Introduction
Mosaic Co (NYSE:MOS) experienced a drop in share price on Friday following the release of its preliminary fiscal fourth-quarter 2025 results. The shares retreated significantly from their recent trading levels, prompting inquiries into the causes behind this market reaction.
Fertilizer Demand Declines Sharply in North America
The company attributed the decline in its performance largely to a notable contraction in fertilizer demand across North America during the fourth quarter, with the decrease exceeding the usual seasonal downturn typical for this period.
Several factors contributed to the diminished demand for fertilizer in this region. Firstly, ongoing economic pressures affecting farm profitability led to restrained purchasing activity. Secondly, an early onset of winter shortened the season available for fertilizer applications, further curtailing demand.
Within the fertilizer segments, phosphates encountered more significant demand weakness relative to potash. Affordability considerations appeared central, as phosphate prices were less favorable compared to potash, resulting in a roughly 20% year-over-year decline in regional phosphate shipments. Conversely, potash demand fell more modestly.
These dynamics impacted Mosaic's sales volumes in the quarter, with phosphate shipments approximating 1.3 million tonnes and potash volumes totaling about 2.2 million tonnes.
Adjustments in Production and Inventory Challenges
In response to the subdued demand environment, Mosaic revised its phosphate production plan and adjusted its product mix during the quarter. This entailed redirecting certain volumes towards markets demonstrating stronger demand, while maintaining overall production levels close to those seen in the prior quarter.
The combination of weaker sales and the accumulation of higher inventories exerted downward pressure on the company's cash flow performance.
Market conditions in Brazil additionally deteriorated during the quarter. Stricter credit availability for agricultural producers and intensified competition from lower-grade phosphate imports originating from China posed challenges for both demand and margins in that market segment.
Consequently, Mosaic Fertilizantes experienced sales volumes that fell short of internal expectations. Full-year sales for this division stood at approximately 9 million tonnes, effectively flat compared to the previous year but reflecting the overall market slowdown.
Outlook and Market Expectations for 2026
Despite the sharply weaker results in the last quarter of 2025, Mosaic projects an improvement in market conditions heading into 2026. Supply factors are contributing to a tightening in phosphate markets, as demand typically increases in the spring and Chinese export volumes decline amid extended export restrictions. These factors have already begun to support elevated phosphate prices.
For potash, the assessment is that market conditions remain balanced. Early settlement of contracts in China has lent price stability to the segment and provided a positive outlook for the Canpotex export consortium.
Industry forecasts suggest there could be record levels of global shipments for both phosphate and potash fertilizers in 2026. In Brazil, although credit conditions are expected to stay tight, these pressures are likely to be offset by increases in planted acreage and robust crop yields, supporting fertilizer demand as farmers focus on replenishing soil nutrients.
Asset Sale as Part of Strategic Moves
In December, Mosaic announced the sale of its Potash Carlsbad mine and associated assets to International Minerals Carlsbad, LLC, for a transaction value of $30 million. The deal includes an initial payment of $20 million in cash at closing, with deferred payments totaling $10 million scheduled to commence in 2029.
The purchaser assumes responsibility for the site's retirement obligations under the terms of the agreement.
Upcoming Financial Reporting and Market Response
Mosaic has indicated that it plans to release its complete financial results for the fourth quarter of fiscal 2025 on February 24, 2026.
As of the time of publication on Friday, Mosaic's share price was down 4.02%, trading at $26.47 per share.
Conclusion
The decline in Mosaic's stock price follows the company's disclosure of preliminary results marked by significant demand declines in key fertilizer markets, increased inventories, and margin pressures. While these challenges have influenced near-term performance and investor sentiment, the corporation's outlook for 2026 points toward recovery driven by tightening phosphate supplies and balanced potash markets, complemented by strategic asset management decisions.