CF Industries Holdings, Inc. (CF) Q3 2026 Earnings Report, Transcript and Summary

Good day, ladies and gentlemen, and welcome to CF Industries' first nine months and third quarter of 2026 conference call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. We will facilitate a question-and-answer session towards the end of the presentation. To pose a question at any time, please press star then one on your touch-tone phone. I would now like to turn the presentation over to the host for today, Mr. Martin Jarosick with CF Investor Relations. Sir, please proceed.

Good morning, and thanks for joining the CF Industries earnings conference call. With me today are Chris Bohn, President and CEO, Bert Frost, Executive Vice President and Chief Commercial Officer, and Andrew Scribner, Executive Vice President and Chief Financial Officer. CF Industries reported its results for the first nine months and third quarter of 2026 yesterday afternoon. On this call, we will review the results, discuss our outlook, and then host a question-and-answer session. Statements made on this call and in the presentation on our website that are not historical facts are forward-looking statements. These statements are not guarantees of future performance and involve risks, uncertainties, and assumptions that are difficult to predict. Therefore, actual outcomes and results may differ materially from what is expressed or implied in any statements. More detailed information about factors that may affect our performance may be found in our filings with the SEC, which are available on our website. Also, you will find reconciliations between GAAP and non-GAAP measures in the press release and presentation posted on our website. Now, let me introduce Chris Bohn.

Thanks, Martin, and good morning, everyone. Yesterday afternoon, we reported results for the first nine months of 2026, in which we generated adjusted EBITDA of approximately $3 billion. Our results reflect the strength of CF Industries' operational performance and the structural advantages of our business. At the foundation of that performance is our team's relentless focus on safety excellence. We closed the quarter with a trailing 12-month incident rate of 0.1 incidents per 200,000 hours worked, well below industry averages. That outstanding safety performance directly supports reliable production and high asset utilization. Since the beginning of the year, we have operated our available ammonia capacity at 97% utilization. Along with our consistent operational performance, we benefit from the structural advantages of our low-cost, low-risk North American asset base. Our low-cost position on the global nitrogen cost curve supports our current $2.9 billion mid-cycle EBITDA estimate, while our low-risk network provides upside during periods of global nitrogen market disruption. We have seen that dynamic play out this year, with adjusted EBITDA through the first nine months already exceeding our mid-cycle. Together, these strengths translate into strong cash generation. CF Industries consistently converts approximately 60% of EBITDA into free cash flow, the highest rate in the materials sector and well above other fertilizer companies. This gives us the financial strength to invest in high-return projects while returning capital to shareholders. Today, we are making tangible progress on investments to grow our advantage network and enhance margins. Blue Point One began site construction in August. Donaldsonville CCS is operating well, and the Yazoo City CCS project is progressing towards startup in 2028. We expect these projects to add $400 million to our mid-cycle EBITDA estimate by 2030, bringing it to $3.3 billion. Further out, we have begun a FEED study for our Courtright diesel exhaust fluid project. Alongside those investments, we have returned $1.3 billion to shareholders over the last 12 months through share repurchases and dividends. Over that period, we have repurchased approximately 6% of our outstanding shares, bringing total repurchases over the last three years to 22% of outstanding shares. Taken together, our structural advantages, operating performance, growth investments, and disciplined capital allocation position us to build on our track record of compounding value for long-term shareholders. With that, I'll turn it over to Bert to discuss the global nitrogen market environment. Bert?

Thanks, Chris. The global nitrogen market environment remained constructive through the third quarter. Demand strengthened as the quarter progressed, while supply remained constrained. Buying activity accelerated in North America, South America, and Europe as deferred demand returned to the market. Corn and wheat values strengthened during the third quarter before giving back some of the gains in the fourth quarter. At the same time, nitrogen values remained below the peaks reached during spring applications. We saw that demand pick up clearly in North America. Participation in our fall ammonia program has been very strong. Weather permitting, we expect fall ammonia volumes to be amongst our highest in the last 10 years. Our UAN fill program also helped us ship nearly two million tons in the third quarter, our largest quarterly UAN volume this decade. Globally, demand also remains robust. India has maintained a steady pace of urea tenders, and we expect imports to exceed 10 million metric tons this year. Brazil has been slower to purchase, in part because of credit constraints. However, improved crop values in the third quarter supported farmer economics and demand there. With nitrogen inventories low across the global system, including North America, South America, Europe, and Southeast Asia, we believe substantial purchasing remains ahead. On the supply side, geopolitical disruptions remain a significant factor. Since hostilities began in the Middle East in late February, we estimate that the global market has lost approximately nine million metric tons of urea supply. Shipping availability and significantly higher freight and insurance costs remain constraints. Russia is another source of uncertainty. While production levels and plant availability are difficult to assess, disruptions in the Black Sea shipping lanes have affected traditional routes. At the same time, high-cost producers remain under pressure. European producers face challenging economics from high natural gas prices. We believe more than 35% of ammonia capacity in the region is curtailed. Additionally, natural gas availability continues to constrain production in other regions. Chinese urea exports are helping to fill part of the global supply gap, particularly into India, but have not materially loosened the global nitrogen supply-demand balance. We expect the Chinese government to continue to manage export levels in line with its domestic food security policies. Against this backdrop, we expect the global nitrogen supply-demand balance to remain constructive into 2027. Purchasing activity that was delayed earlier this year is now being realized, global inventories remain low, and meaningful portions of global production and trade remain constrained. Longer term, our outlook has not changed. Nitrogen capacity currently under construction is not sufficient to meet global nitrogen demand growth and expected permanent shutdowns through 2030. Additionally, the timeline and capital costs required to bring future capacity online have become longer and more challenging. This supports a structurally tighter global nitrogen environment through the end of the decade and reinforces the value of CF Industries' low-cost, low-risk North American production and distribution network. With that, I'll turn the call over to Andrew.

