Good day, ladies and gentlemen and welcome to the second quarter 2008 CF Industries results conference call. My name is George and I will be your coordinator for today. (Operator Instructions). As a reminder, this conference is being recorded for replay purposes. I will now like to turn the presentation over to your host for today's conference, Mr. Charles Nekvasil, Director of Public and Investor Relations from CF Industries. Please proceed.

Thank you. Good morning and thanks for joining us on this conference call for CF Industries Holdings Inc. I am Chuck Nekvasil, Director of Public and Investor Relations, and with me are Steve Wilson, our Chairman and Chief Executive Officer and Tony Nocchiero, our Senior Vice President and Chief Financial Officer. Dave Pruett, our Senior Vice President, Operations who normally joins us on these calls is traveling on business in Peru. Yesterday afternoon, CF Industries Holdings Inc, released its second quarter results. As you read on news release posted on the investor relations section of our website at www.cfindustries.com, and as you listen to this conference call, please recognize that both contain forward-looking statements within the meaning of Federal Securities laws. All statements in the release and all statements in this call or other discussions, other than those relating to historical information or current condition are considered forward-looking statements. These forward-looking statements are subject to a number of risks and uncertainties, many of which are beyond our control and which could cause actual results to differ materially from such statements. These risks and uncertainties include those spelled out in the Safe Harbor Statement included in the news release. Consider all forward-looking statements in light of those, and other risks and uncertainties, and do not place undue reliance on any forward-looking statements. Now, let me introduce Steve Wilson, our Chairman and Chief Executive Officer.

Thanks, Chuck, and thank you all for joining us this morning. Yesterday afternoon, CF Industries reported second quarter sales and earnings that are our best-ever as the public company. Robust global demand for major crops and the fertilizer required to grow them, created the opportunity for a strong spring. Our operating performance at our nitrogen phosphate and distribution facilities permitted CF Industries to capitalize on that opportunity. The cold, wet spring did lead a few of us to wonder if it ever would stop raining, but it did. By and large farmers did get their crops planted but with less fertilizer applied then they and we had expected. Nonetheless for the quarter we delivered record net earnings of $288.6 million or $5.02 per diluted common share, up sharply from the $93.6 million or a $1.65 per share as CF Industries earned in last years second quarter. The primary factor in that improvement was strong pricing for all of our products, more than offsetting volumes that were somewhat lower than those in the last years second quarter. Second quarter net sales totaled $1.16 billion, a 37% increase over last years second quarter. The first time that our sales have topped the $1 billion mark for a quarter. That is an impressive performance especially when you consider the serious weather challenges, including flooding and persistent rains that faced much of the Corn Belt this spring. Looking at the tight global supply demand balance for crops its clear that this years harvest will not be enough to refill the grain-beans, here and around the world. That suggests a likelihood of robust grain prices going forward which should produce a strong increase in planted corn acreage next spring, with a positive implications for fertilizer volume and prices, beginning this fall. More on that shortly, but first Tony Nocchiero, our Chief Financial Officer will provide some added detail on our second quarter performance.

Thanks Steve and good morning everyone, as Steve pointed out CF Industries second quarter net earnings were $288.6 million or $5.02 per diluted share. Those results compared to $93.6 million, and $1.65 per diluted share reported for the second quarter of 2007. Gross margin rose substantially to $470 million up from $178 million, in the second quarter of 2007. Gross margin almost doubled in our phosphate business and nearly tripled in nitrogen. Second quarter gross margin included the effect of $83.2 million of mark-to-market gains on natural gas derivatives. By comparison in last years second quarter we recognized $36.3 million of unrealized mark-to-market losses on derivatives. On an after-tax per share basis, the gain was $0.92 in this years second quarter, compared to a loss of $0.41 in last years second quarter. The mark-to-market adjustments on natural gas derivatives are reflected in Nitrogen business results. Let me review some important financial highlights for the quarter compared to last year's second quarter. Net sales increased by 37% to $1.16 billion. As Steve pointed out that was our first billion dollar sales quarter ever. Volume at 2.6 million tons was down by 6%. Nitrogen volume declined by 5%, due to a combination of factors including weather and our decision to reduce low margin sales of purchased UAN. In Phosphate we saw some timing issues with export sales, India and Brazil major phosphate purchasers delayed spot market purchases for phosphate for their spring planning season. The net effect for CF Industries was an 11% reduction in phosphate volume compared to the second quarter of last year, with the entire decline coming in export sales. We saw India, Brazil and other Southern Hemisphere Nations enter the phosphate market more actively in July. Selling prices were substantially higher for all products, average nitrogen fertilizer prices…

