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A Mosaic Co. dragline carves out phosphate matrix in Tampa, Fla.

Jim Stem, Bloomberg

Mosaic lowers forecast in softening market

  • Article by: Mike Hughlett
  • Star Tribune
  • September 16, 2013 - 8:34 PM

Mosaic Co. lowered its third-quarter production and profitability forecasts Monday, pointing to fertilizer markets weakened by the recent collapse of a Russian potash marketing cartel.

Plymouth-based Mosaic is one of the world’s largest fertilizer producers, and the industry was rocked in late July when the world’s leading potash producer, Russia’s OAO Uralkali, backed out of a marketing agreement with its Belarusian partner, Belaruskali. Mosaic has extensive potash mining operations, particularly in Saskatchewan.

Mosaic’s short-term financial forecasts were made just two weeks before the Russian breakup. Since then, “international crop nutrient markets have softened in part as a result of the distributors’ cautiousness caused by the Belarusian Potash Company breakup,” Mosaic said in a statement.

However, “the long-term positive outlook for crop nutrient demand has not changed; high commodity prices are driving record farm returns and making our products more affordable than ever before,” Mosaic CEO Jim Prokopanko said in a news release.

Mosaic’s announcement was made after the stock market closed. In after-hours trading, Mosaic’s stock was at $44.95, down 60 cents or 1.3 percent.

Fertilizer stocks have been hammered by the Russian cartel’s demise, as fear has spread that fertilizer prices would fall. Mosaic’s stock was trading in the mid $50s in mid-July.

The company’s new forecast for third-quarter potash production is 1.45 million to 1.65 million tons, down from 1.8 million to 2.1 million tons. Mosaic now expects potash prices of $330 to $340 per ton and a gross profit-margin rate in the “low to mid 30 percent range.”

The forecast had been $330 to $360 per ton, with a gross margin in the mid- to high 30s.

Potash problems have spilled over into markets for phosphate fertilizer, Mosaic’s other primary product, the company said. “Buyers are in a wait-and-see mode.”

Mosaic’s phosphate production is now expected to be 2.6 million to 2.8 million tons, down from the earlier forecast of 2.9 million to 3.3 million tons.

Phosphate prices also are expected to be lower, $430 to $440 per ton, down from $430 to $465 per ton. Mosaic has large phosphate mining operations in Florida.

Mike Hughlett • 612-673-7003

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