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Potash and phosphate prices to weaken further, says Mosaic

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Potash prices will come under further pressure at the start of this year, US fertilizer group Mosaic said, amid a "challenging environment".

Mosaic expects to sell potash, a key crop nutrient, for $200-230 a tonne over the first three months of 2016.

This compares to an average selling price of $254 a tonne in the previous three month period.

Canadian broker Raymond James this week saw granular potash prices in the Midwest at $284 a tonne.

Sales fall

Mosaic forecast global potash shipments for 2016 at 58-60m tonnes. This is in line with forecasts of global potash demand made by fertilizer group Agrium this week, but behind the 59-62m tonne forecast made by PotashCorp on Tuesday.

Total sales volumes for the Mosaic's potash segment are seen at 1.5-1.9m tonnes for the first quarter of 2016, down from 2.0m tonnes over the same period last year.

Mosaics potash sales are falling, after a decision to reduce volumes in the face of low prices.

Full year potash sales volumes were seen at 7.5-8.5m tonnes.

Weaker phosphate prices

Phosphate prices will also fall, Mosaic said.

Phosphate prices were seen at $350-370 a tonne over the first three months of this year, down from $410 a tonne over the last three months of 2015.

Raymond James saw diammonium phosphate prices in Florida ports priced at $355 a tonne this week.

Mosaic saw 2016 global phosphate shipments at 65-67m tonnes.

Mosaic forecast sales volumes for its phosphates segment down to 1.8-2.2m tonnes in the first three months of 2016, down from 2.3m tonnes in the same period last year.

Full year sales were seen at 9-10m tonnes.

Profits drop

The news came as Mosaic reported a sharp drop in profits, albeit by less than analysts had forecast.

Mosaic reported a profit of $155.0m in the three months to December 31, down 57% year-on-year.

Adjusted earnings were down 39%, at 53 cents a share, ahead of the 44 cents a share forecast by analysts.

Falling sales

Sales were down 9%, at $2.16bn. This is better than the $1.93bn projected by analysts.

Mosaic's potash sales in three months to December 31 were down 25% year-on-year, to $572m.

Phosphate sales fell by 17% to $1.0bn.

The company managed to cut its cost of production by 16% over 2015, helped by the weaker Canadian dollar and facility closures.

By William Clarke

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