瑞信-美股-肥料行业-美国农业科学：Ag在宏观上稳定但空间仍然拥挤-2019.2.4-47页.pdf

DISCLOSURE APPENDIX AT THE BACK OF THIS REPORT CONTAINS IMPORTANT DISCLOSURES,ANALYST CERTIFICATIONS,LEGAL ENTITY DISCLOSURE AND THE STATUS OF NON-US ANALYSTS.US Disclosure:Credit Suisse does and seeks to do business with companies covered in its research reports.As a result,investors should be aware that the Firm may have a conflict of interest that could affect the objectivity of this report.Investors should consider this report as only a single factor in making their investment decision.4 February 2019Americas/United StatesEquity ResearchFertilizers Agricultural Sciences Sector QUARTERLYResearch AnalystsChristopher S.Parkinson212 538 6286christopher.parkinsoncredit-Chris Counihan44 20 7883 7618chris.counihancredit-Victor Saragiotto55 11 3701 6303victor.saragiottocredit-Amanda Foo603 2723 2089amanda.foocredit-Fahd Niaz,CFA65 6212 3035fahd.niazcredit-Graeme Welds212 538 8463graeme.m.weldscredit-Ian Miller55 11 3701 6336ian.millercredit-Kieran de Brun212 538 3440kieran.debruncredit-Harris Fein212 538 3064harris.feincredit-Stable Ag Macro,but Still a Crowded Space19 Outlook Healthy on Probable Trade Resolution,FMC Top Ag Pick:After multiple years of our L-shaped recovery call on the ag macro,were modestly more constructive in 19 due to:(i)healthy coarse grain/oil seed demand,(ii)specialty crop growth,(iii)upside optionality from a potential US/China trade resolution,and(iv)a favorable election cycle backdrop(India,Argentina,etc.).In our view,corn and soy prices will likely push towards the upper end of CSe LT ranges of$3.70-$4.20 and$8.50-$10.00,respectively.Given the high degree of volatility likely to persist in soft commodity markets,we recommend being selective in stock selection,stressing FMC/Corteva(DWDP)are the best ways to play the ag macro.US/China Trade Optionality Drives Cautious Optimism:Its difficult to predict the outcome of US/China trade negotiations,but we believe the risk(from here)is to the upside.There have been positive signs such as China granting new trait approvals,but tensions between the two nations clearly remain elevated in light of ongoing legal actions.We believe there are clear incentives for both parties to reach a deal.The US is well positioned to help China reach its E10 goal,while restoring/growing Chinese grain demand would be a boon for a key component of the Trump support base.Plenty of Supply Availability in Global Ferts,Potash Is Best Balanced:Within ferts,we retain our view all 3 macro fertilizers will remain supply-driven,w/potash preserving the best 1H19 S/D balance.The nitrogen S/D remains at risk(vs.expectations)given:(i)ample new supply(FSU,ME&Africa),and(ii)moderating 4th quartile input costs.We view gas availability improvements in EE,T&T and Central Asia and/or any shift in rhetoric on Iranian sanctions as key supply risks.CF and NTR are arguably reflecting some of this risk,but we still view upside as limited(for now).Phosphate prices continue to decline in the Americas/Asia,which investors are shrugging off,citing lower inputs.We anticipate ample new supply(MENA,etc.)to meet stable 19 demand,posing slight downside risk to bullish expectations despite lower raws.Expect only slight declines in Chinese exports as more efficient producers ramp to offset environmental closures.CPC Outlook Is Producer DependentAsian/Latam Volume Growth:We believe global CPC markets will only muster 1-2%growth in 19,which is underscored by a mostly-healthy Asia,solid Latam and stable US.European growth will likely be fairly muted,given weak crop economics and a challenging local regulatory environment(glyphosate,chlorpyrifos,neonicotinoids,etc.)new product launches/EE exposure are integral to Euro growth.On the cost front,AI inflation appears to be easing,but input headwinds will likely still be prevalent in 1H19,a theme across the sector.New Estimates:MOS(19 EPS$2.25 TP$30),NTR(19 EPS$3.60,TP$55),CF(19 EPS$2.71,new TP$46),FMC(19 EPS$5.80,TP$114).每日免费获取报告1、每日微信群内分享7+最新重磅报告；2、每日分享当日华尔街日报、金融时报；3、每周分享经济学人4、行研报告均为公开版，权利归原作者所有，起点财经仅分发做内部学习。扫一扫二维码关注公号回复：研究报告加入“起点财经”微信群。4 February 2019Agricultural Sciences Sector2Table of contentsGlobal Ag Market Updates4Global Market Summary.4Latam Market Update.5Ag Chemical Outlook.5Central Asia Update.6Other Global Data Points.6Global Nitrogen Overview8Global Nitrogen Price Outlook.11Key Nitrogen Input Prices.13Nitrogen Price Performance.13Global Potash Overview15Global Potash Price Outlook.16Global Potash Market Outlook.17Potash Price Performance.18Global Phosphates Overview19Global Phosphates Price Outlook.20Phosphates Price Performance.21Asian Palm Oil Sector:The Tide Is Shifting222018 was a perfect storm.22CPO price recovery in sight.22A rising tide lifts all boats.25Pakistan Fertilizer Sector Update26Global Soft Commodity Overview29Global FX Overview30Recommended Reading32CS Global Agriculture Team33CF Industries Holding Inc.