Fertilizer Market Review. August 2016

Transcription

1 Fertilizer Market Review August 216

2 A world-class Canadian potash sales and distribution company Created in 197, selling since 1972 Sales to 135+ customers in 6+ countries since 1972 Reliable and Quality Product Three Shareholders Connected. Competitive. Canadian.

3 Canpotex: A Vital Link in the Global Food Story

4 World Fertilizer Consumption and Crop Production Strong Correlation Between Growth in Crop Production and Fertilizer Use Nitrogen Phosphate Potash Crop Production Billion Tonnes Nitrogen Crop Production Consumption Million Tonnes N Crop Production Billion Tonnes Phosphate Crop Production Consumption Million Tonnes P Crop Production Billion Tonnes Potash Crop Production Consumption Million Tonnes K year Correlation.97 2-year Correlation.98 5-year Correlation.91 2-year Correlation.92 5-year Correlation.78 2-year Correlation.87 Source: Fertecon, CRU, USDA, PotashCorp

5 World Grain and Oilseed Supply/Demand Consumption Has Increased for 19 Consecutive Crop Years 3,5 3, 2,5 2, 1,5 Million Tonnes Stock-to-Use Ratio Consumption Production 35% Stocks-to-Use Ratio (World) Stocks-to-Use Ratio (Excl. China) 3% 25% 2% 15% 1% 5% 1, % F Source: USDA, PotashCorp

6 Crop and Fertilizer Price Index Fertilizer Represents Even Greater Value for Farmers 125 Price Index (January 215 Average = 1) Crop Price Index* Fertilizer Price Index** 1 75 Decline in fertilizer prices relative to crop prices provides incentive for farmers 5 * Based on corn, soybean and wheat prices (weighted by global consumption). ** Based on urea, DAP and KCl prices (weighted by global consumption). Source: Bloomberg, Fertilizer Week

7 Brazil Crop Prices and Planting Outlook Robust Brazilian Farm Prices Supports Strong Planting Outlook Brazil Crop Prices (Mato Grasso) Real/Bushel Brazil Planted Area by Crop Million Acres 45 Corn (R$/Bu) 4 Soybeans (R$/Bu) Soybeans Corn 1st Corn 2nd Sugarcane Others F * 216F represents the 216/17 Brazilian crop year. Source: USDA, IMEA, Conab, PotashCorp

8 India Market Update Potential For Above Average Monsoon and Lower Fertilizer Retail Prices Monsoon Relationship to Crop Production Million tonnes (y-o-y change) % of Normal Monsoon (June to Sept) Monsoon Surplus/Deficit 15% 1% 5% % -5% -1% -15% -2% -25% Indian Retail Price for Potash and DAP INR/tonne DAP 25, 2, 15, 1, 5, Potash Source: India Department of Fertilizer, India Meteorological Department, USDA

9 China s Corn Outlook and Fertilizer Application Rate Reduction in Chinese Corn Acreage to Have Small Impact on Fertilizer Use Corn Harvested Area Million Acres F Application Rate Pounds per Acre Nitrogen Potash Source: USDA, IFA, CRU, PotashCorp

10 Southeast Asia Palm Oil Production and Stocks Weather Related Production Issues Tighten Stock Levels Production Million Tonnes Stocks Million Tonnes 7 Indonesia Malaysia Other Ending Stocks F Stacked bars represent palm oil production. 216F refers to the 216/17 marketing year (October to September) Source: USDA

11 No Contract July 27, 26 April 16, 28 March 2, 2, March 3, 215 World Potash Shipments Late Chinese Contract Settlement Has Historically Impacted World Potash Demand Million Tonnes KCl +15% +87% +5% +5% F 217F Denote years when China has had early potash contract settlements. Denote years when China has had late potash contract settlements. Note: 217F based on CRU forecast. Source: Fertecon, CRU, PotashCorp

12 World Potash Supply and Demand Supply/Demand Expected to be Relatively Balanced; Similar to Historical Levels Million Tonnes KCl Shipments POT Shipment Forecast Range CRU Shipment Forecast Operational Capability* F 22F * Estimated annual achievable production level from existing operations; announced probable and possible projects; assuming typical ramp-up periods for new capacity. Probable and possible projects reflect an assessment of project probabilities based on public sources. Source: Fertecon, CRU, IFA, PotashCorp

13 Vancouver Portland Thunder Bay Saint John Canpotex Offices Export Corridors 215 Canpotex Sales

14 Canpotex Historical Sales Volumes 215 Sales by Region 11 1 Million Tonnes KCl Oceania 4.1% Europe 2.% Africa.4% 9 8 North Asia 28.8% Latin America 29.8% Southeast Asia 23.7% South Asia 11.2%

15 Rail Corridors

16 Inland Transportation Canpotex manages and directs the entire inland potash journey over 4, km from mine to port Partnerships with three major railways: Canadian Pacific Railway (CP) Canadian National Railway (CN) Union Pacific Railroad (UP) Canpotex ships among the heaviest bulk unit trains in North America Railcars built by National Steel Car Limited in Hamilton, Ontario, Canada

17 Innovative Railcar Fleet Canpotex has a specialized, custom-built fleet of approximately 5,7 railcars These 47-foot railcars are designed specifically for potash A portion of Canpotex s railcar fleet is dedicated to white potash to ensure product quality Full unit trains of up to 17 railcars Canpotex nearly doubled its trains potash capacity from 9, MT to 17,5 MT since 2

18 Neptune Bulk Terminals Vancouver, BC Portland Bulk Terminals Portland, OR Saint John Terminal Saint John, NB

19 Ocean Transportation Canpotex s forward vessel commitments include 18 new vessels through various joint ventures Canpotex operates approximately 225 vessel voyages per year, making approximately 7 port calls to over 9 ports worldwide Canpotex manages 5-6+ vessels at any given time Canpotex operates clean and modern vessels, with a current average age of four years 95% of sales made on a Cost and Freight (CFR) basis

20 Investing for the Future Current and potential initiatives ensure operational capacity is in place to meet projected future demand Terminal expansions Ongoing terminal capacity improvements Railcar fleet enhancements and efficiencies Additional railcar maintenance services Continued long-term vessel arrangements Overseas transshipment and warehouse facilities Asia container shipments Automatic sampling systems Enhanced product quality dust collection systems Overseas distribution investments Shore power for vessels

21 Growing the Future Potash demand continues to grow in all regions of the world Strongest demand growth (in terms of volume) will occur in the current largest international potash markets of Brazil, China and India Other international potash markets will continue to show strong demand growth including Latin America, Southeast and South Asia and Africa Canpotex is well positioned to service this future growth

22 Thank You