Thanks, Tony. Looking ahead we are very excited about what this fall and next spring could deliver. The big difference between today's strong fertilizer market and the strong markets we have seen in the past is, that this one is demand driven, not supply driven. Despite planted corn acreage this year well above recent averages, USDA numbers suggest we will end with corn stocks nearly historically low-levels, roughly one third of what they were recently at 2006 and barely above what you call the pipeline levels, necessary to keep grain distribution markets functioning smoothly. You see a similar situation if you look at overall world course grains stocks. For good reason, global consumption of grain has outpaced production for six of the last eight years. When this year's supply/demand balance is calculated that is likely to become seven out of the last nine years. The tight supply/demand balance for corn suggest that next year we could see corn acreage that exceeds the blockbuster 93.6 million acres we planted in 2007. With memories of this years challenging spring field conditions fresh in the farmer's minds, we can also accept a robust for monoammonium application season depriving the land for next spring. From a longer perspective we are optimistic about the progress we are making on a number of strategic initiatives. As our new release pointed out, we have signed a natural gas term sheet for our proposed nitrogen complex in Peru, an important element in our strategy to grow and to expand our role in the global fertilizer industry. With the term sheet signed, we are turning to negotiations on the natural gas contract itself and have engaged Technip to assist us preliminary engineering, procurement and construction work on the ammonium urea complex. Technip is a global leader in engineering and…

(Operator Instructions). Our first question comes from the line of Mark Connelly from Credit Suisse. Please proceed.

Thank you just two quick things first we are hearing lots and lots of talk about demand destruction both in the U.S. and abroad and I was wondering if you could share with us what your customers are saying and what they might be saying about next season. My second question was with respect to Peru whether you would give us a sense of what the milestones we should be looking for as you know track the progress of that?

Okay good morning Mark. You know with respect to demand destruction we are in uncharted territory here with the fertilizer prices in the range that no one has experienced, with. From a domestic standpoint we have got crop prices that are also in that range and certainly we believe from an economic standpoint farmers in this country have every incentive to continue to plant substantial acreages, particularly in corn the December future today I think is around $6 that provides good incentive for farmers to plant. It actually puts the economics of ethanol back on the positive side. So we do not see signs of demand destruction particularly they are not present on the nitrogen side. When the economics of the spring come forward a bit and the farmer has a better idea what is likely to get for his crop next spring and will have to make some decisions about this mix of nutrients. We think that the return on each nutrient is significantly positive, but the farmer may make a different decision when the time comes. With respect to Peru, I mentioned that we are now working on the gas contract itself. Mark I think, you are going to look at that particular task as a milestone. We are likely to make an announcement when we get to that point. Other important tasks that we have here are to identify a site to work with another group that is putting a pipeline in place to take the gas from where it meets the Pacific coast, to our chosen site. That is another task that has to take place. We have to get contracts in place that will bring the gas to our site and of course all the work that we are doing now with Technip, to identify the cost of the project, and we will have to bring all those economics together on appropriate time to evaluate, in order to make a go or no-go decision.

Okay, that is helpful. Thank you.

Your next question comes from the line Steve Bryne from Merrill Lynch, please proceed.

Hi, Steve. You just mentioned that your phosphate order book reflects strong demand. Have you pulled back any on your Forward Pricing Program in Phosphate, given the uncertainty in sulfur, your sulfur costs or do you have a pretty good idea where your sulfur costs are going to be in the second half of the year?

