Mosaic Company (the) · NYSE:MOS
Mosaic Company (the) — Ohio AgriBusiness Association and OSU Extension 2011 Crop Production Conference
44 slides from Mosaic Company (the)'s conference presentation, Jan 6, 2011
Slide 1: Phosphate and Potash Market Volatility: Déjà Vu All Over Again?
Phosphate and Potash Market Volatility Déjà Vu All Over Again? Ohio AgriBusiness Association and OSU Extension 2011 Crop Production Conference Columbus, OH January 6, 2011 Dr. Michael R. Rahm Vice President, Market and Strategic Analysis The Mosaic Company Exhibit 99.1
Slide 2: Topics
Topics January 2011 vs. January 2008 Powerful Demand Drivers – Upbeat Forecasts Phosphate Outlook: Surging Demand – Uncertain Supply Potash Outlook: Increasingly Tight Fundamentals Factors to Watch (and Handicap)
Slide 3: January 2011 vs. January 2008
January 2011 vs. January 2008
Slide 4: Current crop nutrient prices are at roughly 2008 levels
Current prices for crop nutrient products are at roughly the same levels as 2008 Weekly published prices 2007/2008 - Jul 1 2007 to Dec 31 2008 2010/2011 - Jul 1 2010 to Dec 31 2010 Jul Oct Jan Apr Jul Oct $ Tonne Mideast Granular Urea Prices 2007/2008 2010/2011 Source: Fertilizer Week America Jul Oc
Slide 5: Nearby corn and soybean prices higher, wheat lower than 2008
Nearby corn and soybean prices are higher, but wheat prices are less than in 2008 Daily Close of Nearby Futures Contract 2007/2008 - Jul 1 2007 to Dec 31 2008 2010/2011 - Jul 1 2010 to Jan 3 2011 3.0 4.0 5.0 6.0 7.0 8.0 Jul Oct Jan Apr Jul Oct $ BU Corn Prices 2007/2008 2010/2011 Source: CBOT 7.0 9.
Slide 6: Much higher prices for other commodities
But much higher prices for other commodities - implying greater competition for acres in 2011 Daily Close of Nearby Futures Contract 2007/2008 - Jul 1 2007 to Dec 31 2008 2010/2011 - Jul 1 2010 to Jan 3 2011 Jul Oct Jan Apr Jul Oct RM Tonne Palm Oil Prices 2007/2008 2010/2011 Source: Kuala Lumpur Ex
Slide 7: Oil prices similar, natural gas prices lower than 2008
Oil prices are about the same but natural gas prices are significantly less than in 2008 Daily Close of Nearby Futures Contract 2007/2008 - Jul 1 2007 to Dec 31 2008 2010/2011 - Jul 1 2010 to Jan 3 2011 Jul Oct Jan Apr Jul Oct $ BBL WTI Crude Oil Prices 2007/2008 2010/2011 Source: NYMEX Jul Oct Jan
Slide 8: Ammonia prices higher, sulphur prices lower than 2008
Jul Oct Jan Apr Jul Oct $ Tonne India cnf Ammonia Prices 2007/2008 2010/2011 Source: Fertecon Jul Oct Jan Apr Jul Oct $ Tonne China cnf Sulphur Prices 2007/2008 2010/2011 Source: Fertecon Weekly published prices 2007/2008 - Jul 1 2007 to Dec 31 2008 2010/2011 - Jul 1 2010 to Dec 31 2010 Ammonia pric
Slide 9: Crop nutrient to crop price index ratio declined in 2010
The ratio of the crop nutrient price index to the crop price index has declined in 2010 0.50 0.75 1.00 1.25 1.50 1.75 2.00 2.25 2.50 Crop Nutrient Price Index/Crop Price Index Ratio Ratio Average
Slide 10: Powerful Demand Drivers - Upbeat Demand Forecasts
Powerful Demand Drivers - Upbeat Demand Forecasts
Slide 11: Strong price signals – an acreage donnybrook
Strong price signals – an acreage donnybrook Daily Close of New Crop Options January 1 2010 to January 3 2011 3.75 4.00 4.25 4.50 4.75 5.00 5.25 5.50 5.75 Jan Apr Jul Oct Jan $ BU New Crop Corn Prices Dec 2011 Dec 2012 Source: CBOT 9.00 9.50 10.00 10.50 11.00 11.50 12.00 12.50 13.00 13.50 Jan Apr Ju
Slide 12: And not just corn
Daily Close of Nearby Futures Contract January 1 2010 to January 3 2011 And not just corn Jan Apr Jul Oct Jan CTS/LB Sugar (#11) Price Daily Close of Nearby Futures Contract Source: ICE Jan Apr Jul Oct Jan CTS/LB Cotton Price Daily Close of Nearby Futures Contract Source: ICE Jan Apr Jul Oct Jan CTS
Slide 13: Is it speculative exuberance?
