The Mosaic Co. on Dec. 19 announced that it plans to decrease phosphate production at its Central Florida facilities by 150,000 mt per month and continue to operate at lower rates at its Saskatchewan potash mines. This follows the 500,000 mt phosphate reduction it took in second-half 2019, mainly in Louisiana. As reported last week, Mosaic is in the process of bringing its Louisiana production back up (GM Dec. 13, p. 1).
“A third consecutive disappointing application season in North America has led to continuing high inventories and price weakness. Mosaic will not produce at high rates when we are unable to realize reasonable prices,” said President and CEO Joc O’Rourke.
“We believe our extended production curtailments will contribute to balancing the global supply-and-demand picture as we move into 2020,” O’Rourke continued. “With fertilizer-depleted soils and rising agricultural commodity prices, we continue to expect robust demand and strong business conditions in the year ahead.”
Mosaic’s cut of some 150,000 mt per month of phosphate production will come initially from the company’s Bartow, Fla., plant, the company confirmed with Green Markets on Dec. 20. The company explained that Bartow was due a maintenance turnaround, and this will be done in January. After this is completed, the situation will be determined on a month-by-month basis, depending on market conditions.
An initial report in the Lakeland Ledger termed the situation at Bartow as a shutdown. Instead, Mosaic says the plant will be down for maintenance, with no furloughs for some 360 employees.
New Orleans DAP barge prices are near a 13-year low.
Mosaic said production in both phosphates and potash will return to full rates when required to meet customer needs. Mosaic and other major producers have idled nearly 3 million mt of potash production in the second half of 2019 (see Markets – Potash). Mosaic has curtailed some 600,000 mt of production at its Esterhazy and Colonsay mines since August (GM Aug. 9, p. 1; Oct. 11, p. 1).
The company expects its potash and phosphates shipment volumes for the fourth quarter to be modestly below its most recent guidance ranges – 1.7-1.9 million mt and 2.1-2.3 million mt, respectively. In addition, phosphate gross margins per mt are expected to fall significantly below the previous guidance range of negative $10 to zero, as a result of the low volumes and realized prices.
Green Markets Research Director Alexis Maxwell also noted the three straight unfavorable fertilizer seasons. “I haven’t seen before where we’ve had a poor fall in 2018, a poor spring in 2019, and then again a poor fall in 2019,” she said. “The industry is expecting a lot of pent-up demand for fertilizer applications.”
Maxwell said prices may remain soft as “supply growth is exceeding demand growth in the coming year,” while input costs probably will stay low. However, favorable spring weather in the U.S. Midwest may turn the tide, she added.