The Mosaic Company

The Mosaic Company had a mixed quarter with revenues of $3.6 billion that were above Wall Street expectations but the company missed out on earnings. The fundamentals of the agricultural sector remain quite appealing as per the management. Grain and oilseed stock-to-use ratios are at a 25-year low and farmer affordability for phosphates and potash is quite strong in the fertilizer markets which should benefit the company. While supply issues are still a worry, this is drawing growers back to the market. Belarusian exports of potash are still restricted due to the sanctions. Volumes have moved into China by rail and, to a lesser extent, through extra Russian port capacity. However, transportation costs are considerable and total shipments are still far below pre-sanctioned levels. The entire amount of exports from Belarus is anticipated to be around 7 million tons this year. Additionally, there are still signs of decreased Russian products, as well. China remains committed to a structural transition away from exports in phosphates. Longer ahead, they continue to anticipate the significant potential for biofuel demand growth, including growing demand for oilseeds to feed renewable diesel production and the vast potential for sustainable aviation fuel. We give The Mosaic Company a ‘Buy’ rating with a revised target price.