Mosaic Cuts Phosphate Output as Sulfur Shortage Bites

Mosaic is throttling phosphate production across its U.S. and Brazilian facilities, with its Louisiana plant fully idled and Florida operations running at reduced rates, as a shortage of sulfur drives raw-material costs to levels the company says are unsustainable for the industry.

Chief Executive Bruce Bodine described the situation as a difficult market shaped by unusually high sulfur prices and constrained supply. The company has limited purchases of high-cost raw materials while maintaining its assets for a future return to higher operating rates. Bodine said Mosaic secured a meaningful portion of its third-quarter U.S. sulfur needs at prices below the spot market, though still at historically elevated levels.

“Mosaic is working through a difficult market by successfully managing what is under our control and positioning ourselves for an eventual recovery,” Bodine said during the company’s second-quarter 2026 earnings call.

Mosaic cited the continued closure of the Strait of Hormuz and a Kazakhstan blockade as factors disrupting global sulfur flows. Spot sulfur prices are not economically sustainable for the phosphate industry, the company said, and have prompted production reductions across the sector.

Bodine estimated that global phosphate production could fall short of last year’s output by as much as 30 million tons if supply constraints persist. Lower fertilizer availability, combined with reduced application rates in prior periods, could affect crop yields and create food-security challenges, he said.

In North America, Executive Vice President of Commercial Jenny Wang said Mosaic estimates phosphate application fell nearly 15% below normal last year and could decline another 20% this year. Compared with typical application levels, that would represent a reduction of more than 30% in 2027, she said. In Brazil, Mosaic expects phosphate application to decline by roughly 30% at the nutrient level this year after application was relatively normal and showed some growth last year. Wang said Mosaic has observed yield pressure in some major Brazilian states despite increased harvest acreage.

The company expects phosphate prices to remain near current levels because sulfur-related supply challenges and lower Chinese exports are limiting global availability. Bodine also said the temporary suspension of U.S. countervailing duties on phosphate imports from Morocco has not affected New Orleans prices, as producers can obtain higher netbacks in markets outside the U.S.

Chief Financial Officer Luciano Siani Pires said second-quarter U.S. phosphate raw-material costs averaged $522 per long ton for sulfur and $621 per ton for ammonia. Those costs produced an average realized stripping margin of $422 per ton. For the third quarter, Mosaic expects realized sulfur costs of approximately $700 to $710 per ton and ammonia costs of approximately $610 to $620 per ton. The company guided for DAP FOB prices of $820 to $840 per ton, which Pires said implies a realized stripping margin above historical averages despite higher input costs.

Management cautioned that curtailments will reduce fixed-cost absorption and increase idle expenses in the phosphate and Fertilizantes segments during the third quarter. Bodine said stripping margins are expected to decline sequentially but remain above historical levels. Phosphate sales volumes are expected at 1.1 million to 1.4 million tons in the third quarter, compared with 1.4 million tons produced and sold during the second quarter.

Mosaic’s Louisiana fertilizer production is fully idled. Bartow is operating at approximately 40%. Other Central Florida facilities are running at rates in the mid-70% range, constrained by sulfur availability. Bodine said the company could restore production within weeks, rather than months, if sulfur supply conditions normalized.

Mosaic characterized potash conditions as comparatively balanced, with supply meeting demand in major consuming regions. The summer fill program was fully subscribed, and the company expects the potash market to remain constructive through the year. Mosaic completed Esterhazy’s annual turnaround in the second quarter and expects lower potash unit costs in the second half as volumes from the Hydrofloat Project increase. Second-quarter MOP costs of $84 per ton reflected a production mix weighted toward higher-cost Colonsay volumes, Pires said.

In Brazil, Mosaic curtailed commodity phosphate production because of sulfur conditions but reported $60 million of EBITDA from its Fertilizantes business in the second quarter. Management expects third-quarter profitability to be below that level, although the seasonally stronger distribution business, co-product sales and an expected contribution from Mosaic Biosciences should support positive results. Pires said Mosaic expects approximately $30 million in Biosciences sales in Brazil during the third quarter, with a contribution margin near 40%. Bodine said Mosaic Biosciences remains on track to double its revenue again this year.

Mosaic reduced SG&A expenses by 20% year over year in the second quarter, citing spending discipline, lower support-labor costs, lower bad-debt expense and benefits from divestitures. The company expects further SG&A reductions in the second half.

Mosaic lowered its full-year capital expenditure outlook to $1.2 billion from $1.25 billion previously and from an earlier $1.5 billion level. Management expects free cash flow to improve sequentially in the third and fourth quarters, supported by lower spending, cost reductions and a projected $300 million to $500 million working-capital release. Pires said roughly $100 million to $200 million of the working-capital release may occur in the third quarter, with the larger portion expected in the fourth quarter as Brazil customer collections increase.

During the second quarter, Mosaic put in place a $1 billion term loan to replace and extend short-term commercial-paper maturities. The company refinanced $500 million of commercial paper in June and the remainder in July. Mosaic said it has not drawn on its $2.5 billion revolving credit facility.

Separately, Mosaic completed the sale of Carlsbad, continues to advance a potential divestiture of its Araxá complex, and is evaluating opportunities involving land holdings. Mosaic also recorded a noncash write-down related to a previously considered purified phosphoric acid and battery cathode materials project, which Bodine said the company no longer expects to pursue.

For broader context on the commodity supply chain, see AlphaScala’s commodities analysis.