Mosaic Releases P&K Guidance

January 4, 2013 10:43 AM

Canada's Mosaic Co. has released guidance for Fiscal 2013 and the report suggests a possible downturn in the pricing of P&K in the coming months. Your Inputs Monitor has observed P&K falling throughout the midwest for a month now, looking for the seasonal low. Anhydrous has been the exception, but NH3 did show signs of falling last week.

Ammonia prices will have to fall as a phosphate feedstock, and high potash inventories will continue to moderate K pricing.

K --

Moving forward, technical data suggests potash prices may soften farther. With China breaking up the international nutrient purchase log jam, buyers can all take a deep breath and with Mosaic themselves projecting prices to continue to edge lower, and if corn futures continue to make it attractive, it may prove to be a good year to bank some extra K in springtime applications.

Inventories are still very high, and China's recent bite from that apple acts as a barometer for Canpotex's price tolerance -- which betrays even more room to the lowside.

P --

Phosphates remain less certain than potash at present, but Mosaic's gross margin is back on the rise along with operating earnings over the previous quarter for the phosphate wing. But international uncertainty is high for P in general. Any new production capacity is expected to do little more than keep pace with current demand, which is low at this time. But the spring application season in North America will undoubtedly find willing buyers globally. That fresh demand -- as with K, coupled with strong corn futures -- will not only present an opportunity to possibly boost P levels in the dirt, but may also encourage increased production upstream.

Phosphate inventories are largely hand-to-mouth, and downstream suppliers report the same attitude toward phosphates.

Seasonal P&K pricing lows are on their way in North America, but experts believe -- and Mosaic agrees -- if growers can stand to wait just a little longer, true seasonal lows will arrive.

Long-Term P&K --

For both Phosphate and Potassium, production increases are in Mosaic's plans in the coming years to keep pace with demand. A hand-to-mouth approach will characterize Mosaic's response to demand for the time being. However, with China writing checks for Canadian nutrient again, other Asian and international buyers will surface on the implied sentiment that short-term pricing supports a buying window.


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