Mosaic Co. (MOS) expects a slow start to the 2013 fiscal year in June, as customers remain cautious amid uncertainty about the direction of grain and fertilizer prices.
Executives with the potash and phosphate fertilizer producer said that dealers, who have been slow to secure supplies despite expectations of heavy demand this spring, are planning to end the season "largely empty" of inventory.
"There is a great sense of risk-avoidance by the dealer," Chief Executive Jim Prokopanko told investors in a conference call to discuss third-quarter earnings, which were down 50% from a year ago. "The nature of the supply chain has become much more cautionary."
Still, he said farmer demand will remain strong. U.S. corn farmers are expected to plant anywhere from 94 million to 97 million acres of corn this year, Prokopanko noted, potentially the most acreage since World War II.
Forecasting potash demand in the first quarter of fiscal year 2013, which starts in June, has been extremely difficult, Prokopanko said. It will depend on prospects for the 2012 crop, he said. The potential for a bumper crop would weigh on the price of corn, and along with it fertilizer prices.
Prokopanko said the company would likely see a slow start to the year, but a strong finish. He added that even if dealers clear out their inventory and remain cautious, ultimately demand will remain strong.
"We know they may delay, but they can't completely avoid having to load up on potash and phosphate," Prokopanko said.
Mosaic's third-quarter results fell below analyst expectations, and shares were recently down 4.3% to $55.71 per share.
-By Ian Berry, Dow Jones Newswires; 312-750-4072; firstname.lastname@example.org