February 2021 - Market Update
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February 2021 – Market Update
Phosphate: Price rally continues
$ per tonne
NOLA and Brazil MAP
Published Spot Prices
650
600 NOLA prices are up ~$350/mt since
the low in May (to a $54/mt premium
550 to Brazil MAP) • Global prices are rising rapidly in
the face of healthy demand
500 prospects and tight supply.
450 • U.S. prices shifted to a premium to
international benchmarks following
400
the filing of the CVD petition.
350
300
NOLA vs. Brazil MAP
250 average discount in
2019: $19/mt
200
Jan-19 Jul-19 Jan-20 Jul-20 Jan-21
MAP fob NOLA MAP c&f Brazil
Source: Argus, Green Markets *weekly average reported spot pricing for prompt delivery
Data thru February 11, 2021
2Phosphate: Industry health has improved markedly
$ per Tonne
High-Analysis Phosphate Global Net Price
Calculated from Published Weekly Spot Prices
450
400
• Phosphate industry margins have
risen rapidly in the face of healthy
350
demand prospects and post-CVD
petition impacts.
• Such a rapid change in benchmark
300
margins has multiple precedents
from the past dozen years.
250
200
Source: Argus, Mosaic
150
Jan-09 Jan-11 Jan-13 Jan-15 Jan-17 Jan-19 Jan-21
Data thru February 11, 2021
Global net price averages several global price benchmarks for finished phosphates and raw materials. It does not include any
handling, storage, transportation or conversion costs. 32020 Regional Phosphate Roundup
U.S. Offshore Imports U.S. imports from China Exports
Mil Tonnes DAP/MAP/NPS/TSP Mil Tonnes DAP/MAP/TSP Annual
Annual offshore sources
3.5 3.3 3.1 12 11.0 H1 Chinese exports in H2
H1 remained subdued 10.1
3.0 10 9.3 did not offset the y-o-y
2.5 2.3 during H2 despite a decline in H1 and
8
2.0
marked uptick of non- ended 2020 down 8%
Moroccan/Russian 6
1.5 (783kt) y-o-y, in-line
1.0
origin shipments in Q4. 4 with expectations.
0.5
2020 imports were 2
0.0
down 25% (or almost
0
2018 2019 2020 800kt) y-o-y. 2018 2019 2020
India Imports Annual Brazil Imports
Mil Tonnes DAP H1 Mil Tonnes DAP/MAP/NPS/TSP
7.8
7.0 6.2 6.3 8.0 Annual H1
DAP arrivals 6.8
6.0 5.6 6.2 With Q4 imports
rebounded sharply in 6.0 stronger than expected,
5.0
H2. Total India DAP Brazilian phosphate
4.0
imports exceeded 4.0 imports were up 991kt
3.0
6.3mmt (+12% or or 15% y-o-y.
2.0 2.0
680kt y-o-y) in 2020.
1.0
0.0 0.0
2018 2019 2020 2018 2019 2020
Source: FAI, India Department of Fertilizer, Genscape, China Customs, Siaesp, Mosaic
4U.S. Phosphate Fertilizer Imports
1,000 tonnes U.S. Offshore Phosphate Imports Morocco/Russia
(DAP/MAP/NPS/TSP) % of Total
1,000 100%
Morocco*
800 80% Russia
• Trade flows are adjusting
Saudi Arabia as the CVD petition
600 60%
progresses.
Mexico
400 40% Australia
• Expect a new normal to
develop subsequent to the
200 20% Other final determination from
MOR/RUS % the ITC in March.
0 0% of Total
Q1 Q2 Q3 Q4
Source: Genscape; Mosaic ► Petitions filed with DOC & ITC to request
* Estimated volume from Morocco in Q4 w as for initiation of CVD investigations on June 26th
bonded shipment to Canada via the U.S.
► Affirmative decision received from ITC on
August 7th
► Affirmative decision received from DOC on
November 23rd
► DOC issues final affirmative countervailing
duty determination on February 9th, 2021
5Global Phosphate Demand
Mil Tonnes Global Phosphate Shipments YoY Changes of Phosphate Shipments
DAP/MAP/NPS/TSP (Mil Tonnes DAP/MAP/NPS/TSP)
80 76 - 78 3.5
China
3.0 0.4
75
76 0.2
2.5 India
74 0.4
72 72
70 71 2.0
70 70 Other Asia
0.3
67 1.5 1.3
65 67
66 0.5 Brazil
1.0 0.0
0.2
60 0.5 0.5 0.3 Other L
61
0.3 0.4 America
0.0
55 -0.4 Europe+FSU
-0.5
North America
50 -1.0
10 11 12 13 14 15 16 17 18 19 20E 21F 2020F 2021F
* NPS products included in this analysis are those w ith a combined N and P2O5 nutrient content of 45 units or greater.
