Phosphate and potash fertiliser manufacturer Mosaic advises “the underlying fundamentals for a strong second half of 2020 are in place”, despite the Covid-19 pandemic and its restrictions.
Unveiling its first half results, the US multinational observed that, in general, crop growers around the world are experiencing good returns for their crops, while inputs are affordable and weather favourable.
Furthermore, fertiliser inventories around the world have been drawn down over the first half of 2020. Key world fertiliser markets such as India and Brazil are experiencing strong growth compared to last year as they head towards the peak fertiliser application season. Potash and phosphate shipments in both these countries are on track to beat 2019 volumes.
The North American fertiliser market is buoyed by the recovery of the ethanol market there and the expectation of higher corn exports to China are driving an improved outlook. Positive sentiment will affect 2021 crop prices that will in turn influence this fall’s fertiliser decisions by growers.
Mosaic added that a tight Chinese corn market is driving domestic demand for the cereal and consumption of all fertilisers, while a sharp recovery in palm oil prices “typically portends a rebound in potash demand in Southeast Asia”.
Agriculture prioritised globally
The company noted that prices for phosphate fertiliser products have strengthened globally, reflecting tightening of the supply and demand balance. It expects potash prices to remain stable, after an increase of most global benchmarks, following the settlement of the China and India contracts.
“The risks posed by Covid-19 are expected to persist through at least the rest of the year,” Mosaic advised. “However, agriculture and agricultural inputs continue to be prioritised globally to ensure food supply for the world’s population.”
Mosaic, based in Tampa, Florida, reported an operating income of $85.8 million on sales of $2.04 billion for the second quarter of 2020, compared to a loss of $241.9m and $2.18bn in the same three months of 2019. The prior quarter included a $284 million non-cash after-tax charge for the permanent closure of the company’s Plant City phosphate facility.
"Mosaic’s results this quarter reflect the accelerated pace of our cost structure transformation, excellent execution throughout our production and supply chain functions and strengthening markets," said Joc O’Rourke, its president and chief executive. "We expect significant further cost progress in the years ahead."