Slide 1: Phosphate and Potash Outlook
Phosphate and Potash Outlook Dr. Michael Rahm Vice President Market Analysis and Strategic Planning Goldman, Sachs & Co. Houston, TX Exhibit 99.1
Slide 2: Topics
Topics Current Situation or . . . How did we get to where we’re at today? Near Term Outlook or . . . What’s ahead for the spring season? (Market Mosaic Spring Issue) Long Term Outlook or . . . Have recent developments changed long term fundamentals?
Slide 3: What happened?
What happened? Customers stepped out of the market Phosphate customers are beginning to return Potash customers remain on the sidelines Distribution pipelines plug Stocks back-up at production points Production declines Crop nutrient markets recalibrate Inventory valuation risk along entire supply c
Slide 4: Customers stepped out of the phosphate market last fall but have started to buy again
Customers stepped out of the phosphate market last fall but have started to buy again Year-to-date (Jul-Feb) DAP/MAP domestic shipments were down about 41% from the high levels a year ago. Shipments during the last quarter of calendar 2008 (Oct-Dec) were off 61% from a year earlier. Domestic shipmen
Slide 5: Phosphate inventories peaked in December and have begun to decline
Phosphate inventories peaked on December 31 and have begun to decline DAP/MAP inventories held by U.S. producers at on- and off-site warehouses 2008/09 2007/08 U.S. DAP and MAP Producer Stocks Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Mil Tons MIN MAX Range (2002/03-2006/07) 2007/08 3-Yr Avera
Slide 6: U.S. phosphate production decreased in December and January but increased in February
U.S. phosphate production decreased in December and January but increased in February Year-to-date (Jul-Feb) U.S. phosphoric acid production was down 27% from a year earlier. The U.S. industry operated at just 30% of capacity in December and January. Production increased to 60% of capacity in Februa
Slide 7: Customers stepped out of the potash market and have not returned yet
Customers stepped out of the potash market and have not returned yet Year-to-date (Jul-Feb) domestic shipments were down 37% from the same period a year ago. Shipments during the last quarter of calendar 2008 (Oct-Dec) were off 38% from last year and shipments during the last three months (Dec-Feb)
Slide 8: NA potash producer inventories increase
NA potash producer inventories increase MOP inventories held by NA producers at on- and off-site warehouses 2007/08 2008/09 North America MOP Producer Stocks Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Mil Tons MIN MAX Range (2002/03-2006/07) 2007/08 3-Yr Average Source: IPNI North America MOP P
Slide 9: NA potash production plummets in February
NA potash production plummets in February North American MOP production for the first seven months of the 2008/09 fertilizer year was down 20% from a year earlier. The industry operated at just 20% of capacity in February due to low shipments and high producer stocks. NA MOP Production and Operating
Slide 10: Near Term Outlook
Near Term Outlook How much will nutrient demand decline this year? Another large crop is required in 2009 Still attractive new crop prices Lower crop input costs Pricing stalemate between retail dealers and farmers How much demand destruction vs. deferral? Reduction in production in line with the de
Slide 11: Another large crop is required in 2009
Another large crop is required in 2009 World Grain and Oilseed Stocks 08/09E L M H Mil Tonnes 10% 13% 16% 19% 22% 25% 28% 31% 34% Percent Stocks Percent of Use Source: USDA and Mosaic (for 09/10 estimates) 2009/10 Scenario Assumptions Low Medium High Decline in Harvested Area (Mil HA) -0.5% -0.5% -0
Slide 12: Domestic Phosphate Outlook: Case 1
Domestic Phosphate Outlook: Case 1 2008/09 Change U.S. Phosphate Demand: -11% 2008/09 Change in U.S. DAP/MAP Shipments: -27% U.S. Phosphate Use and DAP/MAP Shipments 08E 09F Mil Tons P O Mil Tons DAP/MAP Phosphate Use DAP/MAP Shipments Estimated DAP/MAP Use Source: AAPFCO, TFI and Mosaic Fertilizer
Slide 13: Average shipments required this spring if total DAP/MAP shipments decline 27% this year
Average shipments required this spring if total DAP/MAP shipments decline 27% this year U.S. DAP and MAP Domestic Shipments Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Mil Tons MIN MAX Range (2003/04-2007/08) 2008/09 Act/Fcst 3-Yr Average Source: TFI and Mosaic Case 1: 27% Drop in U.S. DAP/MAP S
Slide 14: Domestic Phosphate Outlook: Case 2
Domestic Phosphate Outlook: Case 2 2008/09 Change U.S. Phosphate Demand: ~ -20% 2008/09 Change in U.S. DAP/MAP Shipments: ~ -40% U.S. Phosphate Use and DAP/MAP Shipments 08E 09F Mil Tons Mil Tons DAP/MAP Phosphate Use DAP/MAP Shipments Estimated DAP/MAP Use Source: AAPFCO, TFI and Mosaic Fertilizer
