13 November 2012 21:55 [Source: ICIS news]
HOUSTON (ICIS)--US fertilizer maker Mosaic lowered its near-term price and volume guidance on Tuesday because of expected weakness in the demand for crop nutrients.
Mosaic said the international crop nutrient market demand has weakened, primarily as a result of distributors delaying purchases to avoid price risk.
Mosaic believes this demand is simply delayed, but that sales volumes may not pick up until calendar 2013.
"The long-term positive outlook for crop nutrient demand has not changed; high commodity prices are driving record farm returns and [are] making our products more affordable than ever before," said Mosaic chief executive Jim Prokopanko.
"These strong fundamentals are expected to drive record global phosphate and potash shipments in calendar 2013. In the short term, however, we are seeing lower-than-expected shipments to the export market, in spite of very strong demand in North America for the fall application season," Prokopanko said.
In potash, the delay in signing long-term supply contracts with China and India has resulted in weakening price expectations, leading other international buyers to delay purchases to avoid price risk, said Prokopanko.
The midpoint of the company's previous guidance for second quarter potash volumes of 1.6m-1.9m tonnes already excluded shipments to China and India.
The current guidance range of 1.3m-1.4m tonnes reflects lower near-term demand in other countries as well.
In part because of the decline in international shipments and changes in product mix, the company's realized price expectations are now at the high end of the prior range, at $435-450/tonne (€344-356/tonne), Mosaic said.
In phosphates, international distributors' cautious sentiment with respect to potash is spilling over as buyers avoid phosphate price risk, and are delaying purchases in spite of low reported producer inventories, Mosaic said.
Mosaic lowered its second-quarter volume guidance to 2.9m-3.1m tonnes from 3.0m-3.4m tonnes. Realized prices are expected to be in the upper end of the prior range, at $535-550/tonne.
($1 = €0.79)
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