• We revised up our estimate of global phosphate shipments in 2020. The revision also included updates to
historical estimates of NP/NPS products. After very strong shipment growth in 2020, we forecast global
demand to increase at more moderate rate of 1.0-2.0 million tonnes in 2021.
• Demand growth is supported by continued constructive agricultural fundamentals, while rising fertilizer
prices could curb demand in certain regions. We’ve thus taken a conservative stance versus the growth
seen last year, despite channel inventories estimated to be well below average. 6Global Phosphate Shipment Forecasts by Region
February 2021
DAP/MAP/NPS*/TSP Low High Source: IFA, CRU and Mosaic
2019 2020E Comments (regional figures may not sum to total due to rounding)
Mil Tonnes 2021F 2021F
Domestic phosphate shipments in 2020 increased for the first time in five years, and higher ag commodity prices are expected to spur further
grow th in 2021. This reversal removes the largest headw ind to global phosphate shipments. Domestic DAP/MAP production in 2020 declined
by nearly 0.4mmt (as per CPFIA data), illustrating the continued structural changes taking place in their industry, w hile CPFIA’s producer
China 17.8 18.3 18.4 18.6 DAP/MAP inventory figures showed a drop of nearly 1.1mmt y-o-y at the end of December. DAP/MAP/TSP exports in 2020 w ere nearly 0.8mmt
low er y-o-y. Despite the rally in international prices, w e expect 2021 export volume to remain constrained, driven in part by a further modest
increase in domestic demand.
2020 shipments w ere revised higher on solid Q4 imports (as w ell as being rebased higher to include additional NP products). DAP imports
ended the year up by nearly 700kt to 6.3mmt, w hile production fell by over 600kt to 4.1mmt. This, along w ith a strong domestic sales pace
India 11.3 11.4 10.8 11.2 pushed total DAP inventories dow n by ~1.3mmt y-o-y. Looking ahead to 2021, higher international prices and the potential for limited additional
subsidy could see MRPs increase sharply and curb demand, and w e have low ered our shipment and import forecasts to reflect this. We
continue to look for further guidance on the subsidy, w hile farm economics and the monsoon outlook continue to look favorable.
Farm economics continue to be conducive to a more meaningful rebound in demand, particularly given the strength of ag commodity prices and
Other Asia/Oceania 9.4 9.7 10.2 10.4 generally benign w eather. Fertilizer demand, how ever, continues to lag due to continued issues w ith labor movement restrictions, and w e have
pared back our demand grow th expectations to reflect this.
Shipments in Europe/FSU are expected to continue to see moderate y-o-y growth in 2021, led by grow th in Russia, w hile demand in the EU is
Europe and FSU 6.6 7.0 7.1 7.3 expected to be stable. Dry conditions continue to be monitored in Germany/Poland.
Strong imports in Q4 have resulted in a further upward revision to our 2020 shipment estimate. DAP/MAP/NPS/TSP imports w ere nearly 1mmt
higher y-o-y, while channel stocks were little-changed (i.e. higher imports w ere a demand-pull paradigm). The ag sector continues to be lifted by
Brazil 8.4 9.7 9.9 10.2 higher prices and still-w eak FX, and purchasing activity continues to run ahead of historical norms. We expect this robust demand pattern to
persist through 2021.
Similar to Brazil, favorable farm economics resulted in strong grow th in 2020 (note the rebased figures include additional NP products). Our
Other Latin America 3.9 4.5 4.5 4.8 forecast for 2021 continues to show a slow er, yet still robust demand grow th across most countries.
Normal spring and fall w eather, increased acreage, lower imports (down ~25% y -o-y) and improved farmer balance sheets (in part due to
improving crop prices) led to a recovery of on-farm demand in 2020. This strong demand allow ed channel inventories to clear and put
North America 9.8 9.8 10.0 10.3 availability in the spotlight as the market turned to 2021. The recent rally in ag commodity prices portends strong on-farm demand in 2021 and
w ith a depleted channel is expected to necessitate an increase in shipments y -o-y.
We have revised our 2020 estimate higher due to the inclusion of additional NP products. Demand grow th is expected to be constrained in
Other 5.2 5.2 5.1 5.3 2021 due to higher prices curbing demand, most notably in Africa.
Rebased global shipments are estimated to have increased 3.0mmt or 4.2% in 2020, to 75.5mmt. Our forecast range for 2021 is rebased and
Total 72.5 75.5 76.0 78.0 revised higher to 76-78mmt w ith a point estimate of 77.3mmt. This represents demand grow th of 2.4% y-o-y.
* NPS products included in this analysis are NP and NPS products with a combined N and P 2O5 nutrient content of 45 units or greater.
