Understanding PotashCorp’s Phosphate Price Dive in 1Q17

Potash Corporation of Saskatchewan’s (POT) Phosphate segment sells phosphate products that are used as fertilizers and feed products. In 1Q17, about half of the segment’s net sales came from fertilizer products, while the remaining half was from feed and industrial products. Now let’s see how realized prices for each of these products moved during 1Q17.

We’ve already seen how the realized prices of potash and nitrogen fertilizers fell on a YoY (year-over-year) basis. But the situation was no different for POT’s phosphate realized prices. In 1Q17, average realized prices for phosphate fell ~15% to $423 per ton from $499 per ton in 1Q16.

Realized prices for the feed subsegment fell 17% YoY, from $596 per ton to $495 per ton. Similarly, for the fertilizer subsegment, realized prices fell ~15% YoY to $369 per ton from $436 per ton.

It remains to be seen whether Mosaic (MOS), Israel Chemicals (ICL), and Agrium (AGU) will report better price realization for 1Q17. But since fertilizers are commodities, it’s natural for us to anticipate that these companies will have experienced relatively lower price realizations (NANR) on a YoY basis as well.

In the next and final part of this series, we’ll discuss the margins for each of PotashCorp’s segments.