Mosaic Company (the) · NYSE:MOS
Mosaic Company (the) — 2007 Fertilizer Outlook and Technology Conference
23 slides from Mosaic Company (the)'s conference presentation, Nov 7, 2006
Slide 1: 2006/07 Potash Outlook
Exhibit 99.1 2006/07 Potash Outlook by Michael R. Rahm Vice President Market & Economic Analysis 2007 Fertilizer Outlook and Technology Conference November 7, 2006 Arlington, VA
Slide 2: Safe Harbor Statement
Safe Harbor Statement Safe Harbor Statement Certain statements contained herein constitute “forward-looking statements” as that term is defined under the Private Securities Litigation Reform Act of 1995. Although we believe the assumptions made in connection with the forward-looking statements are r
Slide 3: Take-Aways
Take-Aways The potash market looks increasingly tight in 2006/07 due to: rapidly improving global demand prospects (vs. stock-building in 2004/05) the recent supply shock caused by the loss of Uralkali’s Berezniki I mine. Any surprise will likely tighten the market further: additional supply losses
Slide 4: Drivers of rapidly improving demand prospects
Drivers of rapidly improving demand prospects Bil Bu U.S. Corn Production and Use 12 Unlike the past, U.S. corn stocks are 11 not expected to fall as a result of a Source: USDA supply shock but rather due to 10 impressive growth in corn use during 9 the last few years. 8 Domestic feed demand is stab
Slide 5: Drivers of rapidly improving demand prospects
Drivers of rapidly improving demand prospects Grain markets are signaling the need for more production to meet growing $ BU New Crop Corn Prices demand. Daily Close July 1 to June 30 3.6 Source: CBOT The 2007 new crop price of corn has 3.4 climbed steadily since mid-September due to downward revisio
Slide 6: Drivers of rapidly improving demand prospects
Drivers of rapidly improving demand prospects U.S. Potash Application Rates on Corn vs. Corn Prices Index $ BU 110 3.50 Source: USDA and CBOT 105 3.25 100 3.00 95 2.75 90 2.50 85 2.25 80 2.00 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06E Application Rate Index (1988-92=100) New Crop Price (AMJ
Slide 7: Drivers of rapidly improving demand prospects
Drivers of rapidly improving demand prospects U.S. Nutrient Use 24 3.50 Source: AAPFCO and Mosaic 23 3.25 22 3.00 21 2.75 20 2.50 19 2.25 18 2.00 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 Fertilizer Year Ending June 30 Nutrient Use New Crop Corn Prices (Jan-Apr Average) 11/6/2006 7
Slide 8: Import demand projected to rebound to record levels
Import demand projected to rebound to record levels Global import demand is projected to decline about 9% or 2.4 million tonnes K2O in CY 2006 due to MMT K 2O World Potash Import Demand significant decreases in each of the 27 four major import markets – namely 24 Brazil, China, India and the United
Slide 9: Chinese imports are forecast to rebound 17% in 2007
Chinese imports are forecast to rebound 17% in 2007 China’s potash imports are projected to decline 21% this year MMT K2O China Potash Import Demand due to a combination of factors 6 including a build-up of stocks in 2005, increased domestic Source: IFA and Mosaic production, weaker demand for 5 NPK
Slide 10: Indian fundamentals remain positive
Indian fundamentals remain positive After surging 66% in 2005, India’s potash imports are projected to MMT K 2O India Potash Import Demand decline about 30% or 900,000 3.5 tonnes K2O in 2006 due to a Source: IFA and Mosaic build-up of distribution pipeline stocks last year and long delays 3.0 in set
Slide 11: No recovery is expected in Brazil in 2007, but . . .