72020E & 2021F Major Phosphate Market Summary
North America Despite lower imports, China
Mil Tonnes DAP/MAP/NPS/TSP Mil Tonnes DAP/MAP/NPS/TSP The historic trend of declining
12 NA phosphate shipments 20 phosphate demand in China
10
were largely unchanged 18.3 18.5 reversed in 2020, with
17.8
9.8 9.8 10.2 in 2020. Positive acreage 15 shipments up 2% y-o-y. The
8
prospects next year and 2021 baseline forecast is up
6 10
strong farm economics another 1% y-o-y due to
4 are expected to result in favorable farm economics and
5
2 healthy demand. The higher acreage; this could keep
0 2021 baseline forecast is 0 more supply home and
19 20E 21F up 4% y-o-y. 19 20E 21F constrict exports.
India Brazil
Mil Tonnes DAP/MAP/NPS/TSP India’s ag sector grew in Mil Tonnes DAP/MAP/NPS/TSP
Brazil phosphate fertilizer
12 2020 and DAP/NPS 12
shipments are estimated to have
10 11.3 11.4 11.0 shipments were up 2%. 10 grown an astounding 15% in
10.1
8 However, the baseline 8
9.7
2020 due to favorable farm
8.4
6
2021 forecast is down 4% 6 economics, supported by a weak
y-o-y based on upwardly- currency. This trend is expected
4 4
revised MRP expectations to continue (moderated) in 2021,
2 2
amid a potentially lower though our forecast could prove
0 (preliminary) P subsidy. 0
19 20E 21F 19 20E 21F conservative.
Source: CRU and Mosaic
8Phosphate S/D: More balanced market as we
move through 2021 (but risk appears asymmetric to further tightness)
Phosphate Supply / Demand Forecast • We revised our estimate
(Incremental Y-o-Y Change) of global phosphate
Mil Tonnes DAP/MAP/NPS/TSP 2020E 2021F Comments shipments in 2020 higher,
Projected Shipment Changes 3.06 1.78 Moderate demand growth forecast, as higher prices may curb strong growth seen in including rebasing /
Percent Change 4.2% 2.4%
2020 (through a depleted channel will act as an offset) updates to historical
estimates of NP/NPS
Potential Supply Changes 0.19 1.97 products.
Base Case China Export Change -0.81 0.01 Broadly flat exports despite higher margins (constrained by strong domestic demand)
• After very strong shipment
OCP Line F Ramp-Up and Debottlenecking 1.50 0.30 Line F full capacity in 2022 growth in 2020, we
MWSPC Ramp-Up -0.11 0.34 Production recovers to ~2.4mmt DAP-equivalent after setback in 2020. forecast global demand to
GCT M'dilla Commissioning / Ramp-up 0.00 0.09 Notable uncertainty if this will occur. increase a more moderate
Turkey/Egypt Greenfields 0.28 0.19 Both projects achieve full utilization in 2021. 1.5-2.0 million tonnes in
FSU Expansions 0.00 0.15 Incremental volumes from PhosAgro Volkhov. 2021.
Other Ramp-Ups / Closures -0.13 0.09 NTR Redwater resid. ('20); CIL-India expansion ('20/21); Philphos restart ('21) • Growth is supported by
Misc. Known Operational Changes 0.55 0.00 Primarily the production rebound at IPL-Australia ('20) continued constructive
Curtailments (COVID-19 & Voluntary) -1.10 0.80 Production recovery of ~2/3's of volume lost in 2020. agricultural fundamentals,
S/D Surplus (+) / Deficit (-) -2.88 0.19 while rising prices could
curb demand in certain
regions. We’ve thus taken
a conservative stance
The large “deficit” in 2020 was offset by a The generally balanced market depicted in versus the growth seen
correspondingly large drawdown in producer 2021 is achieved if demand growth moderates last year, despite channel
inventories estimated to
inventories (to historically low levels); channel y-o-y and production increases are achieved; be well below average.
inventories were also pulled lower (though not note that these estimates do not allow for
addressed in the table above) inventory restocking (producer or channel)
9Inventory at both producer and channel levels has
declined: India and China examples
Mil Tonnes India DAP Inventory Mil Tonnes China DAP/MAP Producers Inventory
7.0 3.5
Thousands
Trade Company MAP DAP
6.0 3.0
5.0 2.5
4.0 2.0
3.0 1.5
2.0 1.0
1.0 0.5
0.0 0.0
Source: India Department of Fertilizer and CPFIA
Channel Inventory: India inventory figures provide a Producer Inventory: China producers inventory
proxy for how global channel inventories have evolved: figures provide a proxy for how global producer
• Trade inventories in mid-February of 1.4mmt are inventories have evolved:
25% lower y-o-y. • Inventory as of the end of December of 1.1mmt were
• Company inventories in mid-February of 0.9mmt are 58% lower y-o-y (-1.6mmt).
