Mosaic faces pressure after White House suspends Morocco duties

Investing.com -- The White House announced Monday night a temporary suspension of antidumping and countervailing duties on certain phosphate fertilizers imported from Morocco. The emergency authorization allows for an eight-month suspension of duties, or until the emergency is terminated.

The suspension removes duties of up to 16.8% that were originally implemented in 2021. The decision addresses production curtailments stemming from the availability and price of sulfur, an input for phosphate-based fertilizer production.

Mosaic Corp (NYSE: MOS) and other limited domestic phosphate producers expressed support for the continued duties under review. The countervailing duties have faced more industry resistance, with Nutrien (NYSE: NTR) notably in favor of lifting them.

Oppenheimer expects Mosaic shares to be weaker on the news amid expectations for additional supply from Morocco. The firm noted that phosphate affordability, both production and use, is under pressure.

The impact on domestic pricing is expected to develop over a longer period. The current period is not a seasonal period of high demand, limiting real price discovery. Phosphate producers are awaiting third-quarter sulfur contract prices before setting third-quarter and fourth-quarter production expectations.

Phosphate prices remained elevated through June at approximately $778 per short ton NOLA, up 7% year-over-year and 41% from June 2024 levels, as sulfur continues to restrict phosphate production. Settlement of the third-quarter Tampa sulfur contract is expected soon, with pricing expected to increase from the second quarter's settlement price of $655 per long ton CFR.

Morocco's OCP has also curtailed production due to weak stripping margins, reducing the real-time supply response.

The emergency relief is part of the Trump administration's efforts to offset costs of the trade war and Iran conflict on U.S. agriculture. The administration recently called on Congress to authorize an additional $11 billion in farmer aid and to pass authorization for year-round E15 sales.

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