Thanks, Bert, and good morning, everyone. For the first nine months of 2026, the company reported net earnings attributable to common stockholders were approximately $1.8 billion, or $11.60 per diluted share. EBITDA and adjusted EBITDA were both approximately $3 billion. For the third quarter, net earnings attributable to common stockholders were $436 million, or $2.87 per diluted share. EBITDA was $822 million, and adjusted EBITDA was $833 million. We continue to convert EBITDA into free cash flow at a consistently high rate. For the trailing 12 months, net cash from operations was approximately $3.1 billion, and free cash flow was approximately $2 billion. As you can see on slide nine, our EBITDA to free cash flow conversion has averaged approximately 60% over the last five years. Conversion over the last 12 months has been slightly lower due to $306 million of deposits related to a historical US-Canada transfer pricing matter dating back to 2012. These deposits limit the accrual of additional interest in Canada while the matter is resolved between the two governments. Following resolution, we expect to file amended U.S. federal and state tax returns seeking refunds of related taxes previously paid. Looking ahead, our 2026 consolidated capital expenditure outlook remains approximately $1.3 billion, with CF Industries' share at approximately $950 million. Construction of the Blue Point One ammonia plant is moving forward in line with our expectations. The projected total cost remains $3.7 billion, with ammonia production expected to commence in 2029. The cost of Blue Point common facilities also remains at our initial estimate of $550 million. Our 40% share of the remaining investment in Blue Point One will be spread over three years and is manageable given our consistently strong free cash flow generation. At the same time, we continue to return substantial capital to shareholders. During the third quarter, we repurchased three million shares for approximately $367 million. As we discussed last quarter, we believe the market continues to ascribe too much of our earnings and free cash flow performance to short-term geopolitical factors. Structural advantages Chris discussed, combined with the global nitrogen supply-demand dynamics Bert outlined, underpin our confidence in CF Industries' mid-cycle earnings power. We do not believe our earnings power is fully reflected in our valuation, supporting our continued opportunistic share repurchases. With that, I will hand it back to Chris before we open the call for Q&A.

Thanks, Andrew. I want to thank CF Industries employees for their outstanding performance through the first nine months of 2026. Our team is operating safely and executing exceptionally well while navigating significant disruption in the global nitrogen market. We are especially proud of our team's commitment to safety excellence. Our recordable incident rate at the end of the quarter was the lowest we have ever achieved as a company, a testament to our employees living our Do It Right culture every day. That commitment was also on display in this year's Wilson Award for Safety Excellence. Our Medicine Hat Complex earned this year's award, and I want to recognize that team, along with all of our finalists, for the innovative approaches to safety they developed and shared. As you have heard today, structural changes in the global nitrogen market are reinforcing the value of CF Industries' low-cost, low-risk North American asset base. Combined with our consistent operational execution, differentiated sales and distribution capabilities, and industry-leading free cash flow conversion, we have a strong foundation for long-term shareholder value creation. We are building on that foundation today through disciplined growth investments and capital returns. As you can see on slide 10, our current growth projects, combined with our existing share repurchase authorization, are expected to increase nitrogen per share by 15% by 2030. These initiatives build on our long track record of compounding value and leave us well-positioned to continue to create value for long-term shareholders. With that, operator, we will open the call to questions.

We will now begin the question-and-answer session. To ask a question, you may press star, then one on your touch-tone phone. The first question comes from Kristen Owen of Oppenheimer. Go ahead, please.

Hi. Good morning, and thank you for the question. I just wanted to start with your long-term supply outlook. You called out the 37% of European nameplate capacity that is currently curtailed. Just given the volatility in energy prices, never mind the absolute cost challenges, what is the structural settling out point, and has your view on the long-term supply backdrop changed?