Well Steve, when we had our call at the end of the first quarter we made some comments regarding a pause in our look at the Forward Pricing program in phosphate because of uncertainty on raw material costs. As we did that and of course we wanted to make sure that if we booked forward orders, that we book them at prices that were sufficiently high to make sure that we could handle the raw material cost increases that might materialized. I think we have taken that look. Going forward, we certainly are willing to book forward business. We book forward business when we like the margins. It is pretty well publicized the third quarter sulfur prices have settled or in the late stages of settling. So we have a pretty good idea right now, what our third quarter sulfur price will be. There is a high degree of uncertainty with respect to fourth quarter and beyond. No one knows where the peak will be in sulfur costs, the supply situation has not really resolved itself and some number of months we are going to have to go by before we see those sulfur costs coming down. So with respect to our forward position, our forward offerings in phosphate, we take into account the cost structure that we know, and we get beyond the time period, when we have that knowledge, our expectations increase in terms of the price it might take in order for us to lock in an order given the uncertainty on raw material costs.

I recall the discussion, you are referring to about this whole issue and I had thought that your second quarter phosphate prices would track spot prices a little more closely. However, it appears that they did lag quite a bit, they were much more representative of say early first quarters spot prices. Is that a function of some forward sales you made in the fourth quarter in phosphate that were into the second quarter?

It is a function of the order book that we had in place at the end of the first quarter. I would point out of course that our, our DAP prices are up $203 from the first quarter on a sequential basis. That is a pretty substantial increase. It does not reflect the spot price and we did not have an expectation that we would be getting to the spot price for the quarter.

Then just lastly on the Forward Pricing program, the 2.7 million tons that are in your program now as of, 24th of July, is some of that extending into the beginning of 2009?

What we reported as 2.7 million tons is for commitments through the end of this year.

Okay. Do you have some sales into 2009?

We do have interest in 2009.

Okay. Thank you.

Our next question comes from the line of Edlain Rodriguez. Please proceed.

Thank you. Good morning, Steve.

Good morning

Quick question, just to follow-up on the sulfur prices. Are you expecting that prices to move up sufficiently to offset the incremental costs in sulfur, and because the activity has been pretty quite recently and should we see that prices move up soon?

Well I do not have anyway of knowing that, the market will determine what the price is. I will just tell you what our attitude is and that is if we make every attempt to make sure that our future prices reflect our cost structure. We can not control that situation. That is going to be determined by global supply/demand factors as they materialize over the coming months.

Of course, other quick question on corn prices. I mean they have come down recently I mean yes the farmer is still not doing extremely well. Do you expect the mindset of the farmer to start changing as he sees is corn moving from 7-8 to 5-6?

Well I think we need to keep in mind that the farmer really has not realized those $7 plus corn prices in their own sale of corn. They are selling at the farm level I think $6 price at the farm level is something that most farmers would welcome, if they could lock that in. One of the benefits of corn coming off its all time highs is that it is likely to spur on the margin more demand for corn because some of the ethanol facilities that could not make money at the higher prices will be back in the game at this price. So $6 corn I think is a really strong pricing level and one that provides good fundamental support for our business going forward.

Okay. Thank you.

(Operator Instructions). Our next question comes from the line of Michael Peekan from Cleveland Research. Please proceed.

Just wanted to touch based in terms of China and what you are hearing in terms of the export tax there, and if in fact, where so well the export tax stay back to the 35% level in early 2009. What do you think how much product would be available particularly on the urea side to be exported?

Well, there are all sorts of rumors about what China might do and they range from reducing the tax to increasing the tax to increasing the tax. I do not think anybody outside the authorities making those decision, knows at this point what the situation is. Obviously, the reason the taxes, and places that they want to make sure that Chinese farmers are provided adequate supplies of product in the home market. If the tax were to come off, that is a sign that there demand is being met internally, and they have got access product. I really do not have visibility in terms of how much product might become available or what point in time because it is really a function of their own production and their own consumption internally, and that data that we do not have.

Okay, fair enough. Do you have any estimate in terms of how much raw production may have been losses result of the earthquake?

I do not think we have quantification of it. However, it is a not a noticeable amount and probably not a substantial percentage. I do not have number for it.

Okay, great. Lastly on this, if you could provide an update on other gasification and uranium project as well, that will be, great. Thanks.

Well, we have really nothing substance as to report on either projects. We are still working hard on that, on the uranium we are working to try to get contracts in place; long-term contracts for the sale of the output. That is a difficult process because we have multiple potential customers. We are trying to align them in such a way that those contracts are consistent and comparable as a group. On gasification, we mentioned at the end of the first quarter that we are working on an alternative approach to the capital cost that work continues. We think that they were going down on a path that has a reasonable likelihood of being successful. We have not come to the conclusion yet.

