Mosaic Company (the) · NYSE:MOS
Mosaic Company (the) — Investor Presentation (August 2009)
37 slides from Mosaic Company (the)'s investor presentation, Aug 11, 2009
Slide 1: Crop Nutrient Situation and Outlook
Crop Nutrient Situation and Outlook Dr. Michael Rahm Vice President Market Analysis and Strategic Planning Whistler, BC Exhibit 99.1
Slide 2: Topics
Topics 2008/09 Post Mortem Collapse of shipments, use and production De-stocking from the pipeline to farm field Lessons learned 2009/10 Prospects Key near term drivers Handicapping potential scenarios Long Term Outlook Strong demand drivers still intact Handicapping the race between demand and supp
Slide 3: Topics
Topics 2008/09 Post Mortem Collapse of shipments, use and production De-stocking from the pipeline to farm field Lessons learned 2009/10 Prospects Key near term drivers Handicapping potential scenarios Long Term Outlook Strong demand drivers still intact Handicapping the race between demand and supp
Slide 4: Collapse of global crop nutrient use (particularly P&K)
Collapse of global crop nutrient use (particularly P&K) World Nitrogen Use Source: IFA May 2009 Mil Tonnes Upside Downside Baseline 2008/09 Decline in Crop Nutrient Use Baseline Downside Upside Nitrogen -1.5% -2.4% -0.5% Phosphate -7.0% -9.7% -5.8% Potash -14.3% -18.1% -13.5% Source: IFA May 200 9
Slide 5: Collapse in NA phosphate shipments and use
Collapse in NA phosphate shipments and use U.S. DAP/MAP shipments were less than the minimum of the five-year range in 8 months of the 2008/09 fertilizer year. Shipments were especially slow during the traditionally strong shipment months such as Oct, Nov, Mar, Apr and May. We estimate that U.S. pho
Slide 6: Collapse in NA potash shipments and use
Collapse in NA potash shipments and use NA MOP monthly shipments trended downward throughout the 2008/09 fertilizer year. Implied May shipments of about 230,000 tons KCL were approximately 1.0 million tons less than the three- year average for this peak shipping month. NA offshore exports also decli
Slide 7: Large production declines when warehouses filled
Large production declines when warehouses filled U.S. DAP and MAP Producer Stocks 0.0 0.5 1.0 1.5 2.0 2.5 Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Mil Tons MIN MAX Range (2003/04-2007/08) 2008/09 3-Yr Average Source: TFI and Mosaic Phosphate DAP/MAP stocks held by U.S. producers at on- and of
Slide 8: Large production declines when warehouses filled
Large production declines when warehouses filled North America MOP Stocks 0.0 0.5 1.0 1.5 2.0 2.5 3.0 3.5 4.0 4.5 Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Mil Tons KCL MIN MAX Range (2003/04-2007/08) 2008/09 3-Yr Average Source: IPNI and Mosaic Potash MOP stocks held by NA producers at on- an
Slide 9: De-stocking from the pipeline to farm field
De-stocking from the pipeline to farm field De-stocking of the distribution pipeline A key driver that is difficult to estimate Assessments and estimates Argentina - P (DAP/MAP/TSP): Extremely low distribution pipeline inventories on June 30 • ~ 160,000 tonnes today vs. >500,000 tonnes one year ago
Slide 10: De-stocking from the pipeline to farm field
De-stocking from the pipeline to farm field De-stocking of the distribution pipeline Assessments and estimates Brazil - P (DAP/MAP/TSP): Will get worked down to normal by the end of 2009 - K: Low levels and a need to re-stock for pre-plant application right now Brazil Processed Phosphate Import Dema
Slide 11: De-stocking from the pipeline to farm field
De-stocking from the pipeline to farm field De-stocking of the distribution pipeline Assessments and estimates North America - DAP/MAP: 800,000 to 1.0 million ton decline in pipeline inventories - MOP: 1.4 to 1.6 million ton decline in distribution pipeline inventories U.S. Phosphate Use and DAP/MAP
