey. We just like to thank everyone who participated on today's call. If you need more information about CF Industries or our results, I would advise you to contact me. Thank you.

Thank you for your participation in today's conference. This concludes your presentation. You may now disconnect. Good day, everyone.