(CF)34Mosaic Co.(MOS)36Nutrien Ltd.(NTR)38FMC Corporation(FMC)404 February 2019Agricultural Sciences Sector3Figure 1:Summary of Changes to EstimatesEPS EstimatesPrev.EstimatesFY18FY19FY18FY19NTR$55-$2.66$3.60$2.75$3.47We see stable potash pricing until 2H19/20 when headwinds should begin to mount.Nitrogen pricing will likely be volatile again in 19 but capital deployment remains key optionality.MOS$30-$1.92$2.25$1.90$2.15Risks to P pricing are ample in 19 as new capacity ramps in MENA,and potential remains for Indian production to recover from low base.K pricing should be stable until supply headwinds begin to build in late 2H19/early 20.CF$46$47$1.44$2.71$1.55$2.50We continue to see choppy nitrogen prices as new supply comes online in international markets.Fluctuations in global gas prices and availability also add to the risk of volatility in 19 as production remains idled in several key geographies.Ticker TPPrev.TPCommentsSource:Credit Suisse estimates4 February 2019Agricultural Sciences Sector4Global Ag Market UpdatesGlobal Market SummaryGlobal crop prices remain at stable levels early in 19.In North America,US-China trade negotiations and farmer planting intentions are the two key NT drivers of sentiment for the ag macro.Negotiations between the US and China are offering hope to financial markets for a prompt conflict resolution,but the timing and terms of a solution remain uncertain.Recent events suggest a potential de-escalation in the confrontation between the two nations,which we suspect will eventually lead to a deal(though uncertainty remains).The focus remains on soybeans(poised for a large reaction in the event of a resolution),but we stress much more could be at stake.In late December China announced its intentions to purchase US rice for the first time ever,promptly after resuming US soy imports.Its reasonable to assume the US ag trade balance with China will subsequently improve over the coming years,spanning oil seeds/coarse grains,among other goods.Regardless of ones political views,from our perspective the US farmer will eventually be better off.Given growing Brazilian competition in the global ag trade,we argue improving US-Chinese ag trade relations is key to maintaining the US industry leading position.In 2019 we maintain our expectation for US farmers to plant 3-4mm incremental acres of corn(vs.89.1mm in 18/19 marketing year).The USDA has not released any of its usual reports thus far in January as a consequence of the ongoing government shutdown in the US,but media wires indicate past reports will be released on February 8th.The lack of US data indicates domestic markets have been largely sentiment driven since the year began.The key catalyst remains the USDA prospective plantings report on March 29th.Our early expectations are for acreage numbers to roughly align with our current view,but any trade breakthroughs may lead to shift in farmers intentions for some key marginal acres.Given the success of the US farmer on the yield front(thank Bayer&DuPont for yield enhancing tech and better population densities),we expect trend-line yields for corn and soy to be in the 175-177 bu/ac and 50-52 bu/ac ranges,respectively.The key delta to the US stock:use ratios(other than yields)will still be export expectations,which may vary greatly,dependent on any trade deal with China bottom line,export#s are likely to rise.Developments in the Latin America growing season will be crucial in establishing market fundamentals for 2019(more details below).South American corn and soybean production was strong in 2018 despite poor weather conditions in Argentina.Normalized weather conditions will likely allow for another large crop which should dampen the prospects for significant price appreciation(notwithstanding geopolitical changes as described above).Wheat production in Europe in 2018 was heavily impacted by a severe drought which crippled yields across a broad expanse of the continent.This impacted EU producers in Western Europe as well as Eastern European farmers in Russia and Ukraine.Russian and Ukrainian wheat production are estimated to have fallen 17%and 8%respectively.Wheat prices have been positively impacted as a result.Following the drought,there was also an expectation among some traders that Russia might curb its exports in order to ensure domestic availability of product,however