57% lower y-o-y.
• Total inventories in mid-Feb are 1.7mmt lower y-o-y. 10India DAP
Mil Tonnes India DAP Imports Mil Tonnes India DAP Imports
3.0 8.0
2020 12% or 7.0
2.5 5.7 - 6.1
680kt y-o-y
6.0
2.0
5.0
1.5 4.0
3.0
1.0
2.0 2019: 5.6
0.5 2020: 6.3
1.0
2021F: 5.9
0.0 0.0
Q1 Q2 Q3 Q4 10 11 12 13 14 15 16 17 18 19 20 21F
2018=6.2mmt 2019=5.6mmt 2020=6.3mmt Actual Forecast Range
Source: FAI, India Department of Fertilizer, Mosaic
• We expect DAP imports to range 5.7-6.1mmt in 2021, assuming normal monsoon developments.
• DAP pipeline inventories continue to decline, as expected, in the face of strong demand pull and low imports.
• Subsidy policy changes remain a key factor as retail prices are expected to rise due to higher
international prices and a proposed cut to the P subsidy.
11Brazil Phosphates
Mil Tonnes Brazil Phosphate Imports Mil Tonnes Brazil Phosphate Imports
(DAP/MAP/TSP/NPS)
3.0 9.0 8.1 - 8.4
2020 15% or 8.0
2.5
991kt y-o-y 7.0
2020 4% or
2.0 43 kt y-o-y 6.0
5.0
1.5
4.0
1.0 3.0
2.0 2019: 6.8
0.5 2020: 7.8
1.0 2021F: 8.2
0.0 0.0
Q1 Q2 Q3 Q4 10 11 12 13 14 15 16 17 18 19 20 21F
2018=6.2mmt 2019=6.8mmt 2020=7.8mmt DAP TSP MAP/NPS Forecast Range
Source: ANDA, Siacesp, Mosaic
• The Brazilian fertilizer market is estimated to have grown ~4% to 37.8mmt in 2020, driven by favorable farm
economics. Phosphate imports surged 15% to 7.8mmt last year.
• Positive prospects on corn prices and corn exports incentivize farmers to increase safrinha planting.
• Phosphate import volumes are expected to stay at elevated levels well into 2021.
12China Phosphates
Mil Tonnes China Phosphate Exports Mil Tonnes China Phosphate Exports
4.0 12
2020 8% or 10 9.1 - 9.5
3.0 783kt y-o-y
8
2.0 6
4
1.0
2 2019: 10.1
2020: 9.3
2021F: 9.3
0.0 0
Q1 Q2 Q3 Q4 10 11 12 13 14 15 16 17 18 19 20 21F
2018=11mmt 2019=10.1mmt 2020=9.3mmt TSP MAP DAP Forecast Range
Source: China Customs and Mosaic
• After declining for 2 consecutive years, we expect Chinese phosphate exports to remain flat at ~9.3mmt in 2021.
• The Chinese market remained tight entering into Chinese New Year with low producer/channel inventories.
• There is upside risk to China’s export capability in H1 as the export price premium is rising rapidly, but offset by
what is anticipated to be a very strong domestic spring season. Questions remain as to whether China will be able
to increase production to meet expected domestic demand growth in the face of continued industry restructuring,
and therefore maintain (or potentially increase) exports.
13Phosphate Outlook: Even our modest demand growth
forecast is expected to fully offset new supply
Mil Tonnes Global Phosphate Shipments Utilization
DAP/MAP/NPS/TSP
85 97%
80 94%
75 91%
• We expect an increase in 2021
70 88% capacity utilization, and expect the
industry to hold relatively stable at
65 85% this historically elevated rate unless
additional new projects are
60 82%
announced/commissioned later in
55 79% the forecast period.
~2.2% CAGR ~1.5% CAGR
50 76%
10 11 12 13 14 15 16 17 18 19 20E 21F 22F 23F 24F 25F
Actual/Estimates Mosaic Forecast Ranges
CRU - January 2021 Capacity Utilization
Source: IFA, CRU and Mosaic
* NPS products included in this analysis are those with a combined N and P 2O5 nutrient content of 45 units or greater.
14Raw materials prices are rising, providing a cost
push to phosphate fertilizer prices
Ammonia Weekly Raw Materials Prices Sulphur
$/MT c&f Tampa $/LT
800 200
• Both sulphur and ammonia have
Ammonia Sulphur upside price risk in H1 2021.
• Some recovery of refining rates
600 150
should curb sulphur prices in H2.
• Expect ammonia prices to ease in
H2 2021 as well:
400 100
•Additional N capacity will be coming
on line mid-year,
•Current unexpected outages should
return to normal production,
200 50
•While cost pressures should ease
post-winter.
