Will Mosaic’s Purchase of ADM Upset the Potash Apple Cart?

On 15 April Mosaic announced that they were buying Archer Daniels Midland Company’s fertilizer distribution business in Brazil and Paraguay for $350MM. While not yet finalized, this deal would provide blending and warehousing in these countries as well as logistics services.

This seemingly represents a sound strategy in that it expands market access for Mosaic particularly in Brazil. With 2014 GDP growth expected to increase by over three percent, Brazil represents 80 percent of the Latin American potash market, has nutrient deficient soils, and is a large producer of corn, sugar cane and soy beans. This important market grew 4.6 percent in fertilizer use in 2013 alone. This region is further characterized by difficulties in transporting not only the crop nutrients, but also the finished agricultural products. Improved logistics would certainly aid these issues likely improving sales.

Obviously sales of phosphates in this area will be straight forward. However how will sales of potash be affected with this strategy? Campotex seemingly adds an additional wrinkle to this deal. Will the potash tonnes be sold outside of Campotex, or will this just improve movement of Mosaic’s allocation within this region? This certainly has the potential to upset the potash balance, at least in Brazil.

Leave a Reply