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Earnings Results: Fertilizer company Mosaic sees high ag-commodity prices continuing due to Russia-Ukraine conflict

Fertilizer and feed producer Mosaic Co. late Monday said Russia’s invasion of Ukraine continues to push prices of some agricultural commodities higher, with the conflict also impacting fertilizer supplies amid low stocks globally.

Russia and Ukraine together supply more than a quarter of the world’s wheat and barley, 16% of corn, and more than three quarters of global sunflower oil, Mosaic
MOS,
-0.03%

said.

That “supply uncertainty” continued to drive grain and oilseed prices higher, and prices were already higher before the February invasion amid a 20-year low in global stocks-to-use ratios, the company said.

Related: Corn futures climb to their highest prices in nearly a decade

Mosaic reported first-quarter earnings after the bell Monday, with shares down more than 2% following mixed results.

The Tampa, Fla., company said it earned $1.18 billion, or $3.19 a share, in the first quarter, compared with $157 million, or 41 cents a share, in the year-ago period.

Adjusted for one-time items, Mosaic earned $2.41 a share.

Revenue rose 71% to $3.9 billion as “stronger pricing more than offset lower volumes,” Mosaic said.

Analysts polled by FactSet had expected the company to report adjusted earnings of $2.40 on revenue of $4.1 billion.

Mosaic said it expects higher annual production in both potash and phosphates across the globe and a recovery of phosphate output from its North American operations.

“We take our responsibility of helping the world grow the food it needs very seriously and are working to mitigate some of the impact of reduced global supply by efficiently maximizing output,” the company said.

Mosaic said the Russia-Ukraine conflict is also impacting fertilizer supply. Russia accounts for 20% of the world’s nitrogen, phosphate and potash exports, and, when combined with Belarus, 40% of the global potash supply is at risk, Mosaic said.

“Russian exports of all three nutrients have declined since the beginning of the conflict and sanctions against Belarus remain in place,” Mosaic said. Moreover, for both potash and phosphates, supply-chain constraints and COVID-related impacts “are only just beginning to abate.”

“Disappointing rail service in North America experienced during the first quarter has improved but is not expected to reach normal performance levels until the second half of 2022,” the company said.

That and other issues, including road and port congestions in Brazil and higher demand, “point to persistent tight markets for both phosphates and potash,” Mosaic said.

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