Slide 1: The Phosphate Outlook
The Phosphate Outlook Dr. Michael Rahm Vice President Market Analysis and Strategic Planning Boca Grande, FL Exhibit 99.1
Slide 2: Topics
Topics 2008/09 Post Mortem Record price volatility Unprecedented declines in use and shipments De-stocking of the global distribution pipeline Production declines but large producer inventories 2009/10 Prospects Positive agricultural outlook Potential strong year-over-year rebound in demand Some re-
Slide 3: Record price volatility
Record price volatility Sulphur Prices c&f Tampa $ LT Source: Green Markets DAP Prices Central Florida Rail $ ST Source: Green Markets DAP Prices fob Tampa Vessel $ MT Source: Fertecon Ammonia Prices c&f Tampa $ MT Source: Fertecon
Slide 4: Unprecedented declines in domestic shipments
Unprecedented declines in domestic shipments Year-to-date (Jul-Mar) DAP/MAP domestic shipments plunged 40% from the high level of last year. Shipments during the last quarter of 2008 were off 61% from a year earlier. Shipments increased during the first quarter, but movement still was 22% less than
Slide 5: Unprecedented declines in offshore shipments
Unprecedented declines in offshore shipments Year-to-date (Jul-Mar) DAP/MAP exports dropped 16% from last year. U.S. exports during the last quarter of 2008 were off 54% from a year ago. Exports increased during the last couple of months due to seasonally strong shipments to India and Australia as w
Slide 6: Production declines but large producer inventories
Production declines but large producer inventories DAP/MAP stocks held by U.S. producers at on- and off-site facilities climbed to high levels at the end of 2008. Since then, inventories have declined slowly due to production reductions and a pick-up in demand. Year-to-date (Jul-Mar) U.S. phosphoric
Slide 7: Topics
Topics 2008/09 Post Mortem Record price volatility Unprecedented declines in use and shipments De-stocking of the global distribution pipeline Production declines but large producer inventories 2009/10 Prospects Positive agricultural outlook Potential strong year-over-year rebound in demand Some re-
Slide 8: 2009/10 prospects
2009/10 prospects Positive agricultural outlook Decent farm profitability Crop prices are expected to remain close to current high levels - Another large crop is required in 2009 - Will the large drop in nutrient use impact yields in 2009? Lower costs for key crop inputs (especially diesel and crop
Slide 9: Decent farm profitability
Decent farm profitability 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 10: Crop prices remain at high levels
Crop prices remain at high levels New Crop Corn Prices Daily Close of the December Contract from July 1 to June 30 3.0 3.5 4.0 4.5 5.0 5.5 6.0 6.5 7.0 7.5 8.0 Jul Sep Nov Jan Mar May $ BU 2008Z 2009Z 2010Z 2011Z Source: CBOT Corn Prices Monthly Average of Daily Close of Nearby Futures Contract 1.0 2
Slide 11: Another large crop is required in 2009
Another large crop is required in 2009 2009/10 Scenario Assumptions Low Medium High Decline in Harvested Area (Mil HA) -0.5% -0.5% -0.5% Yield (Deviation from 10-Year Trend) Largest Negative Largest Positive Demand Growth 0.0% 1.0% 2.0%
Slide 12: Above average U.S. net cash farm income in 2009
Above average U.S. net cash farm income in 2009 U.S. Net Cash Farm Income 08E Bil $ 6% 8% 10% 12% 14% 16% 18% 20% 22% 24% 26% Debt:Asset Ratio Market Direct Government Payments Debt-to-Asset Ratio Source: USDA
Slide 13: Key crop input prices moderate
Key crop input prices moderate Monthly Indexes of Prices Paid by Farmers 1990-92=100 Overall Diesel Fuel Field Crop Seed Chemicals Fertilizer Herbicides Source: USDA
Slide 14: Potential strong rebound in shipments in 2009/10
Potential strong rebound in shipments in 2009/10 US phosphate demand is projected to rebound 14% in 2009/10. This forecast assumes that U.S. farmers plant 90 million acres of corn, 76 million acres of soybeans and 59 million acres of wheat in 2010 and that average application rates recover from the
Slide 15: World import demand is projected to rebound
World import demand is projected to rebound Import demand (outside China) likely declined 17% or more than 3.7 million tonnes in 2008. Import demand is forecast to increase 7% or almost 1.3 million tonnes in 2009. A stronger recovery is projected for 2010 with imports forecast to increase another 12
Slide 16: Import demand by major area
Import demand by major area India Processed Phosphate Import Demand 0.0 1.0 2.0 3.0 4.0 5.0 6.0 7.0 8.0 08E 09F Mil Tonnes DAP MAP Source: Fertecon, IFA and Mosaic Australia Processed Phosphate Import Demand 0.0 0.2 0.4 0.6 0.8 1.0 1.2 1.4 1.6 1.8 08E 09F Mil Tonnes DAP MAP TSP Source: Fertecon, IFA
Slide 17: Weather risks
Weather risks Late U.S. planting season (in Eastern Corn Belt) Drought in Argentina Another average or above average Indian monsoon? A repeat in Europe/FSU? Weather issues exacerbated by less crop nutrient use? Argentina: 30% decline in 2008 Brazil: 9% decline in 2008 United States: 10% to 15% decli
Slide 18: Slide 18
Slide 19: aerate
aerate
Slide 20: aerate
aerate
Slide 21: aerate
aerate
Slide 22: Late planting jeopardizes yield
Late planting jeopardizes yield U.S. Corn Planting Progress vs. Yield y = 0.0025x - 0.1518 R ² = 0.4013 -20% -15% -10% -5% 0% 5% 10% 15% Percent of Acres Planted by May 10 Source: USDA and Mosaic
Slide 23: Lowest Argentine soybean production this decade?
