CF CF Industries Holdings Inc

By Nina Trentmann 

The new finance chief of CF Industries Holdings Inc., whose nitrogen is used to fertilize farmland across the Americas, will need to guide the company through a turbulent period for U.S. agriculture.

The company on Friday promoted Christopher Bohn, a company insider who will start as CFO on Sept. 1. He succeeds Dennis Kelleher, who is retiring from the company after eight years in the role.

A continuing trade conflict between the U.S. and China is causing farmers to rethink which crops to grow -- a calculus that was expected to benefit the Deerfield, Ill.-based manufacturer. But floods have delayed the start of the planting season in the Farm Belt, reducing demand for fertilizer.

While China last year levied 25% tariffs on U.S. soybeans and corn imports, its appetite for American soybeans far outstrips its demand for corn. China imported 8.3 million metric tons of soybeans in 2018, compared with 289,757 metric tons of corn, according to the U.S. Department of Agriculture. China has historically been the top buyer of U.S. soybeans.

Soybeans are generally more profitable than corn, but the Chinese tariffs take away some of that profit. As a result, U.S. farmers are expected to plant more corn this year and less soybeans. And while farmers rely heavily on Chinese exports to drive demand for soybeans, demand for corn is driven by multiple domestic sources including ethanol production, animal feed, food ingredients and other uses.

"More corn means more nitrogen fertilizer that's required, benefiting CF Industries," said Seth Goldstein, an analyst at Morningstar Inc. Soybeans don't need to be fertilized with nitrogen, he said.

But because of floods in several U.S. states, farmers have only planted 49% of their intended corn fields, far below the 80% average for this time of year, according to the Agriculture Department.

"Farmers are running out of time to get their corn into the ground," said Jonas Oxgaard, an analyst at Sanford C. Bernstein & Co. That could limit demand for CF Industries' products. "If farmers leave 5% or 10% of fields empty, we will see a significant impact on their production," Mr. Oxgaard said.

CF Industries in May said sales volumes for the first quarter were lower compared with the prior-year period because of U.S. weather.

"Despite the recent challenges, the CFO is coming into a pretty stable environment" for the company's finances, Mr. Oxgaard said.

Mr. Bohn has worked for CF Industries for the past decade, most recently serving as senior vice president of manufacturing and distribution. In this role, he has overseen the company's nitrogen plants and distribution facilities in Canada, the U.K. and the U.S. During his time at the company, he also has held roles overseeing supply chain corporate planning, CF Industries said in a statement.

That experience could help the company during a period of shifting demand.

Two new plants in Louisiana and Iowa will help CF Industries react quickly to customer demand, which can change based on the weather or planting decisions based on tariffs, Mr. Oxgaard said.

The plants helped reduce the company's cash cost of goods sold per product ton -- an industry efficiency measure -- by about 25% between 2014 and 2018, Mr. Goldstein said.

Mr. Bohn's base salary will increase to $600,000 from $550,000 and his target bonus opportunity will rise to $480,000 from $440,000, CF Industries said in a filing with regulators.

Write to Nina Trentmann at Nina.Trentmann@wsj.com

(END) Dow Jones Newswires

May 31, 2019 18:57 ET (22:57 GMT)

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