Good morning, Kristen. I would say our view has not changed. I think it is something that we have been talking about for quite a while. The only part that has changed, our view, I should say, in the aggregate has not changed, is we believe it is going to accelerate from what we thought was a 2030 timeframe with some of those European shutdowns to occur, whether it be 12 months or 18 months sooner than that, given the current dynamics that you discuss in the energy volatility. Today, we are seeing, like you said, close to 40% either offline or curtailed in Europe. Additionally, each quarter that this goes on makes it more and more challenging to start up that equipment because the capital costs that would be associated, and additionally, to have fixed overhead absorption that continues, and the work that is needed to keep that equipment in line to be started up at some unknown date is quite expensive. I would say our position on the tightening in the global S&D market has been one that we have back all the way to 2025. It is just being accelerated now. That is also being compounded by what we are seeing in Russia, Ukraine, with no true resolution there. I would even say, what we are seeing in the Middle East, even if there is some sort of resumption, it will take a while in order for that supply to begin flowing again.

Thank you for that. My follow-up is for Bert. I think you said fall application demand among the highest in 10 years. It has been a pretty dynamic year from a commodity price perspective. Obviously, pretty healthy crop this year, but just maybe some indications on how you are thinking about acreage in 2027 would be helpful. Thank you.

Good morning. The positive implications or directions in our fall ammonia program, which is one of the highest in 10 years, one, it has to weather. We always put in the caveat of weather-dependent because we are just starting the program now. We are well through our movement in Canada, and that is moving down into the Dakotas, and then we have to move into the Illinois, Iowa, and Nebraska states. Right now, that is a little bit delayed just because of the wet weather and elevated temperatures. But the indications are, with that big program for fall applications, it does lead to positive implications for corn planting in 2027. What we are looking at is probably in line with what the other recommendations or indications are from the other players, is 95 million-96 million acres. Could be elevated depending on pricing. Right now, where corn is settling, one of the positive things for this year and for farm revenue is the settling of the Crop Revenue Guarantee Programs at $4.75 for harvest. That will lead to, I think, a nice floor for a farmer in today's economics. Then interesting to see what is going to happen globally with yields due to, I think, some under-applications of nutrients around the world and what that does to stocks-to-use ratios and how that correlates then to demand, which we see as healthy in the ethanol and protein markets, and then therefore drives price. I would say the expectation is driving price for corn, at least, up in 2027, which could drive acreage even higher than the 95 million or 96 million acres that we are targeting today.

I appreciate the time.

The next question comes from Andrew Wong of RBC Capital Markets. Go ahead, please.

Hey, good morning. Thanks for taking my questions. Just curious your thoughts on how you see the setup on nitrogen, the market today, when you compare it to where we were last year. It seems like we're in a tighter situation with a lot of things you've mentioned, higher energy prices. We also see stronger crop prices. You look at nitrogen prices, and I think in aggregate, they're maybe only like 10% higher from where we were last year at this time. What's your thoughts on that, and why do you think that is?

Yeah, I think you're correct in terms of your 10%. We were trading in the high $380s, probably $360s-$380s last year, and today trading at $430 for Q4 for a short. That's on a short ton for NOLA. I do see a positive market going forward. Just a lot of this demand that has been deferred is going to catch up, and then you throw in, like we've talked about, a lack of supply, and the first world countries that can pay and will pay as we go into the Northern Hemisphere planting and application seasons. We see a robust demand coming, and we're actually seeing that with orders for our UAN programs and urea as well. My expectation would be we're on a positive trajectory in at least the first half of 2027 for nitrogen pricing.

Okay, perfect. Maybe just between the different products, you look at urea, ammonia, UAN, and we've seen more strength in ammonia and UAN recently, which I think is more reflective of what we've been seeing on European nat gas. Urea seems to have lagged a bit, right? Why do you think that is, and do you expect some catch-up as well on that gap there?

Yeah, when you look at the global market in urea, you are trading about 4.5 million to five million tons per month seaborne traded. I think with the Chinese supply that has come in to kind of covering what has been lost from the Middle East, as I said in my prepared remarks, we have probably lost nine million tons, and it is in our deck of what has been lost and what has been made up with different places. As we are trending into the back half of this year in Q4, I think the market is just in pause as you transition from hemispheres to hemispheres and planting and applications and building up supply. But inventories are low across the globe in our channel checks, and so I do see a positive movement for urea. UAN has been trading at a higher differential to urea at this time, and we are seeing solid uptake in the UAN program for 2027 as well. Ammonia globally has more impacted, you are correct, European demand and global demand for ammonia. As Chris's comments mentioned, you are seeing curtailments and shutdowns and inability to source, and that has driven ammonia up higher in recent weeks.

Okay. Thank you very much. Appreciate that.

The next question comes from James Hooper of Bernstein. Go ahead, please.

Thank you very much for taking my question. How long do you think that the Northern Hemisphere farmer can wait before buying? I mean, are they looking at events this week thinking the Iran war might end and they can hold on for some time? Is that why pricing is only 10% higher than last year?

