MOSAIC (MOS) Q2 FY26 earnings call: guidance and Q&A

What is the estimated phosphate application reduction in North America for this crop year, and what is the outlook for Latin America, particularly Brazil?

North America phosphate application is estimated to be down 20% this year, on top of a 15% reduction last year, totaling over 30% below normal. Brazil is also forecasted to see a 30% reduction in phosphate application this year, which will significantly impact crop yields.

“So if you compare with the normal typical phosphate application in North America, we're talking about over 30% phosphate down this year in '27. This is a combination of farm economic challenges, affordability issues but also it's an availability issue. So over to Latin America, especially in Brazil, last year, phosphate application didn't really go down, so that was normal last year. We actually saw some growth in Brazil last year. However, this year, we are forecasting similar percentage of the phosphate application down in Brazil by 30% at a neutral level.”

asked by Patrick Fischer · answered by Jenny Wang

Why are Q3 ammonia costs guided higher, and what are the implications for Q3 phosphate earnings given the curtailments and cost absorption?

Ammonia costs are expected to peak in Q3 due to inventory flow-through of contracts settled in June/July and a production mix weighted towards contract negotiations. Lower production volumes will also lead to higher fixed cost absorption, impacting stripping margins, though they are still expected to be above historical averages. Q3 phosphate earnings are expected to be lower than Q2.

“But I would use those as factors as you're looking towards guidance. The other factors to think about are cost absorption for the additional production down in North America. Quarter 2 didn't represent all of those curtailments. Quarter 3, given that those curtailments are likely to be sustained, barring some unforeseen circumstance in the market, we'll have to absorb more of that. So that will affect some of our conversion costs on the margin as well.”

asked by Joel Jackson · answered by Bruce Bodine

Is the previously guided $400 million working capital outflow still accurate, and what are the dynamics behind it?

The $300 million to $500 million working capital release target is still valid, but the timing has shifted. Q2 saw less prepayment inflow in Brazil than expected. Approximately one-third of the release is now expected in Q3 and two-thirds in Q4, driven by collections from Q3 sales and reduced inventory build due to curtailed production in Brazil.

“So we should expect first some release of working capital in Q3, maybe between $100 million and $200 million but the bulk of the $300 million to $500 million will come in the second quarter -- in the fourth quarter when the collections come in. So I would say we are still subscribed to the $300 million to $500 million release. The dynamics has changed a little bit.”

asked by Vincent Andrews · answered by Luciano Pires

Given Bartow is at 40% and Louisiana is offline, what are the implied operating rates for New Wales and Riverview, and how should we think about the network's ability to normalize?

New Wales and Riverview are operating in the mid-70s. The company is optimizing production based on sulfur availability and active market demand, flexing between facilities. While the situation is complex, the facilities have shown capability to run at full utilization when not constrained by sulfur. Ramp-up to full production would take weeks, not months, once sulfur supply normalizes.

“Yes, Chris, I think you're pretty spot on, on the operating rates in the mid-70s at the other facilities. So let me just go back maybe a little bit and set the stage. I think of what you're looking for -- as we came out of Q1, Q2 turnaround at New Wales, prior to the big announcements of curtailments and conserving sulfur inventory that was lower cost out of Q1 and Q2. New Wales was running at its kind of full utilization rate.”

asked by Christopher Parkinson · answered by Bruce Bodine

What is the expected magnitude of idle and turnaround costs in Q3 for Phosphates, and why are potash realizations guided relatively flat despite market strength?

Q3 idle costs are expected to double from Q2's $30 million component, while turnaround costs will halve. The net increase in idle/turnaround costs from Q2 to Q3 will be between $10 million and $20 million, not $100 million-$120 million. Potash realizations are impacted by higher freight rates for exports and a channel mix shift towards more international sales through Canpotex, which have lower netbacks.

“So Matt, the $60 million in Q2 is basically half and half, half idle half turnaround. And so yes, for Q3 that idle component is probably going to double, right? So it's another $30 million. But the turnaround component is going to half probably. So maybe we're talking about $15 million, let's just put a bracket $10 million to $20 million additional from Q3 to Q2. But in the fourth quarter, you're going to have an additional reduction in turnaround because you're not doing turnaround or something which is either, right? So you're going to probably go back to the -- with the [ 6 ] handle in the fourth quarter. So it's not $100 million, it's not $120 million. It's well below that.”

asked by Matthew DeYoe · answered by Luciano Pires

How quickly could production ramp up if conditions normalize, and how was the advantaged Q3 sulfur contract secured, and can it be replicated?

Ramp-up to full production would take weeks, not months, if sulfur supply magically returned, as asset health is being protected. The advantaged Q3 sulfur contract at $705/tonne was secured through long-standing, symbiotic relationships with Gulf Coast refiners, who value Mosaic's consistent demand for molten sulfur. Management expects this relationship to continue to provide favorable terms, though future pricing cannot be guaranteed.

“I think it's worth talking about that we were able to create separation on that settlement cost from what spot solid sulfur was. And I think that is a testament to the relationship that's very symbiotic that we have with Gulf Coast producers here in the United States to be able to take their molten supply and give them a baseload that's very ratable and doesn't jeopardize their primary existence, which is to produce oil and gas.”

asked by Andrew Wong · answered by Bruce Bodine