Mosaic expects Q4 potash sales to be in a 1.5m-1.9m ton range

05 November 2013 22:12  [Source: ICIS news]

HOUSTON (ICIS)--Mosaic forecasts Q4 2013 potash sales volume to be 1.5m-1.9m tons (1.4m-1.7m tonnes), while phosphate sales are expected to be between 2.5m-2.9m tons, the fertilizer producer said on Tuesday.

Speaking during a Q3 earnings conference call, Mosaic officials said the biggest impact on the domestic fertilizer market has been the delay and deferring of purchase for fall applications by North American farmers.

Part of this can be attributed to a delay in the harvesting of crops due to weather issues early in the season and the reluctance by end users to buy when prices have been wavering over the past two months. This has led to more cautious buying, with the company seeing more hand-to-mouth customer purchases over the past quarter.

“The thing is, probably the biggest impact on our Q4 is the fact that North American buyers didn’t come to the table during our Q3 this year where last year, if you remember, the fall application season and the crop was harvested four weeks ago at the same period last year,” said Rick McLellan, Mosaic's senior vice president.

Mosaic expects Q4 potash pricing to be between $285-310/ton (€211-229/ton), down from $342 in Q3, with an operating rate calculated to be below 65% due in part to planned maintenance at its Esterhazy operations.

For diammonium phosphate (DAP), the company anticipates Q4 prices at $370-400/ton, down from $436 in Q3, but the operating rate is estimated to be at 80% during the quarter.

Mosaic CEO Jim Prokopanko said that the company expects a continued 3% annual growth in potash demand over the next decade. He said the major anomaly in the market over the past two years has been the reduction in demand coming from China and India.

“Their demand shipments into those countries are both down about 2m tons each,” said Prokopanko. “We don’t think that is sustainable. We are convinced that both of those markets are going to come back, and we are anticipating that some time by the end of this coming 2014 year that we will see that demand begin to come back.”

Looking at the phosphate market, Mosaic said there have been five consecutive years of growth and that the company has tremendous confidence in the segment, which has prompted it to invest in both a joint venture in the Middle East and purchase the phosphate business of CF Industries.

While domestic demand is expect to remain steady, Mosaic sees global growth as a possibility, with demand from India in particular holding promise.

“If we look at next year our expectation is for [64m-66m] tons of phosphates globally,” said McLellan. “When we look at India, we believe that while imports have declined on DAP to near 4m tons this year, channel inventories at retail distribution have been drawn down and applications have been solid, so this would frankly imply that we will see imports into India next year at [6m-6.5m] tons of DAP.”

($1 = €0.74)

By: Mark Milam
+1 713 525 2653

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