Slide 1: Phosphate Outlook
Sulphur World Symposium 2014 Long Beach, CA April 7-9, 2014 Dr. Michael R. Rahm Vice President Market and Strategic Analysis Phosphate Outlook Exhibit 99.1
Slide 2: Topics
Topics Current Situation and Near Term Outlook – The Rally – The Sky Really is Falling – The Inverse – The Fundamentals Long Term Outlook – The Demand Drivers and Forecasts – The New Supply Ballgame – The Likely Scenario: Positive and More Stable – The Key Factors to Watch
Slide 3: Safe Harbor Statement
Safe Harbor Statement This presentation 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 acquisition and assumption of certain related liabilities of the Florida phosp
Slide 4: Current Situation and Near Term Outlook: The Rally
Current Situation and Near Term Outlook: The Rally
Slide 5: The Phosphate Market Catches Fire
The Phosphate Market Catches Fire The price of DAP loaded on a barge in New Orleans (NOLA) increased from about $330 per ton at the end of November to about $500 ton at the end of March. The price of DAP loaded on a vessel in Tampa increased from about $340 per tonne at the end of November to the $4
Slide 6: A Combination of Factors Fueled the Rally
A Combination of Factors Fueled the Rally Continued good end-user demand and lean channel inventories Several small planned and unplanned production outages Supply disruptions due to severe logistical problems Raw materials cost pressure A rush of purchases once buyers perceived the bottom was in
Slide 7: Continued Good End-User Demand
Continued Good End-User Demand
Slide 8: Lean Channel Inventories: India Example
Lean Channel Inventories: India Example Million Tonnes DAP 2013/14E 2014/15F 2014/15 2013/14 Producer/Importer Beginning Inventory 1.45 1.60 Production 3.60 3.70 Imports 3.45 5.35 Producer/Importer Sales to Retailer Dealers 6.90 9.20 Retail Dealer Sales to Farmers 9.40 9.60 Retail Inventory Change -
Slide 9: Cumulative Impact of Several Production Outages
Cumulative Impact of Several Production Outages Producer Estimated Q1 Loss Notes OCP 200,000 DAP/MAP Product loading and raw materials discharge delays ICL 25,000 TSP Intermittent labor disputes (a strike began March 13) GCT 30,000 DAP Gabes still running at ~50% of capacity Fauji 75,000 DAP Re-star
Slide 10: Raw Materials Cost Pressure
Raw Materials Cost Pressure Now from ammonia First from sulphur (especially in China) $ MT Sulphur Prices c&f China Source: Fertecon $ MT Ammonia Prices c&f Tampa Source: Fertecon
Slide 11: A Buyers Rush: Picking Up the Knife
A Buyers Rush: Picking Up the Knife (and starting a fight) Once distributors perceived that prices had bottomed, or that knives had hit the floor, they rushed to position product. Based on the recent spikes in nitrogen and phosphate prices, distributors not only have picked up the knives, but they h
Slide 12: Current Situation and Near Term Outlook: The Sky Really is Falling
Current Situation and Near Term Outlook: The Sky Really is Falling
Slide 13: The Sky Really is Falling
The Sky Really is Falling The Annual Spring Ritual – Warnings of transportation bottlenecks, rail car/truck shortages and shipping delays – Warnings of stock-outs and lost demand – But the Sky Never Falls The Sky Really is Falling this Year – Serious disruptions in Q1 – Morocco – OCP • Flagship faci
Slide 14: The Problem in Pictures
The Problem in Pictures 50,000 100,000 150,000 200,000 250,000 300,000 350,000 400,000 450,000 Carloads Originated Carloads of Crude Oil on U.S. Class I Railroads Source: AAR The Canadian government introduced regulations aimed at easing the grain logistics bottleneck. These require CN and CP to shi
Slide 15: A Silver Lining - Latitudinal Stratification?
A Silver Lining - Latitudinal Stratification? A More Normal/Orderly Spring Application Season?
