Bloomberg News

Mosaic Potash Sales on 1 Day in March Beat All of January

March 29, 2012

Mosaic Co. (MOS:US), the largest U.S. potash producer, said demand is improving and it sold more of the fertilizer in one day last week than in all of January.

Demand is strengthening in Brazil as a drought lowers soybean output and raises prices for the crop, Chief Executive Officer Jim Prokopanko said in a telephone interview yesterday. North American agricultural dealers expect a “strong” year, he said.

Mosaic was among potash producers to announce output cuts this year, citing lower demand. Farmers hesitated buying fertilizer after crop prices fell and as the European sovereign debt crisis created economic uncertainty. Fertilizer use is now showing signs of a recovery as the U.S. Department of Agriculture predicts the second-highest farm income on record.

Mosaic dropped 5.1 percent to $55.27 in New York, the biggest decline since Nov. 17.

The Plymouth, Minnesota-based company said yesterday after the close of regular trading that earnings (MOS:US) declined to 64 cents a share in the quarter ended Feb. 29 from $1.21 a year earlier. That missed the 69-cent average estimate of 19 analysts compiled by Bloomberg. The company cited lower potash volumes and higher phosphate raw-material costs for the slump. Those factors were “transient events,” Prokopanko said.

“The poor quarter is quickly becoming a distant memory,” he said.

Production Forecast

Total potash sales volume will be 1.7 million to 2.2 million tons in the current fiscal fourth quarter, up from 1.1 million in the third quarter, the company said. Phosphate sales will be 2.3 million to 2.7 million tons, compared with 2.6 million in the previous quarter.

Phosphate made up 70 percent of sales (MOS:US) in fiscal 2011 and potash the remainder.

Demand in India, Mosaic’s largest export market, shouldn’t drop despite lower government subsidies for phosphate and potash fertilizer, Prokopanko said. The strengthening in the Indian rupee is increasing farmer purchasing power and fertilizer prices are coming down, he said.

Mosaic will get $420 to $450 a ton for its potash in the current fiscal quarter, down from $453 in the third quarter, it said yesterday. Phosphate will drop to $460 to $490 a ton in the three months through May 31 from $536 in the third quarter.

“The translated price in India could be unchanged or could be lower,” he said. “We are expecting good phosphate demand, equivalent to last year or perhaps higher, into India.”

Phosphate raw-material expenses such as ammonia have dropped since the third quarter, he said.

To contact the reporter on this story: Shruti Singh in Chicago at ssingh28@bloomberg.net

To contact the editor responsible for this story: Simon Casey at scasey4@bloomberg.net


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Companies Mentioned

  • MOS
    (Mosaic Co/The)
    • $46.44 USD
    • -0.29
    • -0.62%
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