Is it speculative exuberance? -900,000 -800,000 -700,000 -600,000 -500,000 -400,000 -300,000 -200,000 -100,000 100,000 200,000 300,000 400,000 500,000 600,000 1/3/2006 7/3/2006 1/3/2007 7/3/2007 1/3/2008 7/3/2008 1/3/2009 7/3/2009 1/3/2010 7/3/2010 Contracts Source: CFTC Commitments of Traders Weekl
Slide 14: Or is it fundamental strength? World corn stocks
Or is it fundamental strength? Mil Tonnes World Corn Stocks China Rest of World Source: USDA
Slide 15: Or is it fundamental strength? U.S. corn stocks
Key Assumptions for 2011/12 Planted acreage: 92.5 million Trend Yield: 163.2 bu acre Total use: 13.55 bil bu Or is it fundamental strength? 0.0 0.5 1.0 1.5 2.0 2.5 3.0 3.5 4.0 4.5 5.0 Pct of Use Bil Bu U.S. Corn Stocks Stocks Pct of Use Source: USDA and Mosaic
Slide 16: Strong global growth expected in 2011/12
Strong global growth expected in 2011/12 100.0 110.0 120.0 130.0 140.0 150.0 160.0 170.0 180.0 09/10E 11/12F Mil Tonnes Source: IFA December 2010 World Nutrient Use 75.0 80.0 85.0 90.0 95.0 100.0 105.0 110.0 09/10E 11/12F Mil Tonnes N Source: IFA December 2010 World Nitrogen Use 25.0 27.5 30.0 32.5
Slide 17: U.S. demand projected to grow 10%
U.S. demand projected to grow 10% 09E 10E 11F Mil Tons Fertilizer Year Ending June 30 U.S. Nutrient Use Source: AAPFCO and Mosaic 10.5 11.0 11.5 12.0 12.5 13.0 13.5 09E 10E 11F Mil Tons N Fertilizer Year Ending June 30 U.S. Nitrogen Use Source: AAPFCO and Mosaic 3.0 3.5 4.0 4.5 5.0 09E 10E 11F Ferti
Slide 18: Positive U.S. demand drivers: planted acres
11F Mil Acres U.S. Corn Planted Acres Source: USDA and Mosaic 11F Mil Acres U.S. Soybean Planted Acres Source: USDA and Mosaic Positive U.S. demand drivers 11F Mil Acres U.S. Wheat Planted Acres Source: USDA and Mosaic 11F Mil Acres U.S. Cotton Planted Acres Source: USDA and Mosaic
Slide 19: Phosphate Outlook: Surging Demand – Uncertain Supply
Phosphate Outlook: Surging Demand – Uncertain Supply
Slide 20: Market stable to slightly softer during slow period
Market stable to slightly softer during this seasonally slow period $ MT DAP Prices fob Tampa Vessel Source: Fertecon $ ST DAP Prices NOLA Barge Source: Green Markets
Slide 21: Surging global phosphate shipments
10F 11F Mil Tonnes DAP/MAP/TSP World Processed Phosphate Shipments Surging global phosphate shipments Source: Fertecon and Mosaic (Forecast Range for 2011, Trend 1995-2010)
Slide 22: Record phosphate trade
Record phosphate trade 10F 11F Mil Tonnes DAP/MAP/TSP World Processed Phosphate Import Demand (Excludes China) Other Latin America Asia less China Europe Source: Fertecon, IFA and Mosaic
Slide 23: U.S. DAP/MAP exports stable in 2010/11
U.S. DAP/MAP exports stable in 2010/11 0.0 2.0 4.0 6.0 8.0 10.0 12.0 14.0 11F Mil Tons U.S. DAP and MAP Exports Source: TFI and Mosaic Fertilizer Year Ending June 30
