Mosaic (MOS) earned about 19% of its revenue and 19% of its gross margin from its Potash segment in 3Q16. The shipments and average realized prices of potash products impact the segment’s revenue. In this part, we’ll see how Mosaic’s Potash segment’s shipments evolved.
Overall, the 3Q16 shipments for the Potash segment rose 36% to ~2.2 million tons from ~1.6 million tons in 3Q15. The shipments in 3Q16 also beat the company’s guidance. Mosaic expected shipments of 1.8 million tons–2.1 million tons in 3Q16.
Most of the increase in 3Q16 came from North America. Its shipments rose 92% from 419,000 tons to 806,000 tons YoY (year-over-year). International potash shipments rose 22% to 1,270,000 tons from 1,041,000 tons in 3Q15.
In contrast, non-agricultural shipments fell 20% to 132,000 tons in 3Q16 from 166,000 tons in 3Q15.
Why did the shipments rise?
During the earnings call, management attributed the steep rise in shipments to strong “on-farm demand” and lower channel inventories. However, the company cautioned that competition (MXI) is optimizing operations to match the demand.
During the earnings call, Mosaic (MOS) echoed for PotashCorp (POT) to state that its export consortium Canpotex is sold out for the rest of the year. Mosaic expects its shipments to top its 2H14 volume when it shipped 4.1 million metric tons. It should also benefit Agrium’s (AGU) shipments. It’s the third partner in the Canpotex consortium. Keep in mind that Intrepid Potash (IPI) isn’t part of Canpotex.
In the next part, we’ll look at the company’s realized potash prices.