Market Outlook and Key Assumptions
Strong agricultural commodity pricing trends are expected to continue driving demand for fertilizers through the end
of the year and into 2022. Rising input costs have narrowed grower profitability, but farmer economics in most global
growing regions remain attractive as a result of strong crop demand and favorable weather. In North America, Brazil
and China, domestic crop prices continue to justify nutrient application to drive higher yields, while in India, the
recently increased government subsidy rate for fertilizer is expected to improve importer economics and increase
availability of phosphates.
China's domestic phosphate industry is undergoing significant change as growing industrial phosphate demand
competes with agricultural applications. Through the first nine months of 2021, China's phosphate exports totaled
10 million tonnes, up 45% from the prior year period, but exports are expected to slow in the fourth quarter and into
2022 as a result of the directive from China's National Development and Reform Commission limiting new export
commitments in order to ensure adequate supply is available for China's domestic demand. We expect fourth
quarter exports to be down from last year, leaving total 2021 exports to end the year up 1.0 to 1.5 million tonnes
from 2020 levels.
In potash, low inventories in India, down 59% year over year, and China, down 26% year over year, suggest the
potential for early settlement of contracts for 2022. In the U.S. and Brazil, demand remains solid though we expect
the pace of growth to slow in 2022. In Southeast Asia, strong palm oil prices are expected to drive significant
demand growth.
Approximately 90 percent of expected fourth quarter phosphate and potash segment sales are already priced. In
phosphates, the company expects to realize fourth quarter price improvements of $55 to $65 per tonne over the
third quarter. Fourth quarter per tonne raw material costs are expected to be $5 to $10 higher than the third quarter.
Potash prices in the fourth quarter are expected to be $110 to $130 per tonne higher than third quarter average
realized prices.