Slide 24: U.S. exports off 7% FY 2010/11 YTD
0.0 0.1 0.2 0.3 0.4 0.5 0.6 0.7 0.8 0.9 Jul Oct Jan Apr Jul Oct Jan Apr Jul Oct Jan Apr Jul Oct Mil Tons U.S. DAP and MAP Exports Source: TFI U.S. exports off 7% FY 2010/11 YTD
Slide 25: U.S. shipments forecast to climb another 13%
4.5 5.0 5.5 6.0 6.5 7.0 7.5 8.0 8.5 1.5 2.0 2.5 3.0 3.5 4.0 4.5 5.0 5.5 09E 10F 11F Mil Tons DAP/MAP Mil Tons P O U.S. Phosphate Use and DAP/MAP Shipments Phosphate Use DAP/MAP Shipments Source: AAPFCO, TFI and Mosaic Fertilizer Year Ending June 30 U.S. shipments forecast to climb another 13%
Slide 26: Strong Spring shipments expected after outstanding fall
Strong Spring shipments are expected following an outstanding fall season Source: TFI, US Department of Commerce and Mosaic 0.0 1.0 2.0 3.0 4.0 5.0 6.0 Jun -Nov Dec-May Mil Tons Implied North American Phosphate Shipments 5-Yr Min-Max Range 2010/11 5-Yr Average
Slide 27: Production down 2% FY 2010/11 YTD
0.0 0.2 0.4 0.6 0.8 1.0 1.2 1.4 Jul Oct Jan Apr Jul Oct Jan Apr Jul Oct Jan Apr Jul Oct Mil Tons U.S. DAP and MAP Production Source: TFI Production down 2% FY 2010/11 YTD
Slide 28: Surge of phosphate imports
0.0 0.1 0.2 0.3 0.4 0.5 0.6 11F Mil Tons U.S. DAP and MAP Imports Source: TFI, USDOC, and Mosaic Fertilizer Year Ending June 30 Surge of phosphate imports
Slide 29: Record-low inventory level at producer sites
0.0 0.2 0.4 0.6 0.8 1.0 1.2 1.4 1.6 1.8 2.0 Jul Oct Jan Apr Jul Oct Jan Apr Jul Oct Jan Apr Jul Oct Mil Tons U.S. DAP and MAP Producer Stocks Source: TFI Record-low inventory level at producer sites
Slide 30: Bottom Line
Bottom Line Global shipments on a new growth trajectory – Global phosphate shipments likely increased to 57.0 MMT in 2010 and are forecast to increase to 59-61 MMT in 2011 – Strong growth in Latin America and Asia – U.S. shipments projected to climb to 7.5 MST in 2010/11 based on higher acreage and
Slide 31: Potash Outlook: Increasingly Tight Fundamentals
Potash Outlook: Increasingly Tight Fundamentals
Slide 32: MOP prices firm based on tighter fundamentals
$ ST MOP Prices Blend Grade fob U.S. Midwest Warehouse Source: Green Markets Prices firm based on tighter fundamentals $ MT MOP Prices Blend Grade c&f Brazil Source: ICIS
Slide 33: Global shipments back on track
10F 11F Mil Tonnes KCL World MOP Shipments Global shipments back on track Source: Fertecon and Mosaic (Forecast Range for 2011, Trend 1995-2006)
Slide 34: Second highest world import demand
10F 11F Mil Tonnes KCL World MOP Import Demand (excluding Canda > U.S. shipments) Other Europe Latin America North America Asia Source: Fertecon and Mosaic Second highest world import demand
