By Ian Berry Of DOW JONES NEWSWIRES A downturn in fertilizer prices and demand is temporary, and phosphate prices have already started to rebound following production cuts, Mosaic Co. (MOS) executives said Wednesday, maintaining that long-term prospects for the industry are strong. Mosaic and other fertilizer companies have struggled recently as prices have dipped and demand fallen while fertilizer dealers take a cautious stance on purchases. Uncertainty about the global economy in the face of Europe's debt crisis helped push grain prices lower, which made for what Mosaic CEO Jim Prokopanko called "a pretty gloomy December." The Minnesota-based company reported second-quarter earnings fell 39% and said third-quarter earnings will likely be weaker. But the company said U.S. farmers are still likely to plant a large crop this year, which will help demand and push prices higher again. "We're in a dip, but I think those conditions are starting to abate already," Prokopanko said in an interview. Mosaic, the world's largest phosphate fertilizer producer, announced in December it was cutting phosphate production by 250,000 tons through March due to cautious buyers and declining prices. But prices in the U.S. have rebounded 10% in the last week to $475 per ton, Mosaic Chief Economist Mike Rahm said. Prokopanko said Mosaic did not plan any further phosphate production cuts. Unlike competitor Potash Corp. of Saskatchewan (POT, POT.T), Mosaic does not plan to curb potash production. Potash supply and demand "is in balance for our situation," he said. Mosaic officials added that the phosphate industry should be able to absorb additional capacity coming online, including an estimated 2 million tons in 2012 from a Saudi Arabian mine project. Phosphate shipments in 2012 should hit a record 62 million to 64 million tons, Rahm said, up from 60 million this year and 51 million in 2007. Amid that record demand, China phosphate exports are likely to drop this year, and domestic unrest in key Arab nations could also limit supplies, he said. Meanwhile, the company maintains a bullish outlook for 2012 crop prices as supplies stay relatively tight. Drought is stressing the South America corn and soybean crop, and Prokopanko added that a lack of snow is concerning for U.S. producers. He noted that much of the upper Midwest has seen very little snow, which could mean insufficient soil moisture heading into planting. "You have to be concerned about the North American crop, and what we're going to have," Prokopanko said. Mosaic said it has experienced minimal disruptions from an injunction barring expansion of a phosphate mine in South Fort Meade, Fla. A judge's denial of a request for a limited stay of the preliminary injunction Tuesday was "perfunctory," the company's chief counsel said in an interview, adding that it has no impact on Mosaic's expectation that the expansion will ultimately be permitted. -By Ian Berry, Dow Jones Newswires; 312-750-4072; ian.berry@dowjones.com