Well, I think you are seeing some indications of actual stepping in and buying. Our UAN program from our retail friends has been sold down a lot to farmers, so that is a product we have already shipped. We have talked about the ammonia program has been sold down to farmers, and I think ours and the other suppliers in the U.S. and Canada have also done and/or had or have prepared a good program for fall, which indicates, again, farmer uptake. We will launch our spring program for ammonia post the application season this fall, and I expect that to be well uptaked. I think where you have seen some cutbacks in P and K is a reflection of the higher prices for those products, but I think nitrogen is a very good value, and it has been reflected in purchasing. I think the slowdown, if you are taking the whole Northern Hemisphere and the slowdown in Europe is a reflection of just those natural gas costs and European producers of nitrogen, those prices are much higher than in North America.

Just as a follow-up, can you just expand a little bit more on where you see Chinese urea exports going? I mean, it looks like this is the highest level in 10 years, but do you think this could be a new normal or just a one-off with helping India out effectively?

There are two Chinas. There is the prilled urea producers and the granular urea producers. What has helped stabilize the market in India and Southeast Asia has been the prilled supply, which is generally not demanded in first-tier, first-world markets like South America or the U.S. or Europe. If you extract the prilled supply out, I would say the granular supply out of China is probably giving a balanced market at this point. The export authorizations now total almost nine million tons, so it is higher. Historically, last year was just a little under five million tons. But again, in a strange year with the limits out of the Middle East, it made sense for China to open up a little bit more. It is consistent with, I think, what China has focused on is their own food security and food production and supply of fertilizers to their farmers on an economic basis. I think that is the first focus for China, and then excess has been exported. Whether that is next year, six million, seven million, eight million, I will not project yet at this point.

Yeah, I think the other thing with China, you said it is their highest export in over 10 years. It would also require them to have their highest asset utilization over a decade. I am not so certain some of the eight million to nine million tons of export that Bert was talking about there do not move a little bit into the early part of next calendar year as well. That is where maybe that bumps up against some of the domestic food supply constraints that they are looking at doing there. A lot to keep our eye on with that, but it would be quite a bit for them to export before the end of the year here.

Thank you very much.

The next question comes from Joel Jackson of BMO Capital Markets. Go ahead, please.

Hi, I just want to get an update on Yazoo, and would you expect the level of insurance inflow from Yazoo to be similar in Q4 and Q1, let's say, as Q3 levels? That's the first question.

Yeah, so I'll let the numbers in the insurance part go to Andrew, but just on an overall update with Yazoo, our expectations are still that towards the end of the first half of next year, that we will be starting up components of that plant. As you recall, we've idled the ammonia, the nitric acid, and the AN plants there as we rebuild the AN supply. Additionally, we're looking at, as part of that reconfiguration, is building out some of the logistics and distribution attributes of the site to make it more flexible than what it's been in the past, being able to serve more customers. We're excited about that plant getting back in operation in the first half of next year. But I'll turn it over to Andrew. He'll talk through a little bit more of the timing of insurance payments.

Yeah, and hi, Joel. The way that I would think about it is I would take a longer view. I think when you look at both the capital build and the timing of when the cash payments will go out at the end of this year and into next year, relative to the insurance pieces, what we expect is that the two are going to offset. If you take a longer-term view, and you kind of go through once we're complete with the rebuild and this is all wrapped up, we see that the two will largely offset. We're not trying to give guidance on what it's going to look like quarter over quarter, but I would say, feel assured that that longer-term view will largely offset.

Okay, you are just a little bit of months into, you and your partners, into construction at Blue Point. Any observations or thoughts you want to share, what you have learned so far about the project, things you are thinking about changing, or any observations?

Well, I would say we are in very early days related to that, but we have hit some significant milestones with receiving the permits that were required. There is significant civil work that is ongoing down there. Our long lead items have been ordered, and we are looking to begin our module work at the beginning part of next year. I would say the learning is that I think we are fortunate we made the decision when we did on a timing basis. If you think about it, we made FID 18 months ago, but about six months prior to that, we had put in orders on electrical gear, given we knew that to get in queue there was important. So we are really two years ahead on some of our ordering of equipment. I would say if you were to announce a project today and look to build a world-class plant of something as similar to that, no matter where it is globally, you probably would have an extension of the duration by 12-18 months in completion of that. So, I think the one thing that we are happy that we made was the decision when we did, and also the pre-ordering of some of that critical equipment prior to the start. Operator, we can move to the next.

Okay. I will move on. The next question is Lucas Beaumont of UBS. Go ahead, please.

Thank you. Good morning. I just wanted to ask about the controllable non-gas costs. They've sort of been running up about $200 million year-to-date year-on-year, which is about a 12% increase. I mean, it's been choppy quarter-to-quarter, but it's generally been higher. Could you just kind of talk us through the drivers there and how you see that evolving into the fourth quarter and into next year, please?

