Question-and-Answer Session
Operator
(Operator Instructions) You’re first question comes from Charlie Rentschler – Wall Street Access.
Charlie Rentschler – Wall Street Access
Mike, your company obviously has two pretty darn well defined avenues for organic growth and you talked about each of them, the diesel engine fluid or AUS and then direct applied ammonia, which I guess is a shift from anhydrous to UAN. And it seems like you’re really kicking the latter thing in gear doubling, more than doubling, I guess your CapEx for ’09 with the big Woodward project.
I’m wondering the diesel engine fluid is obviously a function of SDR and how quick those trucks get on the road etc., but the other one is obviously dependent upon the switch from anhydrous to UAN and how fast that happens, and could you talk about your outlook on how fast that could happen and what kind of upside could this present and physically beyond the Woodward upgrade, what would you do? Could there be a really quick shift quicker than anybody thinks in this transition?
Mike Bennett
I guess, yes, we’ve been talking for years that at some point direct applied anhydrous would be a thing of the past and basically it’s still here and about the same proportion overall that it has been. But really as we look at even the last few years and some of the changes in cultural practices and farming. What we’ve experienced is that growers with these new hybrids anymore want that seed in the ground more quickly than they did in the past, whereas it used to be getting their corn planted by the middle of May seemed like an adequate period for these guys.
What we’ve seen is a trend more toward wanting to have that seed in the ground by early in May, and with the shift in the corn acreage paradigm in the U.S., roughly today we’re producing or I guess planting about 15 to 20% more corn acres that we were in the earlier part of the decade. Basically we’ve got basically roughly the same number of farmers out there planting this increased acreage.
And with the window deadline or relatively narrow window, if you will, to apply nitrogen, especially in the spring, we believe that UAN’s value has on a relative basis been highlighted pretty clearly here in the last couple of years.
So from our perspective as we continue to produce a relatively strong level of corn acres, as this application window to get that nitrogen down continues to be compressed, we think that UAN is a product that will command appropriate value, given the things that it can do for the farmer from that perspective, and that’s at least one key part of the shift that we anticipate.
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