Slide 35: NA exports projected to increase 36%
NA exports projected to increase 36% 11F Mil Tons KCL North American MOP Exports U.S. Canada Source: IPNI and Mosaic Fertilizer Year Ending June 30
Slide 36: NA exports up 74% FY 2010/11 YTD
NA exports up 74% FY 2010/11 YTD 0.0 0.2 0.4 0.6 0.8 1.0 1.2 1.4 Jul Oct Jan Apr Jul Oct Jan Apr Jul Oct Jan Apr Jul Oct Mil Tons KCL North American MOP Exports Source: IPNI
Slide 37: NA shipments forecast to climb another 28%
NA shipments forecast to climb another 28% 0.0 1.0 2.0 3.0 4.0 5.0 6.0 7.0 8.0 11F Mil Tons KCL Mil Tons K O North American Potash Use and MOP Shipments Ag Use Total Shipments Source: IPNI and Mosaic Fertilizer Year Ending June 30
Slide 38: "Perfect storm" fall application season in NA
“Perfect storm” fall application season in NA Source: IPNI, US Department of Commerce and Mosaic 0.0 1.0 2.0 3.0 4.0 5.0 6.0 7.0 8.0 Jun -Nov Dec-May Mil Tons KCl Implied North American MOP Shipments 5-Yr Min-Max Ran g e 2010/11 5-Yr Avera g e
Slide 39: NA production up 79% FY 2010/11 YTD
NA production up 79% FY 2010/11 YTD 0.0 0.2 0.4 0.6 0.8 1.0 1.2 1.4 1.6 1.8 2.0 Jul Oct Jan Apr Jul Oct Jan Apr Jul Oct Jan Apr Jul Oct Mil Tons KCL North American MOP Production Source: IPNI
Slide 40: Record NA imports expected in 2010/11
Record NA imports expected in 2010/11 0.0 0.2 0.4 0.6 0.8 1.0 1.2 11F Mil Tons KCL North American MOP Imports Source: IPNI, USDOC, and Mosaic Fertilizer Year Ending June 30
Slide 41: Demand pulls down NA producer inventories
Demand pulls down NA producer inventories 0.0 0.5 1.0 1.5 2.0 2.5 3.0 3.5 4.0 4.5 Jul Oct Jan Apr Jul Oct Jan Apr Jul Oct Jan Apr Jul Oct Mil Tons KCL North American MOP Producer Stocks Source: IPNI
Slide 42: Bottom Line
Bottom Line Potash shipments are back on track – Global shipments forecast to increase to 49.7 MMT in 2010 and to 53-56 MMT in 2011 – Broad-based demand recovery – NA shipments forecast to climb to more than 10.3 MST in 2010/11 based on higher acreage and application rates – “Perfect Storm” fall sea
Slide 43: Factors to Watch
Factors to Watch Agricultural commodity prices – Macroeconomic developments and value of the dollar – Weather developments during the next 60 to 120 days • Southern Hemisphere: La Nina effect (hot and dry Dec-Feb in southern Brazil and northern Argentina) • Northern Hemisphere: 2011 spring planting
Slide 44: Thank You!
Phosphate and Potash Market Volatility Déjà Vu All Over Again? Ohio AgriBusiness Association and OSU Extension 2011 Crop Production Conference Columbus, OH January 6, 2011 Dr. Michael R. Rahm Vice President, Market and Strategic Analysis The Mosaic Company Thank You!
Mosaic — Ohio AgriBusiness Association and OSU Extension 2011 Crop Production Conference on 6ix