Source: Argus
0 0
Jan-14 Jan-15 Jan-16 Jan-17 Jan-18 Jan-19 Jan-20 Jan-21
Data thru February 11, 2021
15Potash: The bull run on granular prices continues
$ per tonne Published MOP Prices
400
• U.S. prices are rising rapidly in the
Source: Argus; Green Markets
face of healthy demand prospects
and renewed concerns of spring
350 availability.
• Cornbelt granular prices are up
circa $140/mt since August 2020.
300 • Prices in SE Asia are up ~$15/mt
since the beginning of the year, and
Brazil prices are up ~$45/mt.
250
200
Jan-17 Jan-18 Jan-19 Jan-20 Jan-21
c&f SE Asia delivered Corn Belt c&f Brazil
*weekly average reported spot pricing for prompt delivery
Data February 11, 2021
162020 Regional Potash Roundup
U.S. Offshore Imports China Net Imports
Mil Tonnes KCl Mil Tonnes KCl
Annual H1 Annual H1
2.0 10 8.9
1.7 1.7 U.S. offshore imports 8.6 Chinese MOP imports
1.5 surged in December 7.3 partially recovered in H1
1.5 8
and helped pull 2020 on a strong rebound of
6
1.0 annual volume up shipments from Belarus
towards last year’s 4 and Russia. 2020 net
0.5 level. Volume was 2 imports were down 3%
down 3% (-46kt) y-o-y. or 257kt y-o-y.
0.0 0
2018 2019 2020 2018 2019 2020
India Imports Brazil Imports
Mil Tonnes KCl Mil Tonnes KCl Annual H1
Annual H1
6.0 12 10.9
5.1 A strong recovery of 10.0 10.2
5.0 4.6 Brazilian imports
Indian import demand 9
4.1 remained above
4.0 in H2 resulted in a
average in Q4. Total
~1.0mmt increase in 6
3.0 imports ended the year
total imports in 2020
3 up 7% or 753kt y-o-y.
2.0 (+24% y-o-y).
1.0 0
2018 2019 2020 2018 2019 2020
Source: FAI, India Department of Fertilizer, Genscape, China Customs, Siaesp, TDM, Mosaic
17Global Potash Demand
Mil Tonnes Global MOP Shipments YoY Changes of MOP Shipments
KCl (Mil Tonnes KCl)
68 - 70
70 4.0
3.5 0.4 China
68
65 67 66
3.0 India
1.0
64 64 2.5
0.2 Indonesia+
60 61 2.0
60
Malaysia
1.5 1.0
0.4 Latin America
55 1.0 0.6
55 0.9 0.1
North America
0.5 0.2
53 53 0.2
50 0.0 Europe+FSU
-0.4
50
-0.5 -0.1 Other
45 -1.0
10 11 12 13 14 15 16 17 18 19 20E 21F 2020E 2021F
Source: IFA, CRU, TFI and Mosaic
• 2020 global MOP shipments bested our expectations at well over 67mmt.
• Our 2021 global forecast range is now 68-70mmt, as we continue to anticipate broad-based growth in most
markets except India which could be a major drag on global K demand this year.
18Global Potash Shipment Forecasts by Region
February 2021
Muriate of Potash Low High Source: IFA, CRU and Mosaic
2019 2020 Comments (numbers may not sum to total due to rounding)
Mil Tonnes KCl2. 2021F 2021F
China MOP imports recovered in H2 2020 and ended the year dow n only 3% y-o-y, while port inventories declined meaningfully in Q4 (and
w ere2020 & 2021F Major Potash Market Summary
North America Brazil
Mil Tonnes KCl Mil Tonnes KCl
12 12
Favorable farm economics
11.4
11.9 in Brazil supported a ~1.0
10
10.1 10.2
Despite relatively 10
10.5 million tonne increase in
8 9.2 stable imports, total 8 potash demand in 2020.
6 NA MOP shipments 6 Demand growth is
4
were up 0.9 million expected to moderate in
4
tonnes in 2020. 2021, though that thesis
2 2
could prove to be too
0 0
19 20E 21F 19 20E 21F conservative.
India India’s MOP imports Malaysia and Indonesia
Mil Tonnes KCl Mil Tonnes KCl
6.0 increased >25% in 6.0
2020. Below-average Malaysia Indonesia Despite very healthy palm
5.1 year-end inventories oil prices, labor and
4.7
4.0
would be expected to 4.0
2.8
3.0 logistical challenges related
4.0 2.8
keep imports at a to Covid-19 limited the
2.0 relatively high pace in 2.0
upswing of Malaysia and
H1 2021, but offset Indonesia MOP imports in
1.1 1.4 1.5 2020, but a more
due to the announced
0.0 0.0
19 20E 21F cut to K subsidy. 19 20E 21F
meaningful recovery is
Source: CRU and Mosaic
expected in 2021.
