Mosaic Company (the) · NYSE:MOS
Mosaic Company (the) — The Mosaic Company — Q2 2020 Earnings Presentation
22 slides from Mosaic Company (the)'s earnings presentation, Aug 4, 2020
Slide 1: August 2020 – Market Update
August 2020 – Market Update
Slide 2: Forward Looking Statements & Non-GAAP Financial Measures
Forward Looking Statements & Non-GAAP Financial Measures This release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements include, but are not limited to, statements about proposed or pending future transactions or strategic
Slide 3: Phosphate market tightens and NOLA discount to international benchmarks has reversed
Phosphate market tightens and NOLA discount to international benchmarks has reversed NOLA and India DAP $ per tonne NOLA and Brazil MAP $ per tonne Published Spot Prices Published Spot Prices 500 500 • NOLA DAP traded at an • NOLA MAP traded at an average discount of $21/mt average discount of $19/m
Slide 4: A Tightening Phosphate Market (pre-CVD Petition): Solid Demand & Reduced Supply
A Tightening Phosphate Market (pre-CVD Petition): Solid Demand & Reduced Supply U.S. Imports China Exports Mil Tonnes DAP/MAP/NPS/TSP Mil Tonnes DAP/MAP/TSP 2.0 5.0 U.S. imports through 4.0 4.6 1.5 H1 2020 were 4.0 China exports 1.6 3.8 1.4 1.3 ~244,000 tonnes or 3.0 through H1 2020 1.0 16% lower y-
Slide 5: Global Phosphate Demand
Global Phosphate Demand Mil Tonnes Global Phosphate Shipments YoY Changes of Shipments by Region DAP/MAP/NPS/TSP (Mil Tonnes DAP/MAP/NPs/TSP) 75 70-72 2.0 China 70 72 72 0.6 71 1.0 India 70 0.3 0.3 0.2 68 68 0.4 0.1 Other Asia 65 0.0 0.2 66 -0.1 64 65 -0.6 -0.4 Brazil -0.2 -0.3 60 -1.0 60 -1.1 Other
Slide 6: Global Phosphate Shipment Forecasts by Region
Global Phosphate Shipment Forecasts by Region August 2020 DAP/MAP/NPS*/TSP Low High Source: IFA, CRU and Mosaic 2018 2019 Comments (numbers may not sum to total due to rounding) Mil Tonnes 2020F 2020F Our estimate for on farm phosphate demand in the spring season shows it having stabilized versus ye
Slide 7: Global Phosphate S/D Balance: Tighter global market than expected
Global Phosphate S/D Balance: Tighter global market than what many analysts and buyers were expecting 2020 Expected Phosphate Supply/Demand Changes Projected Phosphate Supply/Demand Changes (Mil Tonnes DAP/MAP/NPS/TSP) Mil Tonnes DAP/MAP/NPS/TSP 2020 2020F Production Demand Recovery -0.6 Projected S
Slide 8: India expected to see import surge in Q3 on strong demand and low stocks
India expected to see import surge in Q3 on strong demand and low stocks Mil Tonnes India DAP Ending Stocks Mil Tonnes (company inventories) India DAP Imports 4.0 3.0 YTD 55% or -1.7mmt y-o-y 2.5 3.0 2.0 2.0 1.5 1.0 1.0 0.5 2018 2019 2020 0.0 0.0 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Q1 Q
Slide 9: China DAP/MAP/TSP exports fall y-o-y
China DAP/MAP/TSP exports fall y-o-y China Phosphate Exports Mil Tonnes China Phosphate Exports cumulative DAP/MAP/TSP January-June 2020 vs. 2019 12 1,000 2018 2019 2020 Tonnes 2016 2017 2018 2019 2020 Change %Chg 10 DAP 2,088 2,266 2,490 2,748 2,031 -717 -26% 8 MAP 825 1,357 1,016 1,320 1,236 -84 -
Slide 10: Phosphate Outlook: Steady demand growth to outpace new supply, boosting operating rates
Phosphate Outlook: Steady demand growth to outpace new supply, boosting operating rates Mil Tonnes Global Phosphate Shipments Utilization 80 90% • Our base case demand forecast is 75 86% aligned with CRU’s and shows a 2.0% CAGR from 2020 to 2024 (in 70 82% line with the 2010-2018 growth rate prior t
Slide 11: International prices converge after India/China contract settlements
International prices converge after India/China contract settlements $ per tonne Published MOP Prices 400 375 350 • Brazil prices have rebounded more 325 than $15/mt from the decade-low level seen in April. 300 • SE Asia prices have crept lower, 275 but are expected to remain stable for remainder of
Slide 12: Partial, but relatively broad-based recovery
