Question-and-Answer Session
Operator
(Operator Instructions) Our first question comes from Michael Picken – Cleveland Research Company
Michael Picken – Cleveland Research Company
Congratulations on your quarter and, Chuck, good luck with your retirement. A couple of questions, just sort of looking at the price realization this quarter the ammonia prices were up quite a bit higher than I had modeled. Can you sort of talk about kind of where we are? You sort of indicated your FPP sales kind of going forward in the second half of the year. They are probably less than they were in the first half. Could you provide a little more color in what we might expect kind of going forward there?
Stephen R. Wilson
Well, we had a mix in the quarter obviously of FPP business and a closer to spot business. It won't be surprising to you, I don't think, to know that the proportion of our business in ammonia attributed to the FPP was higher than that for the other nitrogen products because we've had significant deferral of application due to weather conditions in ammonia. So the mix of FPP and spot business in the quarter for ammonia was certainly working in our favor.
Going forward, obviously, the market has changed from what it was a year ago. But I would point out that we manage our business on a margin basis, not based on price. And so we have seen fertilizer prices come down and we've seen gas cost come down. If you look at the spread between ammonia prices available in the Midwest and the gas cost, it looks pretty darn good today.
Michael Picken – Cleveland Research Company
I guess, given that that's the case, I mean, sort of looking out toward the back half of the year, I mean, you talked about your expectation for a good fall season, but are the dealers at this point showing any inclination here in the U.S. to start buying more or with the recent sell off in some of the grain markets have they gotten a little bit more cautious in July? Can you just sort of talk about kind of when we might start to see the volume accelerate heading into the fall.
Stephen R. Wilson
Well, I think we're seeing some movement in prices particularly in urea I think as buyers realize that the cupboard is pretty bare coming out of the spring. We've also seen some movement in the international ammonia market. UAN's been a little sticker I think that there were high expectations for a lot more UAN to be applied this spring than actually got applied. So we're expecting but certainly don't know yet as we move into the fall that perhaps the product will move together, but it's a little early to tell.
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