20Limited new supply may struggle to meet
expected demand growth in 2021
Projected MOP Supply/Demand Changes
Mil Tonnes KCl 2020E 2021F Comments
Projected Shipment Changes 3.70 1.46 Moderate demand growth forecast after big upturn in 2020
• We revised our estimate of
global potash shipments in
Percent Change 5.8% 2.2%
2020 sharply higher, with
Projected Supply Changes 2.99 1.26 y-o-y growth of nearly 4
SQM Production Adjustments 0.29 0.10 Production returns to ~1.25mmt in 2020; incremental increase going forward million tonnes.
K+S Bethune Ramp-Up 0.25 0.05 Production estimated at 1.8mmt in 2020; pond production to slowly ramp going forward
Eurochem Usolskiy Ramp-Up 1.08 0.03 Phase 1 capacity of 2.3mmt in 2021; Phase 1.1 0.5mmt capacity ramping from 2023
• After very strong shipment
growth in 2020, we
Eurochem Volgakaliy Ramp-Up 0.04 0.06 Limited production in 2020-2021; Phase 1 capacity of 2.3mmt in 2025
forecast global demand
Uralkali Production / Ramp-Ups -0.30 0.20 Incremental increases from existing sites and S-3 expansion growth to moderate to ~1.5
Belaruskali Petrikovsky 0.15 0.45 Commissioning of 1.5mmt mine in 2020 (first trial MOP production in August) million tonnes in 2021, but
Other Changes 0.28 0.37 Includes ramp-up at ICL Dead Sea/Suria in 2020/21, closing down of ICL Sallent given the affordability of
Other Existing Utilization 1.20 0.00 Primarily a rebound of Canadian production in 2020 MOP we may be
S/D Surplus (+) / Deficit (-) -0.72 -0.20 conservative, particularly if
Source: Mosaic
there is a restocking of the
channel in advance of
further price increases.
While the market appears more balanced for
The moderate “deficit” in 2020 was offset by
2021, it is still in “deficit” with fewer
drawdowns of producer inventories; channel
opportunities globally to increase output from
inventories were also believed to kept circa
existing capacity (and without producer stocks
average levels
to draw upon).
21India Potash
Mil Tonnes India MOP Imports Mil Tonnes India MOP Imports
2.0 2020 24% or 6.0
996kt y-o-y 4.6 - 5.0
5.0
1.5
4.0
1.0 3.0
2.0
2019: 4.1
0.5
2020: 5.1
1.0 2021F: 4.8
0.0 0.0
Q1 Q2 Q3 Q4 10 11 12 13 14 15 16 17 18 19 20 21F
2018=4.6mmt 2019=4.1mmt 2020=5.1mmt Actual Forecast Range
Source: FAI, India Department of Fertilizer, Mosaic
• Strong H2 demand, favorable domestic pricing and importer margins pulled total imports up by almost 1.0mmt
to over 5.0mmt in 2020 without boosting year-end inventories.
• MOP vessel arrivals are slightly ahead of last year’s low levels in January/February, partially due to the (correct)
expectation that prices would be higher in the new fertilizer year.
• The uncertainty around subsidy and MRP is a major swing factor in 2021. We now expect MOP imports to
range 4.6-5.0mmt in 2021.
22Brazil Potash
Mil Tonnes Brazil MOP Imports Mil Tonnes Brazil MOP Imports
11.2 - 11.6
4.0 12
2020 7% or 10
3.0 753kt y-o-y
8
2.0 6
4
1.0 2019: 10.2
2 2020: 10.9
2021F: 11.4
0.0 0
Q1 Q2 Q3 Q4 10 11 12 13 14 15 16 17 18 19 20 21F
2018=10mmt 2019=10.2mmt 2020=10.9mmt Actual Forecast Range
Source: ANDA, Siacep and Mosaic
• The same positive agricultural fundamentals that drove up phosphate demand also had meaningful impacts on
potash demand in 2020.
• MOP arrivals were stronger than expected in Q4, pushing total imports to a record of 10.9mmt in 2020 (up 7%
y-o-y), while the year-end 2020 stocks-to-use ratio of 14% fell from 16% in 2019.
• MOP imports are forecast to increase again in 2021, though at a more moderate pace.
23China Potash
Mil Tonnes China MOP Imports Mil Tonnes China MOP Imports
3.0 2020 3% or 10
278kt y-o-y 8.3 - 8.8
8
2.0
6
4
1.0
2019: 9.1
2 2020: 8.8
2021F: 8.5
0.0 0
Q1 Q2 Q3 Q4 10 11 12 13 14 15 16 17 18 19 20 21F
2018=7.5mmt 2019=9.1mmt 2020=8.8mmt Actual Forecast Range
Source: China Customs and Mosaic
• MOP import arrivals in China leveled off, but were higher than expected in Q4 2020. This, coupled with a
healthy pull from inland demand and maintenance turnaround at QSL, allowed port inventories to gradually
decline to under 3.0mmt by end of January 2021.
