Leading U.S. phosphate and potash supplier MosaicCo. said earlier this week that it would reduce its potash output and maintain its low phosphate output for the time being. "We are managing our production levels to match current demand, controlling our costs, and maintaining our discipline," said Chief Executive Joc O'Rourke in a press release. Low demand in Brazil and North America along with global currency uncertainty prompted the production cut as a means to manage risk.
The Inputs Monitor has reported in previous writings that U.S. fertilizer producers in general are currently of a mindset to minimize production risk on fertilizers by relying on imported supplies. Phosphate from China and the Middle East will fill the production gap, and the more imported fertilizer sold in the U.S., the less U.S. fertilizer prices will reflect American crop prices.
Costs for phosphate feedstocks have declined since their significant increases a year ago, but since U.S. crop prices are not expected to firm significantly in the near future, producers fear P&K will be cut from the production budget, or at least used only in a have-to-have-it scenario.
The impact on prices through the winter will be up to the foreign sources who export into the U.S. Canadian potash is less of a concern than is Chinese phosphate, and we expect decreased domestic production and increased imports to support higher prices by spring.
We are currently 80% filled on phosphate for fall and 30% filled for spring applications. How quickly phosphate prices firm will be up to the amount your preferred retailer has on hand. Have a conversation about phosphate prices and supplies with your phosphate supplier, and make sure to make your intentions known if you expect to apply phosphate wither in the fall of the spring.