NEW YORK, NY--(Marketwire - Jan 31, 2013) - Last year, agricultural chemicals industry saw some harsh times due to reduced demand for potash from China and India, two of the world's largest buyers of potash. However, Potash and Mosaic Co., two major players in the potash market, expect things to improve in 2013. China and India have accounted for over a quarter of global demand for potash in recent years. Reduced demand from both countries in 2012 resulted in sustained downward pressure on potash pricing. It also led major suppliers to reduce capacity.
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Mosaic Co. President and CEO Jim Prokopanko earlier this month said that the company's international shipments were impacted by the lack of contracts in India and China. However, demand and pricing could improve in 2013.
The biggest driver for agricultural demand will be global economic growth. While developed economies are expected to continue to struggle this year, developing and emerging economies are expected to drive global economic growth in 2013. Demand for agricultural products from these countries should remain robust and this will benefit companies such as Potash and Mosaic. Mosaic CEO recently said that over the long-term, economic and demographic trends are extremely promising for the company and strong agricultural fundamentals will lead to strengthening crop nutrient markets.
Earlier this month, Mosaic released its second quarter financial results, posting net earnings of $629 million, up from $624 million reported for the same period in the previous year. The company's net sales in the Phosphate segment were $1.8 billion in the second quarter, down 19% over the same period in the previous year. MOS's sales volumes were impacted by lower shipments to the export market, which were offset by near record domestic shipments. Net sales in the Potash segment totaled $780 million, down 7% over the same period in the previous year.
Looking ahead to the fiscal third quarter, Mosaic expects total sales volumes in the Potash segment to be in the range of 1.5 million to 1.8 million tons. Total sales volumes for Phosphates segment are expected to be in the range of 2.5 million to 2.8 million tons in the third quarter of fiscal 2013.
CEO Prokopanko noted that crop nutrients have never been more affordable, and farmers around the world continue to have strong incentives to use MOS's products to boost crop yields.
Elsewhere in the industry, Potash Corp. will release its fourth quarter financial results on today, January 31, 2013 (At the time this article was completed the company's financial were not available). The company has already given a bullish outlook for 2013. CEO Bill Doyle noted that the agricultural fundamentals that drive the company's business -- rising food demand, supportive crop prices and the scientific need to replenish nutrients -- remain strong despite some disruption in deliveries to offshore potash markets.
While the agricultural fundamentals remain strong, there are some concerns for the agricultural chemicals industry in the near-term. One of the concerns is the state of the global economy. While the economic environment is improving, it is far from stable. Another concern is the contract negotiations for crop nutrients in China and India.
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