• Imports are expected to be flat to lower in 2021, as some suppliers may curtail volumes in light of the lower-
than-desired contract price settled by BPC and Chinese buyers in February. This could push port stocks lower
year-over-year at the end of 2021.
24Potash Outlook: New supply expected to slightly trail
demand, leading to higher industry operating rates
Mil Tonnes
KCl Global MOP Shipments Utilization
80 100%
75 95%
70 90%
• We expect a gradual, modest
65 85%
increase in global capacity
utilization over the next couple of
60 80% years, though this will depend on
the timing of the commissioning
55 75% and ramp-up of greenfield projects.
50 ~2.5% CAGR ~2.3% CAGR 70%
45 65%
10 11 12 13 14 15 16 17 18 19 20E 21F 22F 23F 24F 25F
Actual/Estimates Mosaic Forecast Ranges
CRU - January 2021 Capacity Utilization
Source: IFA, CRU and Mosaic
25Ag remains resilient during economic downturns
& global balance sheets are snug
World G&O Demand vs. World Real GDP MMT World (Less China) Grain and Oilseed Stocks %
% (y-o-y % change) 475 23%
World GDP Growth (%) World G&O Demand Growth (%) 450 Source: USDA 22%
5.0
425 21%
4.0
400 20%
3.0
375 19%
2.0
350 18%
1.0
325 17%
0.0
-1.0 300 16%
-2.0 275 15%
-3.0 250 14%
-4.0 225 13%
-5.0 200 12%
'90 '95 '00 '05 '10 '15 '20F 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20
Source: USDA, World Bank (Jan 2021 – Global Economic Prospects) Stocks Percent of Use
• World grain and oilseed demand has been relatively stable in 2020 despite the impacts of COVID-19 and the
notable world economic downturn.
• Global grain and oilseed balance sheets are snug – supporting farm economics.
• Despite increased production in 2020, global stocks are estimated to have been pushed below their
historical lower bound.
• The global grain and oilseed stocks-to-use ratio is projected to drop to 15.5% in 2020/21, even below
the low level seen in 2007/08.
26Chinese appetite for ag commodity imports
moved sharply higher in 2020
Mil Tonnes China Corn Imports Chg (%) China Ag Commodity Imports
(cumulative) Calendar Year 2020 Y-o-Y Changes
12 2015: 4.7 y-o-y change 136% 200%
Wheat
2016: 3.2 154%
10 123% 150% Pork
2017: 2.8
Poultry 116% Corn
2018: 3.5 97% 136%
8 100% 95%
2019: 4.8 73%
2020: 11.3 50% Beef Barley
6 50%
31% 28% 36% Soybean
18% 13%
4 16% 0%
30%
2 65% 27% -50%
16%
0 -100%
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec -2.0 0.0 2.0 4.0 6.0 8.0 10.0 12.0 14.0
10-yr Range 2019 2020 Chg (mil tonnes)
Source: China Customs
• 2020 China corn imports: record high of 11.3 MMT (+136% y-o-y).
• 2020 Chinese soybean imports: record high of 100.3 MMT (+13% y-o-y).
• Records set across the animal protein space.
27USDA: Chinese corn and bean import demand
expected to remain strong in 2021
Mil Tonnes China Cumulative Corn Imports Mil Tonnes China Cumulative Soybean Imports
(Marketing Year ending September) (Marketing Year ending September)
100mmt
30 100
2018/19 24.5mmt 90 2018/19
25 2019/20
2019/20 80
2020/21 Actual 70 2020/21 Actual
20
USDA Feb Fcst 60 USDA Feb Fcst
15 50
40
10
30
5 20
10
0 0
Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep
Source: China Customs and USDA
• USDA is now projecting very strong Chinese corn import demand in 2021, but stagnation in soybean imports.
We believe that there is upside to both figures (provided that global production/supply is available).
28Ethanol recovery has plateaued at ~90% of pre-Covid;
20/21 corn demand from ethanol offset by ↑ exports
Bil. Bu.
U.S. Corn Use Source: USDA
US Weekly Fuel Ethanol
Mil Gallons Mil Gal/Day Feed & Residual Ethanol Other FSI Exports
Stocks Production 15
1,200 50
Thousands
2.3 2.4 2.1 2.6
1.8
1,100 45 12 1.5 1.5 1.4 1.4 1.4
1,000 40
9
5.4 5.6 5.4 4.9 5.0
900 35
800 30 6
700 25 3
Source: EIA 5.5 5.3 5.4 5.9 5.6
600 20
Jan '15 Jan '16 Jan '17 Jan '18 Jan '19 Jan '20 Jan '21 0
Data through 2/5/2021 16/17 17/18 18/19 19/20 20/21F
• After falling 52% in April, ethanol production has recovered and plateaued to around ~90% of 2019 levels.