Yeah. Hi, Lucas. This is Andrew. Let me kind of talk you through Q3, because I think what you'll see, Q3 was also consistent with Q2, and that will give you some context here. If you look at Q3, our cost of sales were up 11%. If you tease out the impact of volume, it was up about 4%. You probably saw within the quarter, we had some gas favorability, but I know what you're focused on is kind of what are some of those offsets. There were really three things that were coming through there, and I'll kind of put them in materiality order. There's a couple of ones I want you to make connections on. The biggest impact that we saw coming through was higher cost of purchase ammonia, and this is largely in support of our U.K. operations. Just keep in mind, we benefit from higher ammonia selling prices. There's kind of an overall, when you think about the overall P&L, that flows through our fixed costs, but it's not necessarily structurally disadvantageous to us in aggregate. The second piece is fixed cost absorption. We do have puts and takes between timing of turnarounds of this year versus last year, but the net of what's coming through is the Yazoo City rebuild that we're doing and the fixed cost absorption coming through. The other connection I want to make there is, I know it would be intuitive potentially to say, "I'm going to tease out the impact of the insurance costs and just look at the fixed costs," but those two need to ride in tandem, because that insurance recovery is in part to offset those higher fixed costs we're actually seeing coming through. I would kind of think about those two things together. The third bucket, which is probably the smallest of the three, but it does have an impact, is distribution and logistics. There's two things happening within that. One, you do have some mode mix, where we're seeing some shifting from barge into rail. That's really a function of our order book, and we're really focused on our netback, but you do see some of those costs coming through from a mix standpoint. What you do see that's a little bit more sticky is you do see increases in rail itself and some fuel surcharges. I think when you tease that out, what we've been seeing for the last couple of quarters, it's largely been the purchase of ammonia and the Yazoo City fixed costs flowing through has been the primary driver that you've been seeing come through. Hopefully that helps.

Great. Thanks. You mentioned that you're seeing Middle Eastern urea exports tracking at about half the levels they were previously, coming out of the region since the conflict began. How's that been trending over time? Is that improving? Is it slowing? Is it stable? How do you see the outlook there short of us getting a full resumption in open trade? Thanks.

Yeah, the Middle East has been a question of fairly opaque at first. When hostilities began in late February, March, there were vessels that were trapped behind, unloaded or empty, as well as loaded, that delayed months to get out. There was a period of time when it kind of opened up and things moved in May and June, and then obviously froze up again. There's been a lot of vessels that have moved with transponders turned off, so it's kind of difficult to track those. Outside of Oman, we're probably considering 500,000-550,000 tons per month has been exiting the Gulf, and then throwing Oman on top of that because it sits outside the Gulf, you're probably around 800,000 tons out of 1.5 million-1.7 million tons normally per month. Iran has been moving some tons, but less than their previous capacities. When you consider that, you're probably losing close to 700,000 to one million tons per month out of the Gulf consistently. How quickly that recovers is another question because of the risks and costs of going in and out of the Gulf today. It will take a long time not only to untangle what's there, but for vessels to reposition themselves to load, and just the cost associated with freight. If hostilities were to end tomorrow, I would think it would take months to get back to what is a quote-unquote "normal volume." Then you've got to consider which of those plants are inoperable or operating at a suboptimal rate due to some activities with drones or with inattention or maintenance. I think those two or three things combined would say you're going to be four to six months if everything ended today.

The next question comes from Edlain Rodriguez of Mizuho. Go ahead, please.

Thank you. Good morning, everyone. I mean, just a philosophical question. So when you look at the overall ag complex, corn prices have been down sharply since the last WASDE report. Whether it gets revised down or not next week, who knows? So farmers' income is under pressure. What do you think this is doing to farmers' psychology and their willingness to pay higher prices for crop inputs?

Well, you have to start with the premise of that's the business that they're in, is to plant a crop, harvest a crop.

Farmers have to plant, yep.

As coming from a farm family and with a lot of friends growing up in Kansas, that is just what you do. Relative to cost, there has been a lot of money from the federal government in the three tranches to support farm income. From my earlier comment about the crop, kind of the crop, it is called the Crop Guarantee or Revenue Guarantee Program, with the minimum price set at $4.75 for harvest. That is much more attractive than where cash is today. You have another kind of form of support. I do see with what is going on around the world, those farmers who have the ability to inventory or store their crops through a cycle, probably some good opportunities in the forward market relative to the impact of El Niño around the world, the impact of lower nutrient levels utilized for the crop that is being put in the ground, and the stocks-to-use ratios that are in the market relative to demand being strong with ethanol and protein production. We have some positives in line to support crop prices, which then therefore support farmer income, and that is a knock on wood.

