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Investing.com -- Shares of The Mosaic Company (NYSE:MOS) dropped 3.2% following the company’s updated guidance on phosphate and potash sales volumes. Despite higher phosphate price forecasts, Mosaic revised its second-quarter phosphate sales volumes down from 1.7-1.9 million tonnes to 1.5-1.6 million tonnes, and its full-year production volume from 7.2-7.6 million tonnes to 7.0-7.3 million tonnes.
The company’s Bartow and New Wales phosphate facilities are seeing improvements in production rates, with New Wales expected to increase production by over 20% in the second quarter. However, extended downtimes at the Riverview facility and additional repairs required at the Louisiana facilities have impacted production volumes. Mosaic remains confident in its production plans for the second half of the year, aiming for an 8 million tonne target run rate across its U.S. phosphate assets.
Potash sales volumes for the second quarter remain unchanged at 2.3-2.5 million tonnes, with full-year production guidance also steady at 9.0-9.4 million tonnes. The stable potash price guidance, with mine-gate MOP prices expected to be between $230 to $250 per tonne, reflects a firm market.
Barclays (LON:BARC) analyst Benjamin Theurer commented on the situation, stating, "We expect this to be short-term negative for MOS shares, but our LT investment thesis remains unchanged. Given the surprise announcement this morning, and the magnitude of the volume revision, we would expect a negative stock price reaction. Despite stronger pricing, specific issues at the company’s Riverview facility are causing the lack of volume."
Investors are reacting to the mixed signals from Mosaic’s guidance, balancing the positive pricing outlook against the operational challenges that are affecting volume. The company’s acknowledgment of stronger market conditions for DAP prices, which are now expected to range from $650 to $670 per tonne, up from the previous $635-$655 range, indicates a robust demand that could bolster future performance. However, the immediate impact of the revised volume guidance has led to today’s stock price decline.
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