Mosaic to reduce phosphate fertilizer production this spring.

[MoeAgostino]

I am not sure if you guys have heard this news. Looks like Mosaic is trying to reign in supply.

Moe

From the Mosaic website.

The Mosaic Company (NYSE: MOS) announced a plan to reduce finished phosphate production by up to 250,000 tonnes through March 31, 2012.

"Isolated phosphate market spot prices have become disconnected with the underlying agricultural fundamentals. As dealers and distributors focus on the macroeconomic uncertainty and delay purchases for the North American Spring Season, near term supply of phosphate barges on the Mississippi River has exceeded near-term demand. The current spot prices in this market do not reflect our outlook for the business, nor do we think they are sustainable. In response, we have decided to cut planned production by 250,000 tonnes over the next three months," said Jim Prokopanko, President and Chief Executive Officer.

The Company's second quarter results will be released after close on January 4, 2012. Volumes and pricing for the second fiscal quarter were within prior guidance ranges, for both phosphate and potash. The Company will provide guidance for the third fiscal quarter in the January 4, 2012 earnings release.

"We continue to expect an above average application season in North America and record-setting global demand for both phosphate and potash in 2012," stated Prokopanko. "We are confident strong farmer economics and agricultural fundamentals will ultimately prevail over the near-term cautious sentiment."

[crusher]

So they would rather make $0 per tonne than drop their price and make $200 per tonne. My dealer told me he wasn't going to drop his price because he was full of high priced product. I think I heard this story before...about three years ago. I was going to buy some fertilizer stocks but now I'm not because if they all cut back on production, they're not gonna make any money. Not sure the best way to place this one. Any one have a plan??

[bucket]

If the dealer has any brains he would buy some lower priced product and find a lower price by averaging his high priced product and his lower stuff. Makes him look good and keeps customers happy. It also keeps the supply pipeline moving.

But hey, if cargill/mosaic want to be greedy pigs,good on them. I enjoy ham and bacon as much as the next guy.

It won't work out for them in the long term. What happens if people decide because of their greediness, not to sell them any grain? That can't be a good thing.

[TOM4CWB]

Crusher,

These guys will find out just how elastic this market is!

We can cut back on demand by 100K tonnes... more.

One thing the high cost of these nutrients has taught us... the principal of 'diminishing returns' increases our risk... and reducing our grain production is the very likely outcome of Mosaic being 'greedy'. Folks in the potash 'monopoly' found this out in a hurry.

Hope we can get this message out... to all... near and far... that their 'greed' at Mosaic means less food and fuel.

Sooo the economics of $800/t phos means less is required... and the elastic just got stretched some more!

[TOM4CWB]

Good Phos info at:

http://www.integer-research.com/2011/fertilizers-chemicals/news/phosphate-profits-demand-revenues-producer/

“The demand-driven upturn the phosphate market has experienced since the end of 2009 continued to be reflected in producers’ Q2 2011 financial results. Revenues and profits of the key producers were strong and the bull run of phosphate prices was supportive of another convincing round of financial results for the business as a whole...”

Good article in the News section:

"Morocco and Brazil set for major phosphate spending plans

Posted on 22 December 2011 by Monica Baker


Project activity is brisk in the phosphate market, against solid prices, which once again provided the backdrop for increases in phosphate producers’ revenues and profits in Q3 2011.

In an unprecedented development, Morocco’s OCP went to the debt market for the first time in its history and appears to be poised to go to the international markets shortly. The company is set to spend US$12.2 billion between 2010 and 2020 to increase phosphate production to 50 million tonnes from 26.4 million in 2010. OCP also linked up with Norway’s Yara in a 50:50 joint venture to import phosphate rock into Brazil to feed Yara’s operations in Rio Grande. Financial details behind this deal, expected to complete in Q1 2012, have not been disclosed.

In Brazil, Vale is to spend 9.6% of its total US$21.4 billion planned budget for 2012 on its fertilizer business focused on phosphate rock and potash. It is targeting 8 million tonnes of phosphate rock production next year. Vale’s phosphate project activity includes expansion at Uberaba, Salitre and Bayovar in Peru, and a greenfield phosphate rock project in Mozambique, though not all these projects have received board approval.

In the background, the phosphate market remains firm, albeit taking on a somewhat bearish tone in early December.

As urea prices started to lose ground in late November/early December, DAP prices appeared likely to be impacted in the short-term, amid a lack of immediate spot activity, with buyers holding out for lower numbers. Overall, there is still a strong belief that demand will stay firm on strong crop prices, while supplies of phosphate rock and phosphoric acid continue to be under some pressure. The most recent round of supply disruptions in Tunisia did not help ease supply side concerns.

Meanwhile, recent lower DAP prices have led to a small decline in profit margins, as they have not yet been compensated for by lower third-party raw material costs. Despite this, integrated producers’ profit margins remain relatively robust. Non-integrated producers’ margins turned negative in Q3 2011, based on Integer’s modelling of DAP production costs, implying DAP purchase looks cheaper than manufacturing in India.

Gain insight into the key drivers of the industry’s profitability with Integer’s Phosphate Cost and Profit Margin Service

To find out more about how to subscribe call 44 20 7503 1265 or email publications@integer-research.com"

[boarderbloke]

Hope they're not planning to sell lots of fertilizer into last years wet areas, soil test results I've been hearing and seeing are coming back with astonishingly high nutrient levels, and calls for some of the lowest fertilizer needs in over a decade. SESK

[Hopperbin]

I don't think crop ins. will pay for a whole lot of fertilizer anyway. Plus there is likely some residual fert. left in the bins as one cannot return mixed fert. Also the other farm program paid out better if one kept the old fertilizer. Sorta like getting free fertilizer. Is demand down? I would think so. USA corn acres?

[MoeAgostino]

It looks like if you shop around you might find some fertilizer deals.

With this latest rally in corn prices, I think we will see another big corn acreage in 2012.

Good luck with finding some deals.

Moe

[bucket]

The question is - how much fertilizer got bought or applied to acres in the US? They had an early harvest and great prices for their crops and weather that allowed them to get fall applications done.

[Hopperbin]

In a way we protested guarranteeing supply to our grain buyer consumers. Guarranteeing supply I would think pressures prices down as there is no price discovery. Mosaic has a very good idea of how much fert. is needed and used every year in north America. If ever there was a time for a farmer owned fertilizer company it is now. Cost of production is cost of production. Paying shareholders a dividend is another thing. Going back to when I invested 20 grand that I lost in a hog barn venture I gained more back in increased price of grain sales as the hog barns are still full and the feed mill is still in operation. Little hard to get around but really N is sourced from the air and Natural gas is cheap. An N plant payback should be within a couple years in my opinion, weather it is in operation or not.

[Hopperbin]

Ma'aden project in Saudi Arabia will be increasing phosphate production from 400,000 tons to 2 million tons in 2012. Kinda dwarfs the Mosaic reduction. Wonder if any of that phosphate will be able to replace some of Mosaic's future sales up here?

[Burbert]

Gotta have it, gotta, use it.
Fertilizer junkies, blowin smoke far and
wide. Comedian framing depends on
fertilizer. Casn't fram witout it,
unless a course yous pastey, who kin do
anything all the time and hit home runs
each and every time! An amazin framer,
ta say the least, considerin theys usin
origamie techniques all the time!
Quack'll gettem sunner than later
though, unless theere land is so poor it
won't grow quackers......

[monte]

Organic farming uses alot of the poop you spew to fertilize the crop.

[TOM4CWB]

Burbert,

Has Ducks Unlimited lost their way and got you to troll for them... or did you forget to take your meds again?