Slide 12: De-stocking from the pipeline to farm field
De-stocking from the pipeline to farm field De-stocking of farm fields Farmers understand the science and economics of crop production Universities call it soil science not soil alchemy Farmers don’t starve their chickens and they don’t starve their corn or soybeans Farmers optimize crop nutrient us
Slide 13: Nutrient Removal by Crops / (Fertilizer + Recoverable Manure Nutrients)
Nutrient Removal by Crops / (Fertilizer + Recoverable Manure Nutrients) Estimated Nutrient Removal to Use J P205 Removal / Use PRat2007 IMM 000-010 01-030 03-050 051-090 091-109 110-200 EH 2.01- 5.00 (MM > 5.00 ap Proavans By PAB interact, feriPW ay 2608 ‘Saran: State and County Soundatex ESRI Ferti
Slide 14: Topics
Topics 2008/09 Post Mortem Collapse of shipments, use and production De-stocking from the pipeline to farm field Lessons learned 2009/10 Prospects Key near term drivers Handicapping potential scenarios Long Term Outlook Strong demand drivers still intact Handicapping the race between demand and supp
Slide 15: Key near term drivers
Key near term drivers Key crop nutrient market drivers Uncontrollable and Unpredictable Variables Weather Macroeconomic environment Government policies Intangibles (e.g. market momentum, customer sentiment, risk tolerance) Crop nutrient demand, production and prices Agricultural commodity prices and
Slide 16: Agricultural commodity price outlook
Agricultural commodity price outlook World Grain and Oilseed Stocks L M H Mil Tonnes 10% 13% 16% 19% 22% 25% 28% 31% 34% Percent Stocks Percent of Use Source: USDA and Mosaic (for 10/11 estimates) 2010/11 Scenario Assumptions Low Medium High Harvested Area Change -0.5% -0.5% -0.5% Yield Deviation fr
Slide 17: 2010 new crop corn, soybean and wheat prices
2010 new crop corn, soybean and wheat prices 2010 New Crop Prices Daily Close of New Crop Options January 2, 2009 to August 7, 2009 Jan Feb Mar Apr May Jun Jul Aug $ BU Dec 10 Corn Nov 10 Soybeans Jul 10 Wheat Source: CBOT and KCBOT
Slide 18: 2010, 2011 and 2012 new crop corn
2010, 2011 and 2012 new crop corn New Crop Corn Prices Daily Close of New Crop Options January 2, 2009 to August 7, 2009 3.50 3.75 4.00 4.25 4.50 4.75 5.00 Jan Feb Mar Apr May Jun Jul Aug $ BU Dec 2010 Dec 2011 Dec 2012 Source: CBOT
Slide 19: 2010 Farm Economics: U.S. Midwest
2010 Farm Economics: U.S. Midwest Return After Variable Cost for a U.S. Midwest High Yield Farm Operation $0 $100 $200 $300 $400 $500 $600 $700 2009F 2010F Source: Iowa State University and Mosaic $ Acre Soybeans Corn Following Soybeans Corn Following Corn
Slide 20: 2010 Farm Economics: Brazil
2010 Farm Economics: Brazil Return After Variable Cost for a Brazilian Farm Operation -$100 $0 $100 $200 $300 $400 $500 $600 2004/05 2005/06 2006/07 2007/08 2008/09 2009/10F Source: Mosaic $ Hectare Corn in Parana Soybean in Mato Grosso
Slide 21: How quickly will Latin American demand recover?
How quickly will Latin American demand recover? Latin America MOP Imports 0.0 1.0 2.0 3.0 4.0 5.0 6.0 7.0 8.0 9.0 09F Mil Tonnes Source: Fertecon and Mosaic Latin America Processed Phosphate Imports 0.0 1.0 2.0 3.0 4.0 5.0 6.0 7.0 8.0 9.0 09F Mil Tonnes Source: Fertecon and Mosaic
Slide 22: Lower and more stable energy costs?
Lower and more stable energy costs? Crude Oil Prices Monthly Average of Daily Close of WTI Nearby Option $ BBL Source: NYMEX Henry Hub Natural Gas Prices Monthly Average of Daily Close of Nearby Options $ MM Btu Source: NYMEX
Slide 23: Lower and more stable raw materials costs?
Lower and more stable raw materials costs? Sulphur Prices c&f Tampa $ LT Source: Green Markets Ammonia Prices c&f Tampa $ MT Source: Fertecon
Slide 24: Changes in the Indian fertilizer subsidy?
