uploads///Phosphate Rock Prices at Morocco

Why Investors in Mosaic Need to Track Phosphate Rock Prices

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Mar. 10 2016, Published 10:03 a.m. ET

Phosphate rock

Phosphate rock is one of the main input materials required for manufacturing phosphate fertilizers such as DAP (diammonium phosphate) and MAP (monoammonium phosphate). It’s important for investors in Mosaic Company (MOS), PotashCorp (POT), and Agrium (AGU) to track prices for phosphate rock, as it takes about 1.6–1.7 metric tons to produce one metric ton of DAP, according to Mosaic.

You can access some of these companies through the iShares U.S. Basic Materials ETF (IYM). IYM invests about 12% in agricultural chemical companies, including nitrogen fertilizer producer CF Industries (CF).

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Price trends

Morocco is the largest producer of phosphate rock. According to the International Fertilizer Industry Association, in 2011, Morocco’s share in global phosphate rock was 49%.

The average price of phosphate rock for the week ending March 4, 2016, stood at $114 per metric ton, which remained unchanged compared to the corresponding period a week ago. However, the price of phosphate rock oscillated between a low of $97 per metric ton and a high of $132 per metric ton during the same week.

Phosphate rock’s price has fallen over the one-year period. It stood at $123 during the corresponding week a year ago in 2015. With downward pressure on phosphate fertilizer’s price and concerns over its future outlook, companies have curtailed production recently. Mosaic was one such company. To learn why it curtailed its production, you can read Why Mosaic Is Curtailing Its Phosphate Production.

If more companies follow this path, demand for phosphate rock may fall and push down prices.

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