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Mosaic Co. (MOS) said it would cut phosphate production by as much as 250,000 tons over the next three months in response to market oversupply, though still expects record demand for crop fertilizers next year.
The company said dealers and distributors had delayed buying ahead of the North American crop season because of wider economic uncertainty. Prices had fallen but are seen recovering as farmers use an above-average amount of crop nutrients next year.
The cut by the world's largest producer of potash and phosphate for crop use comes just four weeks after Mosaic told investors the market was in balance, with global demand for the two nutrients seen rising by as much as 12% in the 2012/2013 growing season.
"The current spot prices in this market do not reflect our outlook for the business, nor do we think they are sustainable," President and Chief Executive Jim Prokopanko said in a statement.
Mosaic shares were down 1.9% at $49.35 in after-hours trade, with rival Potash Corp. (POT) off 0.6% at $40.61.
Global industry phosphate production is expected to reach 60 million tons this year, rising to a record 64 million in 2012, Mosaic told investors last month.
Mosaic and rivals such as Potash and Germany's K+S AG (SDF.XE) have benefited from rising world-wide needs for food, with fertilizer capacity increases countered by rising demand.
However, in recent months spot-market prices have been tumbling as buyers have been delaying purchases and reducing inventories.
Mosaic, which reports fiscal second-quarter results on Jan. 4, said it still sees its fiscal second-quarter volume and pricing within its September guidance for both phosphate and potash. On Wednesday, Prokopanko said Mosaic also continues "to expect an above average application season in North America" as well as record global demand for phosphate and potash next year.
-By Tess Stynes, Dow Jones Newswires; 212-416-2481; Tess.Stynes@dowjones.com