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Notes from Potash Conference Call

Originally published Jan. 26 at 3:22 p.m. EDT

I would continue to avoid Potash Corporation of Saskatchewan (POT) .

Here are notes from the company's conference call Thursday:
  • POT reaffirms forecast of 61-64 million tons of potash demand in 2017
  • They don't have the final data for 2016
  • POT had a record second-half Canpotex shipments in 2016; fully committed for 1Q 2017
  • Lower gross margin in the quarter was due primarily to weaker prices in all three nutrients
  • Potash: Decline in spot prices in the first half of last year and lower contract prices settled in the second half of last year
  • Nitrogen: Weaker benchmark prices and realizations due to impact of lower global energy costs and increased supply (lower natural gas costs in Trinidad were the primary driver of reduced per-ton costs)
  • Phosphate: Lower realizations primarily due to weaker fertilizer pricing
  • Sales volumes fell, primarily due to weaker demand for our feed and industrial products
  • Company says there are supportive agriculture fundamentals in most key regions (noted corn, soybeans, sugar and palm oil prices)
  • In North America, a potential pull-back in corn acreage and an increase in soybeans could be slight headwind for nitrogen and neutral for potash and phosphate
  • POT relates that there has been global potash inventory changes
  • Inventory has been drawn down at both producer and distribution level
Regarding M&A with Agrium ( AGU) : Merger regulatory review and integration planning processes expect to be complete in mid-2017.
Position: None.

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