Goldman Sachs' Takeaways From Mosaic CFO Meeting

On Tuesday Goldman Sachs met with the CFO and VP of Mosaic MOS at a sell-side lunch in New York City. In a midday note to clients Goldman's Adam Samuelson said the event contained little in the way of "new news" aside from management conveying a view of cautious optimism regarding global demand for P&K in the second half of 2016. Samuelson says Mosaic management was indifferent "to the China contract and would not dismiss the possibility of a move to spot" regarding demand for Potash from India, Brazil and North America once Chinese ambiguity is resolved. As for Phosphates: "encouraged on declining exports from China YTD, which coupled with stronger Indian demand and lower raw materials would improve 2H margins, consistent with its prior views." And on North American demand: " domestic demand was healthy this year and management expects more normal channel refill post-spring. MOS noted that it has yet to see any signs of K+S Legacy tonnes (via Koch) being pre-marketed in NA." As for Esterhazy: "MOS has $150mn left to spend on the initial K3 shaft, which should be completed in 6-9 months. Phase 2, which is intended to supplant K1 and K2 and ultimately eliminate brine inflow costs, is an additional $1.5bn for another shaft and will come at the expense of less sustaining capex for K1 and K2." And finally Canpotex: "proving runs is a legacy of the 70s/80s and that there could be a more efficient means to prove capacity. It expects its Canpotex entitlement to be ~38% at the end of all current expansions." Updates from the company regarding the multi-year capital program are expected during October's analyst day. Shares of Mosaic traded up more than $70 or roughly 2.50 percent ahead of the Tuesday close at $29.06. Mosaic remains Neutral rated with a $24 PT.