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Fertilizer producer Mosaic Co. (MOS) said Thursday it would cut potash production by up to 20% from February through May, becoming the latest company to pull back in the face of weakening prices.
"Cautious dealer sentiment continues to delay purchases and lower near-term demand for potash," said Jim Prokopanko, president and chief executive of the Minneapolis-based company.
Mosaic, the world's largest phosphate producer, had already announced phosphate production cuts in December. But the company had until now resisted potash reductions despite cuts by competitors. Prokopanko said last month that potash "is in balance for our situation."
Potash Corp. of Saskatchewan (POT), a member of the North American export arm Canpotex, announced a couple rounds of cuts recently. The cuts have pared back production by 1.3 million tons over the last several weeks in response to the lower demand, though the company has said it remains committed to its plan to expand its production by 2015 to 17 million tons from 11 million tons currently.
Russian fertilizer giant Uralkali (URKA.RS), has also signaled it would cut back production.
Fertilizer executives have portrayed the current pricing weakness, and excess supply, as temporary. Prokopanko said that despite caution from dealers, "farmer economics remain strong" and he expects record-setting potash shipments in 2012.
U.S. farmers planted 91.9 million acres of corn in 2011 and are widely expected to increase that total to 93 million to 95 million this year.
Mosaic shares were down 0.2% to $57.02 premarket. They are up 13.3% so far in 2012.
-By Ian Berry, Dow Jones Newswires; 312-750-4072; firstname.lastname@example.org