Reuters — Mosaic Co. said Thursday it will reduce fertilizer production until market conditions improve, as a difficult harvest season in North America has led to reduced fertilizer usage.
Agricultural companies’ profits have been hammered this year due to an unusually cold and wet weather that has delayed planting season in North America, and lower demand fueled by trade war-related uncertainty.
“A third consecutive disappointing application season in North America has led to continuing high inventories and price weakness,” Mosaic CEO Joc O’Rourke said.
The company plans to cut phosphate production at its central Florida facilities by 150,000 tonnes per month, and has already reduced it by 500,000 tonnes in the first half of the year.
“Mosaic will not produce at high rates when we are unable to realize reasonable prices,” O’Rourke said.
The company will also keep operating at lower production rates at its Canadian potash business and said it expects potash and phosphates shipment volumes for the fourth quarter to be modestly below its forecast.
Tampa-based Mosaic’s Canadian potash business includes facilities at Esterhazy, Colonsay and Belle Plaine, Sask.
Production in phosphates and potash “will return to full rates when required to meet customer needs,” the company said in a release.
The next year could also be tough for the fertilizer maker, mainly due to lower price expectations for phosphate, JPMorgan analysts said in a recent note.
Australia’s QBE Insurance Ltd. had earlier flagged harsh weather conditions as it issued a profit warning for its North American crop insurance business.
— Reporting for Reuters by Saumya Sibi Joseph and Shariq Khan in Bangalore.