CF Industries: Why Nitrogen Production and Ammonium Nitrate Formula Strength Drive 2026 Growth

CF Industries (CF) has emerged as a compelling investment opportunity as the fertilizer sector enters a more constructive phase heading into 2026. With a Zacks Rank #1 (Strong Buy) designation, this major nitrogen-based fertilizer producer and distributor is positioned to benefit from fundamental shifts in global supply dynamics and strengthening demand visibility. The company’s product portfolio—anchored by ammonia, granular urea, urea ammonium nitrate solution (UAN), and ammonium nitrate—provides essential inputs for global agriculture. As investors move past recent headwinds to focus on tightening nutrient balances and recovering demand, CF stands out as a preferred vehicle for capturing the strengthening fertilizer cycle.

North American Nitrogen Dominance: Production Capabilities and Competitive Advantages

Founded in 1946 and based in the Chicago area, CF Industries operates one of the most strategically positioned nitrogen fertilizer production networks in North America. The company runs two of the continent’s largest nitrogen fertilizer complexes—one in Donaldsonville, Louisiana and another in Medicine Hat, Alberta—giving it substantial scale, logistical advantages, and access to low-cost North American natural gas that remains a critical competitive advantage.

Beyond core nitrogen fertilizers, CF’s product suite extends into hydrogen and nitrogen-based products serving industrial applications, including emissions abatement, energy generation, and diesel exhaust fluid production. The company’s evolution reflects disciplined portfolio management: after acquiring Terra Industries in 2010 to achieve nitrogen market leadership, CF later streamlined operations by divesting its phosphate business to Mosaic in 2014 while securing a long-term ammonia supply agreement. Today, with a market valuation of $13 billion, a Forward P/E of 12, and a 2.3% dividend yield, CF offers compelling value metrics alongside operational strength.

Global Fertilizer Recovery: When Nitrogen Balances Tighten

The fertilizer sector is entering a significant shift after a multi-year correction phase, with improving fundamentals spreading across potash, nitrogen, and phosphate markets. Morgan Stanley’s recent upgrade of Nutrien (NTR) to Overweight status signals a broader market reassessment: nutrient supplies appear increasingly constrained, inventories remain lean across regions, and global application rates are finally recovering after extended periods of soil nutrient depletion.

Potash shipment growth is now tracking toward a fourth consecutive year of expansion—a milestone unseen since the mid-2000s—while capacity utilization is projected to remain above 90 percent through at least 2028. For nitrogen producers like CF Industries, this cycle represents a particularly powerful tailwind. While the broader investment community focuses on potash through plays like Nutrien, the same supply-and-demand forces are creating significant advantages for nitrogen specialists. Global nitrogen markets remain balanced tightly, with farmers unable to defer critical applications, especially nitrogen which must be applied annually and cannot be extracted from soil reserves indefinitely. CF’s combination of low-cost North American production, scale advantages, and concentrated exposure to ammonia and UAN positions the company to capture substantial upside as pricing stabilizes and volumes hold firm.

Q3 Performance and Strategic Progress Reinforce Confidence

CF Industries delivered a 6 percent earnings beat in its third quarter report in November, with ammonia network utilization reaching 97 percent on a year-to-date basis. Planned maintenance was executed smoothly, and management maintained full-year production guidance at 10 million tons of gross ammonia for 2025. The company emphasized that global nitrogen supply remains constrained relative to demand, with low inventories and ongoing supply disruptions limiting availability and supporting pricing. Demand remained robust across North America, India, and Brazil during the quarter.

Beyond the headline beat, several strategic developments warrant attention for their longer-term implications. The Donaldsonville complex initiated full diesel exhaust fluid rail loading in August, achieving monthly shipment records and driving high-margin DEF revenue growth. Equally significant, CF is advancing emissions reduction and monetization initiatives—including nitric acid abatement at Verdigris and CO2 dehydration and compression at Donaldsonville—that are already generating 45Q tax credits and enabling premium-priced low carbon ammonia sales. Management projects that carbon capture, sequestration, and abatement projects will contribute $150 to $200 million in incremental annual free cash flow by the decade’s end, while maintaining capital spending within established guidance.

Analyst Expectations Accelerate Higher

The investment community has grown increasingly constructive, with analyst earnings estimates advancing sharply across all time horizons. Over the past 90 days since the most recent quarterly report, estimate revisions have moved substantially upward:

• Current quarter: estimates rose from $2.07 to $2.55, representing a 23 percent increase
• Next quarter: estimates advanced 7 percent, from $1.99 to $2.12
• Full year 2025: another 7 percent bump, moving from $8.31 to $8.94
• Full year 2026: estimates climbed 6 percent, from $6.88 to $7.27

With revised earnings power, multiple research houses have established price targets well above current trading levels. Both Wolfe Research and RBC reiterated $95 targets following the earnings announcement, implying meaningful upside from current levels.

Technical Perspective: Testing Key Resistance Levels

From a price action standpoint, CF has experienced a challenging multi-year consolidation. After reaching highs near $120 in 2022, the stock became trapped in a range around $80, and bulls’ earlier attempt to break above $100 early in 2025 ultimately failed. However, recent price momentum has turned more constructive, with shares climbing above the 50-day moving average and approaching technical resistance levels.

The stock now challenges a Fibonacci resistance level at $86.50 and the October highs. A sustained breakout above this level would position bulls to target the $100 mark once again—a psychologically important level that, if breached, could open the door to a move back toward the $120 all-time highs. While longer-term confirmation is needed to convince a skeptical broader market, a decisive move above $100 would represent a major technical reversal with potential to extend significantly higher.

The Bottom Line: A Quality Entry into Nitrogen Cycle Recovery

CF Industries presents a compelling fundamental setup as the nitrogen fertilizer cycle enters a more constructive phase. Tightening global nitrogen supplies, lean inventory levels, and improving demand visibility are aligning precisely with CF’s competitive strengths—its low-cost North American production base, scale advantages, and robust free cash flow generation capability. With analyst estimates climbing, industry dynamics turning supportive heading into 2026, and management executing effectively across both core fertilizer operations and adjacent growth opportunities like carbon capture and DEF production, CF emerges as a high-quality vehicle to gain exposure to an improving fertilizer market without relying on aggressive assumptions.