Mosaic Co., the largest U.S. producer of potash fertilizer, said it plans to reduce output as low crop prices continue to erode farmer demand for agricultural products.
Mosaic will reduce production at its potash mine in Colonsay, Saskatchewan, by extending maintenance work, the Plymouth, Minnesota-based company said Monday in a statement. It also plans to maintain slower output of phosphate fertilizer. Delayed purchases in Brazil and North America have contributed to weaker markets since an Aug. 4 forecast, Mosaic said.
Fertilizer producers including Mosaic and Potash Corp. of Saskatchewan Inc. have endured a 17 percent drop in spot prices for the mined crop nutrient this year. They are bracing for further declines as a wave of new capacity collides with falling crop prices that have cut farmers’ incomes. Potash demand could slide 8 percent next year, leading to a record surplus and lower prices, Macquarie Capital Ltd. analysts said in a report Monday.
“Currency volatility, lower grain and oilseed prices, political and economic uncertainty, as well as global equity market declines have adversely impacted market sentiment,” Mosaic said in the statement.
Macquirie analysts Monday also cut their forecast for 2016 potash spot prices by 7.6 percent to $254 a ton. BMO Financial Group analysts Monday forecast the lowest prices since 2009 for potash and urea fertilizers.
Mosaic dropped 2 percent to $35.72 at 4:29 p.m in extended trading. The company issued its statement after the close of regular trading.
Other farm suppliers also have been hurt by lower crop prices. Monsanto Co., the world’s largest seed company, plans to cut expenses by as much as $500 million because of low commodity prices and weaker foreign currencies, the St. Louis-based company said June 24.