UPDATE 2-Fertilizer maker Mosaic cuts phosphate output as costs rise

Tue Sep 30, 2014 12:26pm EDT
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(Updates with CEO interview, comments from other producers, analyst)

By Rod Nickel

Sept 30 (Reuters) - Mosaic Co, the world's largest maker of finished phosphate products, said on Tuesday it will reduce phosphate output due to rising costs, while it also moderated its sales expectations.

The U.S. fertilizer producer said the output cut, due to the high costs of raw materials sulfur and ammonia, is not expected to result in layoffs.

The reduction comes as corn and soybean prices have fallen to multiyear lows due to expectations of record U.S. production. Softening prices reduce the income farmers have to spend on fertilizer, although big crops offset the price drop somewhat.

Costs have escalated with strong demand for sulfur and due to ammonia output curtailments in Ukraine, Trinidad and elsewhere.

Mosaic is setting its phosphate production levels on a month to month basis, Chief Executive Officer Jim Prokopanko said in an interview. He declined to quantify the size of the cut but said it would be "system-wide". The company operates facilities in Florida and Louisiana.

"The timing is going to be largely dependent on how these markets react, what happens to our raw material costs," Prokopanko said.

"We don't want to take a risk of having very high-priced inventories and possibly weaker pricing."   Continued...