No recovery is expected in Brazil in 2007, but . . . MMT K O 2 Brazil Potash Import Demand Brazilian MOP import demand is 4.5 projected to decline another 3% or Source: IFA and Mosaic 100,000 tonnes K2O in 2006. That 4.0 follows a 22% decline in 2005. Full Year Total 1H Actual 3.5 Producers reported
Slide 12: Oilseed markets are beginning to perk up
Oilseed markets are beginning to perk up $ BU New Crop Soybean Prices Daily Close July 1 to June 30 8.0 Source: CBOT 7.5 The rally in corn and wheat markets is beginning to spill over into the oilseed 7.0 complex. The 2007 new crop price of soybeans 6.5 has increased almost one dollar per bushel sin
Slide 13: The Supply Shock (from Uralkali October 2006 Prospectus and press releases)
The Supply Shock (from Uralkali October 2006 Prospectus and press releases) The loss of Uralkali’s Berezniki I mine due to flooding reduces global potash supply by approximately 1.2 to 1.4 million tonnes KCL The Berezniki I mine produced 1.38 million tonnes KCL in 2005 26% of the 5.38 million tonnes
Slide 14: Canadian exports projected to increase 50% in 06/07
Canadian exports projected to increase 50% in 06/07 MST K2O Canadian Potash Exports to Offshore Destinations Canadian offshore exports plunged 7 29% or 1.8 million tons during the 2005/06 fertilizer year due to a build- Source: PPI and Mosaic 6 up of distribution pipeline stocks the year before, poo
Slide 15: Canadian offshore shipments have picked-up!
Canadian offshore shipments have picked-up! 1000 ST K O Canadian Potash Exports 2005/06 1000 ST K O Canadian Potash Exports 2006/07 2 2 700 Source: PPI and Mosaic 800 Source: PPI and Mosaic 600 700 600 500 500 400 400 300 300 200 200 100 100 0 0 JUL AUG SEP OCT NOV DEC JAN FEB MAR APR MAY JUN JUL AU
Slide 16: Domestic shipments set to rebound in 2006/07
Domestic shipments set to rebound in 2006/07 MST K 2O NA Potash Use and Shipments 8.0 Source: AAPFCO, PPI and Mosaic 7.5 Stock Build 7.0 Implied North American potash 6.5 shipments declined 22% to just 5.6 Stock Draw million tons K2O in 2005/06. That was 6.0 the lowest domestic volume since 5.5 1982
Slide 17: Domestic shipments are forecast to rebound 22%
Domestic shipments are forecast to rebound 22% 1000 ST K2O 1000 ST K O NA Potash Disappearance 2006/07 NA Potash Disappearance 2005/06 2 1000 1000 Source: PPI and Mosaic 900 Source: PPI and Mosaic 900 800 800 700 700 600 600 500 500 400 400 300 300 200 200 100 100 0 0 JUL AUG SEP OCT NOV DEC JAN FEB
Slide 18: U.S. imports are projected to decline this year
U.S. imports are projected to decline this year 1000 ST K2O US Potash Offshore Imports 600 Source: USDC and Mosaic 500 U.S. potash imports from offshore origins are forecast to decline this 400 year due to the recent flooding of the Uralkali Berezniki I mine. 300 Although this mine produces only sta
Slide 19: NA production is off 17% so far this year
NA production is off 17% so far this year 1000 ST K 2O NA Potash Production 2005/06 1000 ST K 2 O NA Potash Production 2006/07 1300 Source: PPI and Mosaic 1300 Source: PPI and Mosaic 1200 1200 1100 1100 1000 1000 900 900 800 800 700 700 600 600 500 500 400 400 300 300 JUL AUG SEP OCT NOV DEC JAN FEB
Slide 20: North American Producer Stocks
North American Producer Stocks 1000 ST K O NA Potash Stocks at Month End 1000 ST K O 2 NA Potash Stocks on September 30 Source: PPI 2 2000 2500 2300 Source: PPI and Mosaic 1750 2100 1500 1900 1250 1700 1500 1000 1300 750 1100 500 900 700 250 500 0 300 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 JUL
Slide 21: Factors to Watch
Factors to Watch Grain prices North American potash shipments Brazilian demand Additional supply losses from the flooding of the Berezniki I mine 2007 contract negotiations with India and China The start-up of Canadian mine expansions 11/6/2006 21
Slide 22: Take-Aways
Take-Aways The potash market looks increasingly tight in 2006/07 due to: rapidly improving global demand prospects (vs. stock-building in 2004/05) the recent supply shock caused by the loss of Uralkali’s Berezniki I mine. Any surprise will likely tighten the market further: additional supply losses
Slide 23: Thank You!
Thank You! 2006/07 Potash Outlook by Michael R. Rahm Vice President Market & Economic Analysis 2007 Fertilizer Outlook and Technology Conference November 7, 2006 Arlington, VA
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