Our next question comes from the line of Brian Yu from Citi. Please proceed.

Great, thanks. Steve on a Peru it does appear that site selection is becoming just as important as securing advantageous gas as evidence by your own experiences in Trinidad and one of your peers in Egypt. Can you discuss how if this is altered your the way you are negotiating site selection in Peru?

Well, we have always since we have began the initiative in Peru we have been very sensitive to local issues, whether there be a local to the country approval or local to the specific areas on which we might have an interest in building a plant. We know that ecosystem preservation is very important in large parts of that country. While we are not prepared to make an announcement about a site, we have identified an area which we believe is a suitable area to host a large industrial complex. It is suitable for hosting a complex bigger than just our plant. As we continue down that path, we will be working as closely as possible with all the local authorities, community groups, and so forth. In order to assure people that we will be good citizens, good neighbors of theirs. Our hope would be that they would be willing to host for our plant. Yes, we have watched what is happened in Egypt. That is an important lesson for us to keep in mind as we go forward on this project. Developing a project like this in an evolving economy is a challenge. We will do everything we can to, to make sure that not only are the relationships good, but that we have whatever protections we can put in place to preserve the value of that complex for our shareholders, presuming that our decision is a positive one about going ahead.

Okay. Then switching subjects a bit, with regards to [mess and had] if I do some pretty simple calculations of the minority interest charge it does suggest a very little year-on-year improvement and in profitability at mess and had. Is this correct and if so, can you discuss what is happening there?

That is not correct. One of the things you can not see looking at the minority interest is the impact of locking-in gas prices at that level any gas price lock-ins that we do for CFL are settled on the CFI's balance sheet and settled on the CFI P&L. So there was actually quite a big impact associated with those gains and losses which you would see if they went to that account, but they do not. So that gives you a misleading indication of what that value actually looks like.

Okay. Can you give us a sense of how much of the gains is attributable to...

I think it is around 20 million, but let me check.

Okay. Then while Tony is checking on that, just back to the whole phosphate pricing question. Is the view that we are still on a one quarter pricing lag, correct or has this expanded buy more than one quarter by now, just looking at realized versus a spot or is the lower pricing this quarter simply a function of some of the missed export shipment opportunities that you highlighted in that press release?

If you want to go back to?

Yes, the amount was $23.8 million.

Great.

Okay. With respect to phosphate Brian, I do not want to specifically predict the rate at which our prices are going to show up in our financial statements. I am surprised to say that we have aggressively pursued pricing and margins in our phosphate business, and that I am quite pleased with our order book today. As things evolve, I think you will get some clarity on this in the quarters ahead. With respect to the actual's in the second quarter, export business comes in big chunks. So if a shipment that might have gone on the 29th of June ends up going on the 2nd of July, it moves in just from one quarter to the next. That is the situation that we were referring to in our comment and in the release. When you have relatively small amount of export business which we do, one shipment of 25, 30, 35,000 tons can have a big impact on the average price for the quarter.

Alright, and then last one. Can you just comment on customer inventories at the end of the spring season, were they higher or lower than last year on this time? Do you think we are going to see quite a bit of restocking throughout the summer?

We do not have visibility in the customer inventories. I can comment on where we were coming out of spring. We normally our aim is to get to the end of the fertilizer urea if you will to June 30th with very, very lean inventories. In recent years we have been very successful in getting to those targets. This year because of the wet spring, we did not quite get down to the levels that we wanted to, particularly with respect to UAN and ammonia. Those volumes are committed volumes, the UAN as most of that is product that are moved during the fall season. The ammonia will be moving in the fall application season and Brian if you look at what is happened to industry prices in the last month or two. I think it is reasonable to conclude that the appetite on the part of customer remains high. Prices have been sustained and in the case of urea, they have shot way up. So I think that whatever inventory is in the channels is where is does not create a digestion problem going forward.

Thank you

Our next question comes from the line of Paul D'Amico from TD Newcrest. Please Proceed.

Hey, good morning, gentlemen.

Good morning Paul.

Steve just a few question first on the FPP, and I do not know if you are able to give this or not. Are you able to tell us the assumed ammonia cost structure in the FPP that exists for the remainder of the year?

Would you repeat?