Slide 16: Current Situation and Near Term Outlook: The Inverse
Current Situation and Near Term Outlook: The Inverse
Slide 17: The Inverse
The Inverse Long List of Reasons for the Large Inverse Source: Cleartrade Exchange via INTL FCStone March 31, 2014 DAP SWAPs Bid-Offer Indications Current Spot Values NOLA Barge: ~$500 ton (prompt loading) Tampa Export: ~$490 tonne Logistical bottlenecks ease Between seasons in the Americas Uncertai
Slide 18: Current Situation and Near Term Outlook: The Fundamentals
Current Situation and Near Term Outlook: The Fundamentals
Slide 19: The Fundamentals
The Fundamentals Record Global Shipments and Import Demand – Positive demand drivers – Lower channel inventories worldwide – India poster child – Continued strong demand in the America – Rebound in Indian imports Ongoing Supply Uncertainties – Raw materials costs? – How much will China export? – Whe
Slide 20: Record Global Shipments and Import Demand
Record Global Shipments and Import Demand 13E 14F Global Phosphate Shipments Likely Scenario MMT Product DAP/MAP/MES/TSP Source: Fertecon & Mosaic 13E 14F MMT Source: CRU/FRC and Mosaic Global Phosphate Import Demand Likely Scenario excluding China Asia and Oceania Latin America Europe Mideast Afric
Slide 21: Positive Demand Drivers
Positive Demand Drivers Recent Rally Drivers/Comments 3.50 4.00 4.50 5.00 5.50 6.00 6.50 7.00 7.50 8.00 J A S O N D J F M A M J US$ BU New Crop Corn Prices Daily Close of the New Crop Option (Jul - Jun 30) Source: CME 8.0 9.0 10.0 11.0 12.0 13.0 14.0 15.0 16.0 17.0 J A S O N D J F M A M J US$ BU New
Slide 22: Price Rally Despite a Blockbuster 2013 Crop
Price Rally Despite a Blockbuster 2013 Crop The USDA projects that 2013/14 global grain and oilseed production will surge to a record-smashing 2.95 billion tonnes due to record harvested area and a record average yield. Global grain and oilseed use increased at a compound annual growth rate of 2.4%
Slide 23: Wide Range of Potential Outcomes in 2014/15
Wide Range of Potential Outcomes in 2014/15 13E 14F Mil Tonnes World Grain & Oilseed Stocks Historical 2014/15 Range 2014/15 Medium Scenario Source: USDA and Mosaic
Slide 24: Positive Farm Economics and Affordable Nutrients
Positive Farm Economics and Affordable Nutrients 13F Bil $ U.S. Net Cash Income Government Payments Market Source: USDA 0.50 0.75 1.00 1.25 1.50 1.75 Plant Nutrient Affordability Plant Nutrient Price Index / Crop Price Index Affordability Metric Average Source: Weekly Price Publications, CME, USDA,
Slide 25: Strong Rebound in Indian DAP Imports
Strong Rebound in Indian DAP Imports Million Tonnes DAP 2013/14E 2014/15F Source: FAI and Mosaic Producer/Importer Beginning Inventory 1.45 1.60 Production 3.60 3.70 Imports 3.45 5.35 Producer/Importer Sales to Retailer Dealers 6.90 9.20 Retail Dealer Sales to Farmers 9.40 9.60 Retail Inventory Chan
Slide 26: Supply Uncertainties – How Much . . .
Supply Uncertainties – How Much . . . . . . phosphate will China export? . . . phosphate will Saudi Arabia export? Key Issues Key Issues 0.0 0.5 1.0 1.5 2.0 2.5 3.0 13E 14F Mil Tonnes DAP Saudi Arabia Phosphate Exports Export Production Capacity Source: CRU February 2014 0.0 1.0 2.0 3.0 4.0 5.0 6.0
Slide 27: Long Term Outlook: The Demand Drivers and Forecasts
Long Term Outlook: The Demand Drivers and Forecasts
Slide 28: Solid Demand Drivers – The Food Story
Solid Demand Drivers – The Food Story Available on Mosaicco.com 1.75 2.00 2.25 2.50 2.75 3.00 3.25 3.50 3.75 MT Ha Mil Ha Source: USDA and Mosaic World Harvested Area and Average Yield Actual Area Forecast Area Actual Yield Required Yield 1980-10 Yield Trend 1,000 1,500 2,000 2,500 3,000 3,500 Mil T
Slide 29: Positive Demand Outlook
Positive Demand Outlook Key Assumptions More moderate but sill elevated crop prices Profitable farm economics worldwide More moderate and less volatile phosphate prices Drive for more balanced nutrient use especially in China and India Continued strong growth of phosphate intensive crops such as soy
Slide 30: Key Demand Features
Key Demand Features Brazil – Continued strong demand prospects – Modest increases in domestic production capabilities – Still largely dependent on imports (~6 million tonnes DAP/MAP/MES/TSP in 2020) India – Demand gets back on track – Inevitable changes in subsidy policies – DAP shipments of nearly
Slide 31: Long Term Outlook: The New Supply Ballgame
Long Term Outlook: The New Supply Ballgame
Slide 32: Key Supply Feature
Key Supply Feature China – Accounted for ALL of the net growth in phosphate supply since – Massive 15-year expansion program expected to come to an end – Domestic industry consolidation – Transition from low-analysis to high-analysis phosphate products Future Supply Growth Largely from New Low Cost
Slide 33: Long Term Outlook: The Likely Scenario: Positive and More Stable
Long Term Outlook: The Likely Scenario: Positive and More Stable
Slide 34: Positive and More Stable Outlook
Positive and More Stable Outlook 50% 55% 60% 65% 70% 75% 80% 85% 90% 95% 100% Op Rate MMT Source: CRU/FRC and Mosaic Global Phosphate Capacity, Production and Oper Rate Likely Scenario Capacity Production Acid Op Rate Based on our likely demand scenario and capacity estimates, global phosphoric acid
Slide 35: Long Term Outlook: The Key Factors to Watch
Long Term Outlook: The Key Factors to Watch
Slide 36: The Key Factors to Watch
The Key Factors to Watch Demand Drivers – Macroeconomic environment (e.g. global growth and exchange rates) – Agricultural commodity prices and farm economics – Biofuels policies – Indian subsidy policies – Technological change (e.g. biologicals) – Social Change (e.g. dietary habits in both develope
Slide 37: Thank You!
Sulphur World Symposium 2014 Long Beach, CA April 7-9, 2014 Dr. Michael R. Rahm Vice President Market and Strategic Analysis Phosphate Outlook Thank You!