Yeah, I would just say from CF's perspective, the area that we focus on is providing as much supply as we can globally by our production. That is operating our sites like we have at a utilization rate at 97%, making consistent investments over the year into those assets so they are safe and have that high reliability that we can serve the farmer. Then increasing production, whether it be through de-bottlenecks at our plants or even our distribution network in order to make certain that we can get the product to the farmer at the lowest cost and move it through the system when they need it for application. Our whole focus is really on the supply side of the S&D balance here in order to assist our end customer, the farmer.

Thank you. That is all I have.

The next question comes from Ben Theurer of Barclays. Go ahead, please.

Hey, good morning, Chris, Bert, Andrew. Thanks for taking my question. A lot being talked about already on the supply side and obviously the ups and downs here, but wanted to dig into one of the demand drivers, particularly Brazil and what you're expecting here for the next, call it one to two quarters. Trending behind on a year-to-date basis in terms of imports, but you still have, at least based on your presentation, a pretty sizable uptick into the fourth quarter. Given the volatility of Brazilian politics, the BRL, the corn price, and so on, as well as soybean prices, how confident are you about the level of potential uptake for urea in Brazil? That would be my first question.

Yeah, I think with the rally in Q3 that we saw in corn, if hedging had taken place at the $5 level, was pretty attractive for second crop corn in Mato Grosso. safrinha gets planted generally late January through early March, but we are seeing it is a credit-constrained issue with a lot of kind of carrying costs that the suppliers of nutrients have to have long-dated credit and getting repaid. That has delayed purchasing from the importers, which has delayed sales to the farmers. So our estimates today is that for urea, Brazil would be down probably one million tons compared to 2025. Overall, with NPK, probably down seven million-nine million tons of total fertilizer demand cut due to an inability to pay for it in terms of being competitive and, again, these credit issues. But I think one of the overhangs of Brazil today is this super El Niño that all the weather prognosticators are predicting, is the impact when it's dry and you're planting at the tail end of the rainy season, and does that come early and impact yields, which would be a very difficult move for a Brazilian farmer moving forward.

Okay. My follow-up question, maybe help us understand, with this very big spread on gas prices and European being in the high $20s, almost $30 MMBtu, obviously completely out of money where the prices are. Why has that not driven higher prices globally just yet? Is it just because the demand's not there? Is it because of the supply from China? What is holding back a better pricing, just given what the cost for the last producer, so to speak, is, versus what the cost for you guys is that has been very, very stable on a nine-month basis?

I think you have seen a supply contraction with our estimates of 35% of European production is either shut down or curtailed, and the impact then on ammonia, you've seen a $100-$200 rally in ammonia prices and seeing North African as well as North American ammonia moving towards Europe to supply those producers that can import ammonia and produce CAN or AN or UAN. I think with what the supply constraint in Europe relative to the total global supply is lower, and I think you'll be seeing some deferred purchasing around the world that has also probably not impacted. Supply hasn't had to move into those positions yet. So, when you combine demand deferral globally with prompt demand in Europe, I think that's why we're not escalating in price to the level that probably you would expect.

Thanks for that.

The next question comes from David Symonds of BNP Paribas. Go ahead, please.

Hi, thanks. Just a question on the announcement of some of these modular ammonia plants coming internally in the U.S. Do you have any view on where those guys might land on the cost curve and whether it impacts distribution margins or if it is just a removal of imports in favor of domestic production? Thanks.

Some of these discussions that are coming through are part of the FIELDS program that the USDA had with expanding production that the top four producers were not eligible to participate in. A lot of those are very, very small. You sort of question on scale, their efficiency, and really their capital cost per ton that could happen. On some of the other announcements related to FIELDS, you are looking at some pretty small debottlenecks, things that we look at through our network all the time to increase efficiency. Obviously, we believe, given our technical expertise, we can do that on a lower cost per ton than anybody else. In the end, those announcements, you are looking at sizes that are in the 50,000-150,000 ton range) here, where our Blue Point, at minimum, is going to be 1.5 million tons. You are kind of just nipping around the edges from what it is going to do from the overall supply standpoint. I think that just really touches why our view, both near, mid, and long term, is so constructive on nitrogen. We are seeing demand, as Bert said, yes, there is some deferral, but it directly affects yield with the lack of nitrogen. Demand continues to grow, but we have seen not only what is happening with geopolitical, but European shutdowns occur, and then this lack of new supply being bid into the market. Add on top of that, as I mentioned earlier, the duration to start up a new plant is longer. All of this, even though we hear these announcements of these smallers, are not moving the needle to the tightness we are seeing in the global S&D balance, not only this year, but over the next several years.

That is clear. Thank you.

The next question comes from Vincent Andrews of Morgan Stanley. Go ahead, please.

Thank you. I wanted to come back to Yazoo for a moment. At this point, when you are talking about first half of 2027, does that mean at some point the complex will restart then, or does that mean you think the ramp of the restart will be completed by the end of the first half? Any color you could provide on that would be helpful.