Slide 15: Below average shipments required this spring if shipments run ~40% below last year
Below average shipments required this spring if shipments run ~ 40% below last year Case 2: ~ 40% Drop in U.S. DAP/MAP Shipments in 2008/09 U.S. DAP and MAP Domestic Shipments Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Mil Tons MIN MAX Range (2003/04-2007/08) 2008/09 Act/Fcst 3-Yr Average Sourc
Slide 16: Domestic Potash Outlook: Case 1
Domestic Potash Outlook: Case 1 2008/09 Change U.S. Potash Demand: -20% 2008/09 Change in NA MOP Shipments: -24% North America Potash Use and Shipments 08E 09F Mil Tons Ag Use Total Shipments Estimated Use Source: IPNI and Mosaic Fertilizer Year Ending June 30 K 0
Slide 17: Average shipments required this spring if MOP shipments decline 24% this year
Average shipments are required this spring if MOP shipments decline 24% this year (but bunched in Apr-May) Case 1: 24% Drop in MOP Shipments in 2008/09 North America MOP Domestic Shipments Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Mil Tons KCL MIN MAX Range (2003/04-2007/08) 2008/09 Act/Fcst 3
Slide 18: Domestic Potash Outlook: Case 2
Domestic Potash Outlook: Case 2 2008/09 Change U.S. Potash Demand: ~ -32% 2008/09 Change in NA MOP Shipments: ~ -38% North America Potash Use and Shipments 08E 09F Mil Tons K 2 O Ag Use Total Shipments Estimated Use Source: IPNI and Mosaic Fertilizer Year Ending June 30
Slide 19: Low shipments this spring if total shipments decline 38% from last year
Low shipments this spring if total shipments decline 38% from last year Case 2: 38% Drop in MOP Shipments in 2008/09 North America MOP Domestic Shipments Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Mil Tons KCL MIN MAX Range (2003/04-2007/08) 2008/09 Act/Fcst 3-Yr Average Source: IPNI and Mosaic
Slide 20: Impact of reductions in P&K application rates on corn yields and profitability
Impact of reductions in P&K application rates on corn yields and profitability Economic P&K Cut Optimum 10% 50% 100% Yield Potential (bu acre): Estimated Yield Without N (bu acre): P Soil Test - Bray P1 (ppm): K Soil Test (ppm): Corn Price ($ bu): Ammonia Price ($ ton) N Cost ($ lb N): DAP Cost ($ t
Slide 21: Indian demand outlook remains strong
Indian demand outlook remains strong Indian subsidies insulate domestic farmers from higher crop nutrient costs India MOP Import Demand Mil Tonnes Source: Fertecon and Mosaic India Processed Phosphate Import Demand Mil Tonnes DAP MAP Source: Fertecon, IFA and Mosaic
Slide 22: Brazilian demand outlook remains uncertain
Brazilian demand outlook remains uncertain Brazil Fertilizer Shipments Mil Tonnes Source: ANDA and Mosaic Brazil Monthly Fertilizer Shipments Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Mil Tonnes Source: ANDA
Slide 23: China remains the wild card
China remains the wild card Chinese export taxes and procurement strategies cause uncertainty China MOP Import Demand Mil Tonnes Source: Fertecon and Mosaic China DAP and MAP Export Supply Mil Tonnes DAP MAP Source: Fertecon, IFA, China Customs and Mosaic
Slide 24: Long Term Outlook
Long Term Outlook Solid long term nutrient 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
Slide 25: 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 26: 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 27: Significant additional supply is required to meet projected phosphate demand
Significant additional supply is required to meet projected phosphate 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 Crop Nutrient Demand Growth (P O ) Crop Nutrient Demand Growth (CAGR) 1.7% 0.3% 3.1% 1.5%
Slide 28: Solid long term potash demand prospects
Solid long term potash demand prospects 3.50% CAGR 2.00% CAGR 2.75% CAGR World Potash Demand Forecast Mil Tonnes Actual Low Growth Medium Growth High Growth IFA Fertecon Source: IFA, Fertecon and Mosaic K O
Slide 29: Significant additional supply required to meet projected potash demand
Significant additional supply required to meet projected potash demand MOP Required to Meet Potash Demand Growth 2008-20 Actual 2008-20 Growth Scenario Million Tonnes 97-07 97-02 02-07 Low Medium High Crop Nutrient Demand Growth Crop Nutrient Demand Growth (CAGR) 2.6% 0.8% 4.3% 2.0% 2.8% 3.5% Other
Slide 30: Take-Aways
Take-Aways Current Situation Crop nutrient markets recalibrate Lower energy and raw materials costs Lower crop prices Inventory valuation risk along the entire supply chain Retail dealer – farmer price stalemate Delayed planting and crop input decisions this year Near Term Outlook Another large crop
Slide 31: Phosphate and Potash Outlook Thank You!
Phosphate and Potash Outlook Thank You! Dr. Michael Rahm Vice President Market Analysis and Strategic Planning Goldman, Sachs & Co. Houston, TX