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How CF’s Shipment Volume Has Impacted its Sales

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Sales drivers

Sales for commodities such as fertilizers (MOO) are driven by two factors: the shipment volume and the selling price. Shipment volume is the aggregate volume of fertilizers sold to customers during a period. In this part, we’ll look at the impact of shipment volume on CF Industries’ sales.

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Divergence

In the above chart, we’ve plotted quarterly nitrogen shipment volumes for CF against its quarterly sales. CF’s sales have moved in tandem with shipment volumes. Around 2Q13, the sales and shipment volume diverged, with the shipment volume continuing to grow and CF’s sales declining. The spread between sales and shipment volume widened significantly in 2Q16.

What do these figures tell us?

The demand for nitrogen products continues to remain strong, despite CF’s sales falling over the years. This is a sign of increased competition within the nitrogen fertilizer space, which includes players such as PotashCorp (POT), Terra Nitrogen (TNH), and CVR Partners (UAN). Whereas PotashCorp is a dominant potash fertilizer player, the latter two produce nitrogen fertilizers exclusively.

The above shipment volume is an aggregate of all nitrogen products shipped by CF Industries. In the next part, we’ll look at shipment volume trends for each of CF’s nitrogen products.

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