Sorry, with respect to the phosphate on the FPP for the phosphate?

The short answer is no. We do not provide that kind of forward looking visibility.

Okay. On the 2.7 million tons, could you give us split between Q3 and Q4?

Its well, I will just characterize the way our business goes, okay. You are going to see very light ammonia movement in the third quarter, heavier ammonia movement in the fourth quarter. So it is reasonable to conclude that ammonia is waited to the fourth quarter. UAN moves a little more ratably, I do not have numbers in front of me. It does move more ratably and so it is certainly not going to be waited in the fourth quarter direction. Beyond that I do not think I have any comments.

In terms of phosphate?

I just assume not to go there.

Okay. I could not look it up fast enough, but in terms of, okay, so Q2 overall volume about 72% was FPP I could not find the Q1. So if you would consolidate that with Q1, each one '08 was roughly as a percentage of volume under FPP?

I do not have…

69% in the first quarter.

69% in the first quarter.

Okay. So we are still around 70% in each one '08.

Yes.

Okay. Sorry, is that Chuck?

Steve.

Steve, sorry. In terms of the year-over-year each one '08 versus each one '07 I am just curious about the FPP or the FPP allocation there?

Well in the first quarter of '07 nitrogen was 70% in the first quarter of '08, 72% and for phosphate and first quarter of '07 was 43%. I am sorry the second quarter of '07 43% and the second quarter of '08 72%.

Okay. Well I was actually looking for first half '07. My question I was trying to get out is in terms of Steve you particularly mentioned demand destruction not present in nitrogen. I am just wondering with respect to phosphate I know we are not really seen that or given that the FPP percentage of phosphate sales going forward at least started in Q2, was materially higher year-over-year. Are we supposed to be reading into that that customer's that are there are getting that much more sense to the phosphate pricing versus nitrogen?

No I was not asking you to read anything into that, but I will elaborate a bit on the phosphate situation. The phosphate business has a lot of more complex than nitrogen from the perspective of a North American producer. Because of the high percentage of North American production that goes offshore. So we have to look at individual markets around the world, Brazil, India, for example. Even when you look at a country like India, who has their own DAP production, you got to look at how much asset they might be buying compared to how much finished product, they might be buying. Of course, you have got different seasons at work at the same time. Clearly phosphate prices shot up dramatically in the late winter and through the spring. They have been trading within our fairly tight range recently. These are prices that are very attractive prices. Certainly ones that yield high margins to integrate the producers like ourselves. So it is a good situation to be in. Whether that price might go up from here, it is just something that, I do not have the ability to answer. The price has been really set by the whole combination of supply/demand factors, certainly it is uncoupled from costs in the U.S. but it had bear some relation to cost structure of the non-integrated producers, India being perhaps the best example of that.

I appreciate that, okay. Last question in terms of the balance sheet, being a strong as it is, a site from Peru going forward. How should we be looking at potential usage of the balance sheet? What one or two things might be that we should be looking in terms of mean big usages of the balance sheet for a site in Peru?

Well gasification is a big ticket item, which I am not prepared to quantify at this point. Certainly north of a $1 billion, the Peru and the gasification items are in the same ballpark, in terms of potential costs. We are moving along in that process. We are not ready to make a decision there. The uranium recovery is not in that same legal though that will be measured in a couple $100 million or something like that. So we have other things on a radar screen that we are not in a position to talk about publicly. We do all of this in a backdrop with a backdrop of recognizing that, that cash belongs to shareholders. Then we have to be prudent deployers of that capital whatever direction we go. We have robust discussions at the board level on this subject every time we meet.

Okay. Thanks, gentlemen.

Thank you.

Your next question comes from the line of Majid Khan from Cobalt Capital. Please proceed.

Hi. Given what is happening in the Eastern Europe gas markets and just the Chinese tariff, could you talk a little bit about the long-term changes in the economics as to nitrogen business for you?

