Potash realized prices declined
Previously, we saw that Mosaic (MOS) has experienced a price decline in its Phosphate segment. Potash prices have recovered from mid-2014, the result of higher demand in China, India, and Brazil.
Average prices fell
The average selling price of potash has fallen over the years. As of 4Q15, it was $254 per ton, lower than $295 per ton in 4Q14. Potash prices were weaker in North America, falling about 25% to $264 per ton in 4Q15 from $355 per ton in 4Q14. International potash prices also declined to $227 per ton in 4Q15, from $239 per ton in 4Q14.
Earlier, the company stated, “We continue to maintain our philosophy to match supply with expected demand.” This means that when there’s excess supply in the market pressuring prices, the company may cut down its production. While the company can adjust to the supply and demand dynamics, it has no control over prices.
Mosaic’s management has guided average selling prices, or MOP prices, in 1Q16 in the range of $200–$230 per ton. Again, this is significantly lower compared to $288 per ton in 1Q15. Next, we’ll see what management guided for the Potash segment’s gross margin.
You may also consider other fertilizer companies such as Agrium (AGU), Potash Corporation (POT), and CF Industries Holdings (CF). All three companies comprise ~13.6% of the VanEck Vectors Agribusiness ETF (MOO).