Yeah, Vincent, that is a good question. Really, we are seeing that as the ramp begin at that particular time, and maybe even slightly earlier than that as we start to bring up the ammonia plant, but then may take it down just given the amount of storage capacity. But obviously, this plant will have been down for basically about a year and a half. So our intention is in the first half of the year, we are ramping it up, doing it as safely, making certain that we are able to, when the AN side is completely ready to go, that we can move into AN production in the second half of the year. In addition to that, also, as we are ramping it up, it would be looking at some of the construction on that logistics flexibility that we are looking at, whether that be through DEF load-out, ammonia load-out, et cetera, would be part of that.

Okay. Then for Bert, another question on China, slightly different though. We saw, I think it was last week, they are starting to put quotas on ammonium sulfate exports. Obviously, urea is up more than we all thought, but AS, which had been something that they had let kind of run wild the last few years, now they seem to be holding back on that. Any thoughts on what is going on there?

Yeah, good morning, Vincent. That was a surprise. I think on top of the amazing amount of ammonium sulfate that has gone out in the world, over 20 million tons, it has just been kind of a cheap replacement for urea. But I think it is related to sulfur and the cost of sulfur, the cost of production, and the need for sulfuric acid for other applications. So, that was just a tightening and a restriction of the ammonium sulfate to be produced or exported.

Thanks, everyone.

The next question comes from Chris Parkinson of Wolfe Research. Go ahead, please.

Great. Thank you so much. Ever since summer fill, you've undergone, from what all intents and purposes looks like, very solid demand through the fall in terms of reactions to that program. You've seen a continuation of that in the price on a quarter-to-quarter basis. How are you thinking about building order books in the spring and ultimately maxing out your network on a net unit basis based on where prices reside, at least today? Thank you.

Yeah, good morning, Chris. When you look at the summer fill program, Mike and the team have done a great job of putting that out in early July, and the roll-up was very fast. We took over probably over two million tons of orders and have been shipping against that. Then in parallel, building the book through Q4, and now we're sold into Q1. The pricing on that was, we started in the high, like $280, $290, and you saw that reflected in the positive price of $322 as an average price for Q3, and that has continued to escalate. One is a reflection of just the need for nitrogen. Two is a reflection of the global market and kind of just, I think, a migration to UAN. Parallel to that, we've exported a lot less of UAN and have kept a lot more. One of our decision in earlier in the year to keep tons for the North American farmer or the American farmer, as we position for spring, I think we always compare between the nitrogen products and try to stay in relation. We're seeing a very positive spring demand, I think, coming again back to the corn acres that are going to be planted and applied, as well as what we expect to have a better corn price for spring.

Just a quick follow-up, perhaps a slightly longer-term question, but a couple years ago, India, there were very brief talks about India trying to be independent on the urea side, which has been anything but over the last two years, and obviously have, I'd say, disappointed in production at obviously periodic times over that frame. How are you kind of thinking about that market over the longer term in terms of market growth versus perhaps U.S. LNG contracts towards the end of this decade? Is that something where you're looking at it sustainably, let's say, in the high single-digit millions in terms of the market, in terms of the import market? Do you see that declining slightly? Do you see it growing? Just trying to get kind of a grasp on how you're viewing the longer-term supply-demand dynamic based on them. Thank you.

Yeah, today, India is approaching 40 million tons of total consumption and production of around 30 and imports of around 10 million tons. So imports have ranged between five million-10 million tons over the last several years. The Modi government has directed a Make in India program. They have built new plants. But some of those that are gas-supplied are expensive. So if you are paying the world price for natural gas today at $25-$30 and you are competing against import urea, it makes much more economic sense to not operate those plants and import urea, especially from China, which is the cheapest source. And they are a big buyer of prilled urea. So I would look at it in that range of there is a new plant coming on in 2027, about a million-ton plant in India that is slated to come into production. So I would make that range or think about that range in that six million-nine million tons into 2027. And then if gas prices are expensive, it should be on the high side.

Thank you.

The next question comes from Matthew DeYoe of Bank of America. Go ahead, please.

Yeah, good morning. Thanks. How are you seeing ammonia demand for phosphates transpire? Obviously, the last six months, one direction, but we're starting to see some capacity come back. What do you expect there, and how do you think about the circular reference for price of ammonia and perhaps some of the ability for the phosphate players to actually restart?

Yeah, it's been a difficult road for the phosphate producers because of sulfur and the price of sulfur elevating to over $1,000 a ton. As an ammonia supplier, and we do supply some of the major producers and have very good relationships with them, both contractually and spot tons we sell. Through conversations with them, we're expecting demand for ammonia to increase in 2027 based on two drivers. One, we expect sulfur to come back in line, maybe not back to historical values yet, but trending that way, as well as just overall demand for phosphates, which globally have been cut 20% or 30%. You've had under-applications in all the major markets for phosphate, and that, again, eventually will have a yield impact and then an ability then to pay for phosphate. We're constructive, I think, in 2027, probably more positive going into 2028 for ammonia demand from the phosphate producers.

