Mosaic Company (MOS) announced an update of their near-term price and volume guidance today. International nutrient demand has weakened since the company announced its fiscal Q2 guidance earlier in October. The slide in demand is primarily the result of distributors delaying purchases to avoid price risk. In other words, international shipments are still in the warehouse and vendors fear the stall in shipments will increase the price...so no-one is expected to make much of a purchase in the near-term.
But a bounce-back in demand is expected after the first of the new year. North American demand was strong for the fall application season, but wasn't enough to offset the major declines in exports to Indo-China and other international markets.
"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. These strong fundamentals are expected to drive record global phosphate and potash shipments in calendar 2013," said Jim Prokopanko, President and Chief Executive Officer.
Contract delays from India and China have weakened price expectations, and other international buyers have followed this lead, hoping to minimize price risk.
Potash guidance reflects lower near-term demand globally and has Mosaic sitting on a lot of product. International buyers are unwilling to risk paying too much. Current volume guidance is at 1.3-1.4 million tons. Realized price expectations for Q2 2013 are now at the high end of the prior range at $435 to $450/ton.
Phosphate guidance is much the same as potash -- international distributors' cautious sentiment with respect to potash is spilling over into phosphates and buyers are avoiding phosphate price risk. Q2 volume guidance is lower, down from 3.0-3.4 million tons to 2.9-3.1 million tons. Low inventory is expected to push prices to the upper end of guidance to $535-$550/ton.
"In the short term 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. As a result, we have lowered our volume guidance for both the Phosphates and Potash segments in the second fiscal quarter of 2013 while also tightening the price forecasts to the upper end of the previously announced ranges," said Prokopanko.
As of now (10am CT)...
Mosaic Co. (MOS) took a dive first thing this morning reflecting the new guidance numbers. Falling dramatically to the downside today closing yesterday at 50.75 -- opening today at 48.33. Currently looking for an updraft at 49.00 -- down 1.78 on the morning.