Lowest Argentine soybean production this decade? Argentina Soybean Production and Yields Mil Tonnes 1.0 1.5 2.0 2.5 3.0 3.5 Tonnes per Hectare Production Yield Source: USDA and Mosaic We estimate that Argentine soybean production will drop to 32 million tonnes or in 2008/09. That implies an average
Slide 24: Europe/FSU: Repeat of 2008 record crop in 2009?
Europe/FSU: Repeat of 2008 record crop in 2009? FSU Wheat Area and Yields Mil Hectares 0.75 1.00 1.25 1.50 1.75 2.00 2.25 2.50 Tonnes per Hectare Harvested Area Yield Source: USDA EU-27 Wheat Area and Yields Mil Hectares 2.00 2.50 3.00 3.50 4.00 4.50 5.00 5.50 6.00 Tonnes per Hectare Harvested Area
Slide 25: China remains a wild card
China remains a wild card China DAP and MAP Export Supply 0.0 0.5 1.0 1.5 2.0 2.5 3.0 3.5 4.0 4.5 08E 09F Mil Tonnes DAP MAP Source: Fertecon, IFA, China Customs and Mosaic
Slide 26: Topics
Topics 2008/09 Post Mortem Record price volatility Unprecedented declines in use and shipments De-stocking of the global distribution pipeline Production declines but large producer inventories 2009/10 Prospects Positive agricultural outlook Potential strong year-over-year rebound in demand Some re-
Slide 27: Long Term Outlook
Long Term Outlook Solid long term demand outlook Strong traditional demand drivers Biofuels: a viable component of comprehensive energy policy Demand growth requires significant supply increases Limited capacity additions during the next few years Relatively high prices required to attract capital/j
Slide 28: The million tonne challenge
The 500 million tonne challenge 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
Slide 29: Driven by population and income growth
Driven by population and income growth y = 17.913Ln(x) - 91.411 R ² = 0.6745 Meat Consumption vs GDP (per capita in 2002) Income per Capita (1997 US$) Source: FAO, Global Insight
Slide 30: Driven by population and income growth
Driven by population and income growth Change in per capita broiler consumption 1997-2007 UAE 44.4 Brazil 16.1 Mexico 10.9 Russia 8.3 Australia 7.9 USA 7.4 Argentina 7.2 S Korea 3.7 EU27 3.1 Vietnam 2.9 China 2.7 Japan 1.6 India 1.4 Indonesia 0.9 Philippines 0.9 Thailand 0.6 Malaysia 6.9 kg per capi
Slide 31: Biofuels – a viable component of energy policy
Biofuels – a viable component of energy policy 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 ma
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: Solid long term phosphate demand prospects
Solid long term phosphate demand prospects 2.5% CAGR 1.5% CAGR 2.0% CAGR World Phosphate Fertilizer Demand Forecast Mil Tonnes P O Actual Low Growth Medium Growth High Growth IFA Fertecon Source: IFA , Fertecon and Mosaic
Slide 34: Additional supply required to meet projected demand
Additional supply required to meet projected demand Rock Required to Meet Phosphate Demand Growth 2008-20 Actual 2008-20 Growth Scenario Million Tonnes 97-07 97-02 02-07 Low Medium High 6.0 0.4 5.6 7.5 10.3 13.2 Crop Nutrient Demand Growth (CAGR) 1.7% 0.3% 3.1% 1.5% 2.0% 2.5% Other Demand Growth (P
Slide 35: The Phosphate Outlook THANK YOU!
The Phosphate Outlook THANK YOU! Dr. Michael Rahm Vice President Market Analysis and Strategic Planning Boca Grande, FL