• USDA’s estimate for 19/20 corn grind for ethanol is 4.85 bbu (down 0.53 from 2018/19). They project 20/21
ethanol grind up slightly to 4.95 bbu (still down 0.43 from 2018/19).
• However, this decline in 2020/21 corn grind for ethanol relative to pre-Covid is projected by USDA to be offset
by a 534 million bushel increase in corn exports (relative to 2018/19).
• Recent ethanol industry relief from Chinese ethanol imports.
29U.S. farmer economics look strong
Bil $ U.S. Farm Sector Net Cash Income
Source: USDA & Mosaic
140
120
• 2020 U.S. farm income boosted by
100 additional government payments,
while crop/livestock receipts also
80 recovered in H2.
60 • Government payments in 2021 are
likely to be less than in 2020, but with
40 new CFAP3 and strong commodity
prices, farm income is expected to
20 remain strong in 2021.
0
10 11 12 13 14 15 16 17 18 19 20E 21F
CFAP & PPP Gov't Payments (excl. Covid aid) "Market"
30Farm income elsewhere also quite robust
US$/Bu China & US Corn Prices Ringgits/MT Malaysian Palm Oil
Daily Close of Front Month Contract
Dalian Nearby Corn CME Nearby Corn 4,500
12
10 4,000
8 3,500
6 3,000
4 2,500
2 2,000
Source: CRB
Source: Dalian Commodity Exchange & CME
0 1,500
Jan '17 Jan '18 Jan '19 Jan '20 Jan '21 Jan '17 Jan '18 Jan '19 Jan '20 Jan '21
India MSP Rates for Key Crops Reais/Bu Brazil Soybean Prices USD/Bu
2020/21 % Change Reais/Bu USD/Bu
7%
80 20.0
Source: CEPEA, CRB (FX)
6% 70 17.5
5% 60 15.0
4% 50 12.5
Rapeseed &
3% 40 10.0
Mustard
Soybeans
2% 30 7.5
Cotton
Lentils
Wheat
Maize
Rice
1%
20 5.0
0% Jan '17 Jan '18 Jan '19 Jan '20 Jan '21
Source: Government of India; Ministry of Agriculture & Farmers Welfare
Data thru February 12, 2021 31Grain price rally driven by nearby contracts, but new
crop prices are also at healthy levels
$/bu Corn Price $/bu Soybean Price $/bu Wheat Price
6.0 15 7.0
New Crop (Nov' 21 Contract) New Crop (Jul '21 Contract)
Nearby Nearby
5.5 14 6.5
5.0 13 6.0
4.5 12 5.5
4.0 11 5.0
3.5 10 4.5
New Crop (Dec' 21 Contract)
Nearby
3.0 9 4.0
Sep-20 Oct-20 Nov-20 Dec-20 Jan-21 Feb-21 Sep-20 Oct-20 Nov-20 Dec-20 Jan-21 Feb-21 Sep-20 Oct-20 Nov-20 Dec-20 Jan-21 Feb-21
Source: CME
Price data through February 12, 2021
• The key metric to watch is how the nearby prices migrate to the new crop price as contracts expire (i.e. will new
crop rise to meet the nearby price, nearby fall to meet current new crop price or will they meet somewhere in
the middle)
32Still-preliminary view of 2021 acreage is
supportive to fertilizer demand
Mil Acres Planted Acreage
100
90-92
89-91
•
90.8
Corn and soy balance sheets are both
90.2
90.2
89.7
89.2
88.9
90 tight.
83.1
• They could tighten further if supply
17/18
76.1
80 concerns in S. America materialize (e.g.
18/19 dry conditions in Argentina and late-
70 planting of Brazil’s safrinha crop) and
19/20
China import demand could exceed
20/21 current USDA projections.
60
21/22 F • This will support prices throughout Spring
47.8
46.1
as corn and soy battle for acres.
45.2
50
44.3
~45
• 2021 corn and soybean acreage could
40 both be above 90 million acres, with a bias
Corn Soybeans Wheat towards higher corn acreage.
Source: USDA & Mosaic
33Positive Fertilizer Demand Driver: Affordable Nutrients
Plant Nutrient Affordability
Plant Nutrient Price Index / Crop Price Index
1.10
Source: Weekly Price Publications, CME, USDA, AAPFCO, Mosaic
1.00
Less Affordable
0.90
0.80
▪ Fertilizer prices remain
0.70
low relative to crop prices.
0.60
0.50 More Affordable
0.40
10 11 12 13 14 15 16 17 18 19 20 21
Affordability Metric Average 2010-present
Data through February 11, 2021
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