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Michael Wilson, president and chief executive officer of Agrium, addresses shareholders at the company's annual general meeting in Calgary.Todd Korol/Reuters

Farm products maker Agrium Inc. appears headed for a stellar year as farmers take advantage of soaring crop prices on the back of a U.S. drought.

Calgary-based Agrium said second-quarter earnings would be in the range of $5.40 to $5.50 diluted earnings per share when it reports its financial results on Aug. 2, a record for the quarter, compared with earlier guidance of $4.18 to $4.78.

For the first half of the year, Agrium raised its guidance to between $6.72 and $8.82 per diluted share, from an earlier range of $5.50 to $6.10.

The ongoing U.S. drought was not a factor in the expected first-half results, but has recently caused crop prices to skyrocket.

The strong first-half results come as Agrium sells more crop nutrients and fertilizers than expected, and at higher prices. Particularly strong demand for the products came from farmers in the Northern Plains region and in Western Canada.

"This revised earnings estimate is approximately 15 percent higher than the previously announced second quarter guidance level and would represent a record earnings for the second quarter and the first half of the year," Agrium said in a statement.

"The increase in expected earnings is due to excellent results across our entire crop input business, resulting from the continuation of robust demand through June, despite the very early start to the spring season," said president and chief executive Mike Wilson.

Investors gave a 3 per cent boost to Agrium shares in Toronto.

Mr. Wilson said the strong outlook is supported by prices for grains and oil seeds which in some cases are as high as they were in 2008, when international food prices hit their highest level in 30 years.

Prices are rising on plummeting crop yields in the key U.S. Midwest growing region, where the worst drought in decades has hit farmers of staples like corn, wheat and soybeans.

At $7.69 (US) a bushel, the price of corn is up about 45 per cent this summer, and is near record levels. Soybeans and wheat prices tell similar stories and global importers are starting to feel the pinch and even cancel wheat tenders, according to reports.

Analysts say the drought will result in the smallest corn harvest in five years in the United States, the largest producer of the crop. With no end to the heat in sight, analysts in a Reuters poll on Tuesday slashed forecasts for the nation's corn production by another 7 per cent.

Drought conditions are also developing in Asia, Eastern Europe and Africa, hurting the outlook for global wheat output.

But the higher prices also mean farmers can have more confidence to spend money on next year's crop, planting more acres with better seed and buying more fertilizer from companies like Agrium.

"The outlook remains very positive, supported by the significant increase in grain and oilseed prices globally due to the adverse weather in the U.S. and an expected tightening in international crop input markets," Mr. Wilson said in a statement.

His optimism was an echo from earlier in the week, when Mosaic Co., the world's largest producer of phosphate-based fertilizers, said in releasing its fiscal fourth quarter results that global demand for crop nutrients would continue to be strong.

"We anticipate another good year in fiscal 2013, with continuing growth in global demand for crop nutrients," Mosaic president and chief executive officer Jim Prokopanko said on Tuesday. "Despite the current drought in the U.S. corn belt, farm economics remain compelling, and farmers around the world continue to be incented to use our products to increase their crop yields."

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