Last quarter, I wondered aloud whether Mosaic's
Mosaic's earnings call on Wednesday helped to fill out the picture for fertilizer demand in 2010. I took a close look at the potash market recently, so we're more or less up to speed on the big picture there, but management did make three points worth noting:
- Mosaic estimates global shipments of 47 million to 50 million metric tons this year. That's higher than the gloomy forecasts made by the company's European peers.
- The company sees this demand level taking North American producer inventories, which have been running way above normal, down to average levels by midyear.
- Canpotex, the Canadian potash export cartel, is finding North American and international customers willing to pay more than the recent Chinese settlement price, and has no interest in dropping prices to sell into the Chinese market.
That last one's big. Yes, China is a large potash demand center, but internal capacity is ramping, and the country won't necessarily be the biggest importer / price barometer anymore. Belarusian Potash says that Brazil and India are just as likely to be in the driver's seat in the years ahead.
As far as phosphates, demand has come back in a pretty big way. I hope it's not too simplistic to chalk this up to the much more complete reversion of prices to their prebubble levels. Phosphate sales volumes were up 90% compared to a year ago. Management still expects margins to firm up over the course of the year, though the cost of raw materials like ammonia and sulfur could limit the upside there.
Mosaic continues to be a very solid name in the fertilizer space, as reflected in the payment of a special dividend in December. The company may lack the flash of China Green Agriculture