Slide 1: North American Phosphate Outlook
North American Phosphate Outlook CRU Phosphates 2015 Marriott Waterside Hotel Tampa, Florida March 24, 2015 Dr. Michael R. Rahm Vice President Market and Strategic Analysis
Slide 2: Safe Harbor Statement
Safe Harbor Statement 2 This document 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 the Northern Promise Joint Venture, the acquisition and assumption of certain relate
Slide 3: Agenda
Agenda Demand Drivers Demand Outlook Supply Developments Factors to Watch 3
Slide 4: Demand Drivers
Demand Drivers
Slide 5: Stable crop prices underpin positive demand outlook
Stable crop prices underpin positive demand outlook 5 3.00 3.50 4.00 4.50 5.00 5.50 6.00 6.50 7.00 S O N D J F M A M J J A US$ BU New Crop Corn Prices Daily Close of the New Crop Contract (Sep 1 - Aug 31) 2013 2014 2015 2016 Source: CME 8.0 9.0 10.0 11.0 12.0 13.0 14.0 S O N D J F M A M J J A US$ BU
Slide 6: Balanced near term price drivers (at least for now)
Balanced near term price drivers (at least for now) 6 BullBear Strong demand for food, feed and biofuels in response to more moderate crop prices Downward revisions to the Brazilian crop and a smattering of weather concerns elsewhere Other disruptive factors such as Russian export restrictions
Slide 7: A strong dollar correlates with low commodity prices
A strong dollar correlates with low commodity prices 7 70 75 80 85 90 95 100 05 06 07 08 09 10 11 12 13 14 15 Index U.S. Dollar Index Monthly Average of Daily Index Source: Forex y = 0.3673x2 - 78.96x + 4435.1 R² = 0.717 100 200 300 400 500 600 700 70 80 90 100 110 120 TR-CCI U.S. Dollar Index Commo
Slide 8: Markets looking ahead to continued strong demand
15.0% 17.5% 20.0% 22.5% 25.0% 27.5% 30.0% 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13E14F Global Grain & Oilseed Stocks as a Percent of Use Source: USDA Markets looking ahead to continued strong demand 8 2.50 2.60 2.70 2.80 2.90 3.00 3.10 3.20 3.30 800 820 840 860 880 900 920 940 960 00 01 02 03 04
Slide 9: But Mother Nature likely will have the final say!
But Mother Nature likely will have the final say! 9
Slide 10: The trend is our friend: Farming with spreadsheets
The trend is our friend 10 Farming with spreadsheets 607 580 495 408 470 462 425 437 512 568 549 537 522 583 618 350 400 450 500 550 600 650 700 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14E15F Mil Tonnes World Grain & Oilseed Stocks USDA Mosaic 2015/16 Range Mosaic Medium Scenarios Source: USDA and
Slide 11: Demand Outlook
Demand Outlook
Slide 12: Plant nutrients remain affordable
M o r e A f f o r d a b l e L e s s A f f o r d a b l e Plant nutrients remain affordable . . . 12 0.50 0.75 1.00 1.25 1.50 1.75 05 06 07 08 09 10 11 12 13 14 15 Plant Nutrient Affordability Plant Nutrient Price Index / Crop Price Index Affordability Metric Average Source: Weekly Price Publications,
Slide 13: ...and underpin positive demand forecasts
. . . and underpin positive demand forecasts 13 W orld Grain & Oilseed Nutrient Rem oval M il Tonnes 2012 2014 % Change Product N Rem oval 59.3 64.6 5.3 8.9% 11.5 P2O 5 Rem oval 22.9 24.8 1.9 8.5% 4.2 K2O Rem oval 19.2 20.9 1.7 8.8% 2.8 Source: USDA, IPNI, M osaic 64.5-66.5 30 35 40 45 50 55 60 65
Slide 14: Banking on the beginning of a rebound in India
Banking on the beginning of a rebound in India 14 – Positive demand drivers • Profitable farm economics and good farm demand • A bone-dry retail distribution channel • Stable phosphate subsidy (a windfall from lower oil prices) • The rupee has remained relatively stable – The government is expected
Slide 15: Strong and steady North America shipments
Strong and steady North America shipments 15 2014/15 forecast – 9.9 million tons - second highest in modern era • Increase of 4% or 400,000 tons from last year • Up 9% or 834,000 tons from the seven-year Olympic average • Some tonnage inflation due to MicroEssentials® substituting for DAP/MAP, but
Slide 16: U.S. exports – more stable volumes and destinations
U.S. exports – more stable volumes and destinations 16 Lower but now more stable U.S. exports Focus on freight-advantaged Americas Growth of MicroEssentials® premium products Americas 2.92 35% India 0.16 2% Oceania 0.99 12% China 2.94 36% Other 1.21 15% U.S. DAP+MAP Exports by Destination 2002
Slide 17: Supply Developments
Supply Developments
Slide 18: Recent supply developments
Recent supply developments Significant supply reductions – Permanent closures • Mainly non-integrated operations (outside India) • Suppliers upgrading raw materials into finished products • Others on the brink? – Several temporary shut-downs or reduced rates North American adjustments – Fewer U.
Slide 19: China and Saudi Arabia fill the void
China and Saudi Arabia fill the void 19 China exported 8.1 million tonnes in 2014, up from 5.3 million in 2013 - Exports to India were down, but shipments to Brazil more than doubled. Deliveries to the U.S. topped 400,000t vs. zero in 2013 - Recent changes in China’s export tax could facilitate mor
Slide 20: Evolution of the North American phosphate industry
Evolution of the North American phosphate industry 20 Capacity (mmt P2O5) Percent NA Capacity 12 20 12.3 4 12 8.8 5.4 61% 1.9 22% 0.8 9% 0.7 8% 18 21 10.9 Firms: Facilities: Capacity (mmt P2O5):
Slide 21: Factors to Watch
Factors to Watch
Slide 22: Factors to Watch
Factors to Watch Mother Nature The dollar and energy prices Agricultural commodity prices and impact on phosphate demand Indian demand growth OCP and Ma’aden – timing of start-ups China – always the wild card – Phosphate demand growth – Production and exports – Export policies – Pace of
Slide 23: Look for products on the Mosaic website
Look for products on the Mosaic website 23 http://www.mosaicco.com/resources/market_analysis.htm Mosaic Stakeholder Handbook Market Mosaic ▪ Market Alerts ▪ Past Presentations
Slide 24: Thank You!
North American Phosphate Outlook CRU Phosphates 2015 Marriott Waterside Hotel Tampa, Florida March 24, 2015 Dr. Michael R. Rahm Vice President Market and Strategic Analysis Thank You!