Specialist
Former senior director at Nutrien
Agenda
- Global trade and demand dynamics within fertiliser industry
- Nutrien's (TSE: NTR) competitive positioning, potential threats and direct relationships with farmers
- Recent market share and competitive dynamics with Mosaic (NYSE: MOS) and others
- 2022 fertiliser outlook, including potential for continued elevated costs
Questions
1.
What have been the core drivers of the fertiliser market within the past several months? Could you give an overview of some trends, challenges and opportunities?
2.
As you said, one of the core drivers has really been the elevated prices of ag commodities, particularly corn and soybeans. You mentioned inventories there. Are you expecting a similar pricing environment headed into 2022? I understand China’s buying pattern had a lot to do with the elevated pricing in 2021. Could we expect more of the same for high-than-usual buying of corn from China?
3.
We’ve heard about the logistical challenges resulting from the pandemic, economies shutting down at different times and then trying to ramp capacity back up and moving goods around. How was the NPK [nitrogen, phosphorous and potassium] fertiliser market impacted over the past 18 months? Did that have any read-through impacts on availability and pricing?
4.
You mentioned with pricing of core ag commodity products elevated, farmers are willing to invest more in their crop inputs. How could we quantify exactly how they approach investing more in those inputs? Whether there’s a particular product category, N, P or K, that may have seen more benefits because of this? Could you discuss what happens in a year such as this, where farmers realise pricing has elevated and are willing to invest more?
5.
You mentioned at this point in the year, which is typically considered the off season, a lot of restocking is happening. Is there a way for farmers to put in orders early in a favourable, high-demand environment where the supply chain isn’t as reliable as it once was? Obviously, some volume is moving. What is happening behind the scenes during the off season? What expectations do you have?
6.
Could you discuss Nutrien’s competitive positioning? What are its core strengths or unique characteristics?
7.
Could you discuss Nutrien having a direct relationship with the front line, in a lot of cases farmers directly? Are there tangible ways Nutrien uses that to its advantage? Is there any other player who has that touchpoint to the extent Nutrien does?
8.
How do you think about organic growth within the fertiliser market? In a market such as we saw this past year, the market grows, so there are more markets captured. Are there market share dynamics when we reach retail? Does that simply come down to product availability? Are there differentiators that would drive a farmer’s decision from one brand to another?
9.
How widely do North American players vary for production costs? Where would Nutrien sit on the cost curve relative to other players? Are there wide variations there?
10.
You mentioned logistical costs have gone up significantly, especially for imports to the US in the past year. Could you give a historic overview of imports to the US, and what the import market influence was? Has that changed this past year, with a lot of transportation lanes having exuberant pricing increases? Have they had less of an impact and been priced out of the market?
11.
: Could you discuss the competitive landscape for domestic North American players in the fertiliser sector, especially Mosaic?
12.
: Could you discuss where volume would flow within industrial end markets, and any demand trends within industrial markets?
13.
How fragmented is the fertiliser market outside the larger players? Do the smaller players end up being cost competitive with the largest players?
14.
How should a player such as Nutrien approach consolidation? Is this the type of time where a lot of M&A considerations are happening, given the positive environment?
15.
How should Nutrien position itself for success heading into 2022’s growing season? What is the growth trajectory?
16.
Is there anything that can be done to secure transportation capacity now, ahead of time, or is it mostly spot market-based? How could a player offset some of the transportation risk, or the risk around product availability?
17.
What do you think of the quality of leadership throughout Nutrien? What do you think of its capabilities for managing the challenges you laid out?
18.
Is there anything you think we missed that you would like to highlight or expand on? What questions would you have for Nutrien’s leadership?