Thanks. I'll pass back.

Okay. The next question comes from Salvator Tiano of KeyBanc Capital Markets. Go ahead, please.

Yes, thank you very much. Firstly, you made a comment before some of the higher costs you incurred outside of gas were due to higher shipping costs, but you focused on the netback. On that front, I wanted to understand a little bit, with your Midwest Corn Belt ammonia operations, can you talk a little bit about what percent or what dollar amount of the spread between, say, NOLA ammonia price and Midwest is part of the cost of transportation and perhaps storage versus what is kind of the premium netback you as CF can get by having access to barges and a storage network? Also, can you shed some light into what volume you ship to the Corn Belt kind of on an annual basis?

How we look at ammonia through the Midwest and the terminal system, we have our terminal distribution that is principally supplied by the Sunoco pipeline that starts in NOLA at our Donaldsonville plant, and then intersects and then splits off into Indiana and Iowa up through Nebraska. We ship about one point total ammonia for corn applications or wheat would be about 1.3, 1.4 for CF. Then we stair-step the costs. The most economically advantaged ton is shipped by the pipeline, and we maximize our volume through that. The next step is our barges, which we own and lease some, and we move up through our river-served terminals. Then some are served by truck, that as we moved excess ammonia from maybe our Oklahoma system or extraneous tons from Courtright, Ontario, into one of those facilities, that just balances it out. That is your stair-stepping in costs from pipe to barge to truck and rail. Yes, costs were up a little bit, but as Andrew said earlier, a lot of that is a reflection of the increased volume that we moved, and then we expect to receive, as those tons go out and are applied, the revenue and the margin from that, which is also higher than our export or our industrial gas-based business.

I think the real benefit is our unmatched distribution facility organization, where we can keep all our plants running at high utilization rates, as we've shown year after year. It's really because of the movements that Bert was mentioning, from plant by plant to location by location, to distribution facility by distribution facility, that there's never any type of curtailment from our production network, given that our production network really dovetails directly into our distribution system.

Perfect. I wanted to ask also a little bit about low-carbon ammonia. Can you refresh us firstly on where you stand with any sales commitments or volume commitments from Donaldsonville for whether it's ammonia or urea, and the premiums that you had first disclosed a year ago? Are you seeing any new markets gaining traction? It seems like there have been some ammonia-powered vessels now that have been manufactured. Are you seeing anything there on the energy market incremental versus a few months ago?

Yeah, so I'll start with the first part of your question. Bert's team has done just a fabulous job of month by month building the low-carbon book that we have, and we're starting to see significant volume move through that at what I would say is probably an average price a little over $20 per ton. That was primarily focused on ammonia. We now have our certifications that we're working through on UAN, so we're beginning to see UAN come through that, not only because of the sequestration we're doing with the CO2 on the ammonia production side, but also our abatement projects on our nitric acid plants that we're seeing at a couple of our plants as well. So that's a market that we just continue to see as really upside opportunity that once again- Just demonstrates the differentiation between our network and others in our space, and really the leadership that we're doing through the low-carbon network. We continue to build that book. Our expectation is next year, with CBAM and some of the pending details on certification process getting worked out, we'll see that expand quite a bit more.

Operator, we can move to the next question.

Yes. Our next question comes from Mazahir Mammadli of Rothschild & Company. Go ahead, please.

Hi. Thank you for taking my questions. Just a question on high-level ag fundamentals. I am curious to hear your opinion on the current crop price environment. Do you think the current new crop futures reflect the reality on the ground in terms of what the yields could turn out for corn and other important crops?

Regarding yield, we are almost an information taker as well. We do have our channel checks and different farmers we talk to. I am surprised by some of the farm yields or corn yields I am hearing about in the northern tier, like in North Dakota on dry land, as well as the irrigated performance in Nebraska and Kansas. But overall, I was surprised on the USDA's revision compared to Pro Farmer and some of the other information that came out. So, whether we move from 181 bushel per acre average yield to 183 bushels per acre, which is what is projected. Taking a step back and going from a global perspective, I do see a challenged market again, weather-related, nutrient, lack of nutrient-related in South America, specific to Mato Grosso, is a potential for yield cuts there. I think Argentina is expected to have adequate rains and performance. When you take a step back on where we are on demand, I would hope to see corn values start to rally as we get into 2027.

Great. Thank you.

Ladies and gentlemen, that is all the time we have for questions for today. I would like to turn the call back to Martin Jarosick for closing remarks.

Thanks, everyone, for joining us today, and we look forward to seeing you at upcoming conferences.