Bert A. Frost
Senior Vice President of Sales, Market Development & Supply Chain at CF Industries
Thanks, Tony. The operating environment for CF Industries remains positive as we near the end of 2022. Agricultural-led demand continues to be robust due to the need to replenish global grain stocks. At the same time, energy prices in Europe and Asia have remained high, causing an unprecedented level of ammonia curtailments in Europe during the third quarter. Trade flows have adjusted rapidly with the rate of nitrogen imports into Europe over the last three months approaching those of the two largest import regions, India and Brazil.
Foreign energy curve suggests that producers in Europe and Asia will face high energy costs into at least 2025. This will likely continue to challenge producer economics in those regions and lower global nitrogen supply availability. Producers in Europe with the option to import ammonia have been able to run upgrades profitably. But for those who cannot, the European winter is likely to be very difficult. Global supply also remains limited by government actions. Since October of 2021, Chinese government policy has materially restricted urea exports.
Ammonia exports from Russia are also well below prior years. In contrast, the supply of upgraded fertilizer products from Russia has returned to near normal levels as trade flows have adjusted over the last two quarters. Looking ahead, we expect demand for nitrogen to remain resilient as the agriculture sector focuses on maximizing food production in the face of increasing food and security. Global harvests are not projected to make meaningful progress in 2022 towards rebuilding global grain stocks, as key producing regions suffered from poor weather during the growing season.
This includes the U.S. where crops were negatively affected by extended heat and drought this summer, leading to yields that are expected to be significantly below trend. As a result, crop futures prices for corn remained strong relative to the last decade, which should incentivize farmers to apply nitrogen fertilizer to maximize yields in 2023. As we have seen so far this year, margin opportunities can shift rapidly between regions where product is needed most.
Typical seasonal demand from India and Brazil and higher-than-usual demand from Europe continue to drive today's market. This has enabled CF to build our largest export book ever, and we are receiving strong interest for first quarter export shipments as well. Further out, we expect high corn and wheat planted acres in North America in 2023 due to strong crop futures prices and healthy farm economics.
In line with this outlook, we have a strong order book for the fall ammonia application season which has begun. Low water levels on the Mississippi River have challenged the industry's ability to move product northward late in the year and will have an impact into 2023. This is likely to increase the importance and value of product manufactured in and close to the corn belt as we enter 2023.
As you can see on Slide 11, we expect these broad industry supply and demand dynamics to continue to support a steep global nitrogen cost curve during 2023 and, in our view, well beyond. The wide estimated cost range suggests continued volatility in global nitrogen prices. With our manufacturing network firmly rooted at the low end of the cost curve, we are well positioned for a strong margin opportunities even as prices fluctuate. With that, let me turn the call over to Chris.