Changes in the Indian fertilizer subsidy? India Urea Imports 0.0 1.0 2.0 3.0 4.0 5.0 6.0 7.0 09F Mil Tonnes Source: FAI and Mosaic Fertilizer Year Starting April 1 India MOP Imports 0.0 1.0 2.0 3.0 4.0 5.0 6.0 7.0 09F Mil Tonnes Source: FAI and Mosaic Fertilizer Year Starting April 1 India DAP/MAP I
Slide 25: Chinese N&P export taxes and potash imports?
Chinese N&P export taxes and potash imports? China MOP Imports 0.0 1.0 2.0 3.0 4.0 5.0 6.0 7.0 8.0 9.0 10.0 09F Mil Tonnes Source: Fertecon, China Customs, Mosaic China Net Urea Exports -8.0 -6.0 -4.0 -2.0 0.0 2.0 4.0 6.0 8.0 09F Mil Tonnes Source: Fertecon, China Customs, Mosaic China Net DAP and M
Slide 26: Other factors to watch in 2009/10
Other factors to watch in 2009/10 Agronomic conditions Record yields and large nutrient withdrawals 2007-09 Significant declines in application rates in 2009 Macroeconomic environment Economic recovery: income and job growth Credit availability Interest and exchange rates The intangibles Customer se
Slide 27: Topics
Topics 2008/09 Post Mortem Collapse of shipments, use and production De-stocking from the pipeline to farm field Lessons learned 2009/10 Prospects Key near term drivers Handicapping potential scenarios Long Term Outlook Strong demand drivers still intact Handicapping the race between demand and supp
Slide 28: Long Term Outlook
Long Term Outlook Strong demand drivers still intact Population and income growth Further increases in grain-based biofuels production Demand growth requires supply increases Limited capacity additions during the next few years Relatively high prices required to attract capital/justify new projects
Slide 29: The million tonne challenge next decade
The 500 million tonne challenge next decade World Grain and Oilseed Use 1,000 1,250 1,500 1,750 2,000 2,250 2,500 2,750 3,000 3,250 Source: USDA and Mosaic Mil Tonnes Actual Actual for US Ethanol Forecast Forecast for U.S. Ethanol
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Slide 31: U.S. Biofuels Revisited
U.S. Biofuels Revisited Long term viability Bullish oil fundamentals Strong demand outlook (same as food story) Uncertainties about new supplies Continued or faster agricultural productivity gains from biotechnology U.S. Energy Independence and Security Act of 2007 Biofuels mandates (RFS) Convention
Slide 32: U.S. ethanol – significant part of gas supplies
U.S. ethanol – significant part of gas supplies U.S. Ethanol Production Source: EIA and Mosaic Bil Gal 0% 2% 4% 6% 8% 10% 12% 14% 16% Percent Actual Forecast Percent of Gasoline Use
Slide 33: Positive long term phosphate demand prospects
Positive long term phosphate demand prospects 2.5% CAGR 1.5% CAGR 2.0% CAGR World Phosphate Fertilizer Demand Forecast Source: IFA and Fertecon Mil Tonnes P O Actual Low Growth Medium Growth High Growth IFA Fertecon
Slide 34: Additional rock required to meet projected demand
Additional rock required to meet projected demand Additional Rock Required to Meet Phosphate Demand Growth 2008-20 2008-20 Growth Scenario Million Tonnes Low Medium High Crop Nutrient Demand Growth (P O ) 7.4 10.2 13.1 Crop Nutrient Demand Growth (CAGR) 1.5% 2.0% 2.5% Other Demand Growth (P O ) 0.8
Slide 35: Positive long term potash demand prospects
Positive long term potash demand prospects 3.50% CAGR 2.00% CAGR 2.75% CAGR World Potash Fertilizer Demand Forecast Source: IFA and Fertecon Mil Tonnes K O Actual Low Growth Medium Growth High Growth IFA Fertecon
Slide 36: Additional MOP required to meet projected demand
Additional MOP required to meet projected demand Additional MOP Required to Meet Potash Demand Growth 2008-20 2008-20 Growth Scenario Million Tonnes Low Medium High Crop Nutrient Demand Growth (K O) 7.2 10.4 13.8 Crop Nutrient Demand Growth (CAGR) 2.00% 2.75% 3.50% Other Demand Growth (K O) 0.7 0.8
Slide 37: Crop Nutrient Situation and Outlook THANK YOU!
Crop Nutrient Situation and Outlook THANK YOU! Dr. Michael Rahm Vice President Market Analysis and Strategic Planning Whistler, BC