Partial, but relatively broad-based recovery Mil Tonnes Global MOP Shipments YoY Changes of Shipments by Region KCl (Mil Tonnes KCl) 70 3.0 64-66 China 2.0 0.6 65 66 66 0.3 0.1 India 1.0 1.5 0.8 64 64 0.3 0.0 0.1 Indonesia+ 60 61 -1.0 Malaysia 60 -1.0 -1.4 Latin America 55 -2.0 55 North America -1.4
Slide 13: Global Potash Shipment Forecasts by Region
Global Potash Shipment Forecasts by Region August 2020 Muriate of Potash Low High Source: IFA, CRU and Mosaic 2018 2019 Comments (numbers may not sum to total due to rounding) Mil Tonnes KCl 2020F 2020F As expected, import volumes through the first half of the year were well behind last year’s pace
Slide 14: Global Potash S/D Balance: Demand recovery on pace with incremental new supply
Global Potash S/D Balance: Demand recovery on pace with incremental new supply 2020 Expected MOP Supply/Demand Changes Projected MOP Supply/Demand Changes (Million Tonnes KCl) 2020F Mil Tonnes KCl 2020 Production Demand Recovery -1.3 Projected Shipment Changes 1.26 SQM Production Percent Change 2.0%
Slide 15: India is a bright spot in the global potash S/D particularly in H2 2020
India is a bright spot in the global potash S/D particularly in H2 2020 Mil Tonnes India MOP Imports Mil Tonnes India MOP Ending Stocks YTD 18% or (company inventories) 2.0 -424kt y-o-y 2.0 2018 2019 2020 1.5 1.5 1.0 1.0 0.5 0.5 YTD 48% or -790kt y-o-y 0.0 Q1 Q2 Q3 Q4 0.0 2018=4.6mmt 2019=4.1mmt 2
Slide 16: Potash Outlook: Supply to closely align with demand, leading to a stable to higher operating rate
Potash Outlook: Supply to closely align with demand, leading to a stable to higher industry operating rate Mil Tonnes Global MOP Shipments Utilization KCl 80 100% 75 95% • Our base case demand forecast is similar to CRU’s and shows a 3.1% 70 90% CAGR from 2020 to 2024 (in line with the 2010-2018 gro
Slide 17: 2020 grain prices have partially recovered as fundamentals appear more constructive
2020 grain prices have partially recovered as fundamentals appear more constructive Corn Prices • US$ corn and soybean prices have partially $ / Bu Daily Close of the Front Month Contract recovered from huge drops earlier. 4.75 • Lower-than-expected acreage (but potentially higher 4.25 Corn -19% YTD
Slide 18: New Crop 2021 prices have held up better
New Crop 2021 prices have held up better New ‘20 ’21 Crop Corn 3.27 3.62 • Dec ’21 corn is +11% (+$0.36/bu) vs. Dec ’20 Beans 8.88 8.94 • Nov ‘21 beans are +1% vs. Nov ’20 Wheat* 4.38 4.74 • July ‘21 wheat is +8% (+$0.36/bu) vs. July ‘20 *‘20 wheat is the close of the July contact $ / Bu New Crop Co
Slide 19: COVID-19 impacts on other ag commodities have started to give way to fundamental drivers
COVID-19 impacts on other ag commodities have started to give way to fundamental drivers Ringgits / Malaysian Palm Oil Prices CPO -11% YTD • CPO prices have improved after briefly reaching its Tonne Daily Close of the Nearby Option after rallying on recent low in early May. The recovery of crude oil
Slide 20: Chinese appetite for ag commodity imports appearing to accelerate
Chinese appetite for ag commodity imports appearing to accelerate Mil Tonnes China Soybean Imports China Ag Commodity Imports (cumulative) Chg (%) June 2020 YTD Y-o-Y Changes 100 2015: 81.7 200% 2016: 83.2 2017: 95.5 Pork 80 150% 153% 2018: 88.0 Poultry 2019: 88.6 87% Wheat y-o-y change 100% 60 97%
Slide 21: More corn imports by China could be on the horizon; China corn price premium surpasses $5/bu
More corn imports by China could be on the horizon; the China corn price premium surpasses $5/bu China Corn Stocks-to-Use Ratio US$/Bu China & US Corn Prices Spread (US$/Bu) (S:U%) Spread (China - US) Dalian Nearby Corn CME Nearby Corn 120% 105% 9 6 8 Spread (Jul 30): 100% 5 87% 85% $5.02 84% 77% 7
Slide 22: Ethanol recovery continues
Ethanol recovery continues Mil Gallons US Weekly Fuel Ethanol Mil Gal/Day Production and Stocks 1,200 50 Stocks Production 1,100 45 • Since peaking at nearly 1.2 million gallons, ethanol stocks now appear to be stabilizing at around 850 million (versus the 2016-2019 1,000 40 average of about 950 mil