One of the big changes in this business in the last year to year and half has been the whole competitive landscape as it relates to North American nitrogen. Couple of years ago, maybe three years ago the question was really how soon you are going to big out of business. Today being in North American nitrogen is a pretty good place to be. Is that sustainable? I do not know, but when you look at the cost of natural gas in Eastern and Western Europe, the fact that the suppliers of that gas are using it as certainly an economic if not a political weapon. Those gas costs are unlikely to come down. We have many players in the world now whose gas costs are tied to the price of crude oil and with $130 crude oil that has helped increase that gas costs. I never thought that I will be in position of saying I thought $9 gas in the Gulf of Mexico would be a good thing. On a relative basis today, our competitive position is a pretty good one. If we had a reduction in nitrogen demand globally at the present and that would occur in the near future, we would not be the marginal supplier. We would not be the ones who first have to absorb any reduction in demand. So if I put on top of that the fact that we are in the best market in the world, and that we have first class facilities that we maintain quite well. Our view of North American nitrogen is quite positive.

Got it. I mean it sounds like for maybe the first time in a long time you are going to be able to make money through the cycle and certainly next year you are probably going to post a ridiculous earnings number. I am looking at your stock at trading, significantly below replacement cost. I am just wondering as a use of cash you are going to be spending $1200, $1300 per ton of product to build new capacity versus $600, $700 per ton where your stock is trading. I would just love to get your thoughts on how you view investment in your own stock versus investment in new build?

First, I just want to go back and comment on one of the points in your premise and that is, I wish I was as confident that you are that we will be profitable through the cycle. This business has not stopped being cyclical; we are still manufacturing commodities. We approach this business on a ongoing basis from the standpoint of not believing that the business cycle is being repealed, and then we have always have to be alert to, to things that might happen that would reverse the direction of the business. With respect to your comments about the cost of the new capacity and the implied value of our assets, I would just say that we take capital deployments seriously. We look at making investment that are accretive to our shareholders. I would reiterate that, we know whose money it is. As a management group and as a board, we will consider all things going forward in terms how we use our and there capital.

So you certainly made good decisions so far. Then one quick question, how do you charge your phosphate business for ammonia, is it at my-cat or at cost?

It is the acquisition cost on the ammonia acquisition cost. The way it is basically all imported and the costs that we pay for that imported ammonia is what gets charged to the phosphate segment.

Got it. Thanks. Congratulations on the quarter.

Thank you.

Your final question comes from the line of Aaron Whitman from Appaloosa.

Congrats on a great quarter.

Thank you.

Again going back to uses of cash, as you near having a billion dollar of net cash on the balance sheet, the other assets that are waiting at the same levels as you, to me it appears that particularly with where corn prices are that you are the cheapest fertilizer asset out there. Why are not you buying more stock and when do you expect the determination of that?

Well Aaron, I do not think I have anymore to say on that subject and I have said it already. We are entrusted with the capital of our shareholders. We have a strategic plan that we are working diligently to implement. As we do that planning and make those decisions, we will consider all alternatives for the use of the capital that we have.

Okay. One more question. Do you think current DAP prices reflect the current spot prices that are being discussed for phosphate rock for competitors and phosphoric acid alone?

Well I think if you look at the international market place, a producer like India, I think they are in a difficult position. It is our understanding that as the Indians have looked at buying fast asset in their next increment, that there is impasse now between the supplier and the purchaser. So it maybe that the resolve of that is DAP and MAP demand increases at the expenses of fast acid being supplied in maybe those higher DAP prices will then change the configuration of the whole marketplace going forward. I am not an expert on what goes on and nonintegrated producers because we are integrated producer. However, we do know that that had a substantial affect on DAP and MAP values globally.

Thank you.

Our final question is a follow-up from the line of David Silver from JP Morgan. Please proceed.

Good morning, David.

David, did we lose you?

Mr. Silver your line is open.

Speechless, we lost David.

George lets assume that we will follow-up with David offline, see if we can catch up with him so.

George, if there are no more questions, we do thank you for your continued interest in CF industries. I would like to add that we hope that you all consider joining us in Tampa this November, when we will hold our First Investor Day. We are planning a dinner on the 17th of November at the Marriott at Tampa airport, followed by presentations the next morning. During the afternoon of November 18th, we will host a tour of our phosphate mine and beneficiation plant in Hardee County. This facility is the industry newest. It provides a 100% of phosphate rock requirements. If you are interested in learning more about that event, please contact Charles Nekvasil our Director of Investor Relation for additional information. So thanks again for joining us on our call today.

Ladies and gentlemen, thank you for your participation in today's conference. This concludes the presentation. You may now all disconnect. Good day.