Lower phosphate and potash prices slash Cargill’s Q1 earnings

Phosphate is primarily used in fertilizer, although it is also added to processed foods for increased water retention and improved texture in, for example, meats, cheeses, beverages, and bakery goods. Its price shot up last year, up 120 percent in 2008 compared to 2007, largely on the back of short supply and increased demand for biofuels. But sales have fallen and prices along with them, meaning that phosphates only made up 14 percent of Mosaic’s net sales during Q1 2010, compared to 39 percent for the previous year. While phosphate prices plunged from $1,013 a tonne a year ago to $276 in the first part of fiscal 2010, volatile grain and oilseed prices have also contributed to declining sales volumes of potash, The Mosaic Company said – and prices have also fallen on lower demand, to $382 a tonne, compared to $488 last year. Cargill has blamed the fall in its net earnings, which were $525m compared to a record $1.49bn for the first quarter of 2009, on this “sizable decline in earnings” from its majority investment in The Mosaic Company, but insisted that it had still had a solid quarter. Cargill’s chairman and CEO Greg Page said in a statement: "Cargill posted a solid quarter, notwithstanding the comparison to last year's all-time record. Our business unit earnings were broad based, and they were up considerably from the final two quarters of fiscal 2009. We've stayed focused on delivering solutions to customers, which drives the continuing investment in our people, facilities, technologies and innovation. All of this makes us optimistic about Cargill's ability to grow and to help our customers succeed in this still-fragile world economy." As a private company, Cargill does not publish its full financial results, nor give a breakdown of performance across divisions. However, it said that earnings in agriculture services and food ingredients and applications were up from last year's first quarter, “due in part to lower raw material costs, reduced operating costs and changes to product mix.”

Lower phosphate and potash prices slash Cargill’s Q1 earnings

Cargill has reported a 65 percent drop in earnings for the first quarter of fiscal 2010 from the same period last year, partly due to the company’s investment in phosphate and potash suppliers The Mosaic Company.

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