the Russian ag ministry has given no signs that it intends to place any limitations on exports.Meanwhile,South Africa has also been in the midst of a drought which has compromised planting of corn and soybeans in key Western growing areas.South Africa enjoyed strong production in 16/17 and 17/18 but the current season is shaping up to be far more challenging.Planted acreage is the smallest it has been since the drought of three years ago and conditions for yields are far from ideal.As a result of our key geographic views,we see corn and soybean prices in the ranges of$3.70-$4.20/bu and$8.50-$10.00/bu,respectively likely at the higher end of these ranges.4 February 2019Agricultural Sciences Sector5Latam Market UpdateThe Soybean harvest is underway in Brazil with 2.1%of the nations crop harvested so far,but most states are reporting weaker yields yr/yr(2018 was a record year for yields).Reported yields are down 4-5%on average so far,and early planted/harvested soybeans are being hit the hardest because of the dry conditions in December.CONAB recently reduced its estimate for the 2018/19 soybean crop by 1.2mmt to 118.8mmt.This was not as large a reduction as had been expected by many observers,but expectations are for another cut to estimates in February.Meanwhile,Safrinha corn planting has begun in Brazil.CONAB left its 2018/19 corn production estimate unchanged at 93mmt but observers expect final production to come below this estimate,though the final outcome will depend heavily on how the Safrinha season develops.Concerns regarding the Safrinha crop are driven by low rainfall levels which have characterized Brazils typical rainy season.The situation is quite different in Argentina where the weather has been very wet recently.In the north,more rain is expected,which is weighing on the crop outlook there,but the rest of the country appears to be benefitting from favorable weather.Crop conditions for both corn and soybeans in Argentina is improving in recent weeks giving some optimism for the outlook in 2019 following challenging conditions in 2018.Ag Chemical OutlookWe expect modest single digit growth again in 2019 as crop chemical markets continues their gradual recovery from the 15/16 downturn.Farm economics remain generally stable amid lower soft commodity prices being offset by higher production.However,cost inflation for active ingredients and other intermediates will likely flow through to pricing,while acreage shifts may also be a positive for chemical consumption(corn is more input intensive vs.soy).As always,weather/the regulatory environment will be swing factors.Tighter regulatory scrutiny on several active ingredients represents an ongoing potential headwind for crop chemical market growth.2018 saw significant noise around glyphosate-as a California court ruled against Monsanto with respect to the carcinogenic potential of Roundup(now being appealed)and Brazils attorney general proposed to ban the use of glyphosate(which was later overruled).The European Commission has taken a hard line against a number of chemistries including neocotinoids and chlorpyrifos.The potential loss of existing product registrations and/or delays in new registrations represents headwinds to industry growth,accounted for in our global CPC growth ests.We expect APAC and Latam to be the primary drivers of growth in 2019.In North America,we expect LSD growth in 2019.While farmer economics remain challenging,we believe an improving industry inventory position and a favorable switch from soybean to corn will benefit the industry in 2019 and encourage volume growth on stable demand.In Latin America,we expect LSD growth in 2019 as channel inventories are at healthier levels vs.the prior year.This should facilitate both higher volumes and pricing.Modest acreage growth in Brazil should also benefit volumes and the new political regime installed in Brazil has quickly shown itself to be a fierce ally of the agricultural sector.We anticipate government support should boost acreage and access to credit in Brazil.4 February 2019Agricultural Sciences Sector6In EMEA,we expect flat to LSD growth in 2019 assuming normal weather conditions.Weather variability continues to be the biggest swing factor as several producers noted dry conditions in Northern Europe pressured sales in 2H18.In APAC,we expect continued L-MSD growth in 2019,with potential for upside depending on weather conditions.Compared to the rest of the world,the Asian demand outlook is much more favorable in SE Asia and India,while a number of producers have reported strong adoption of new herbicide products in China.Central Asia UpdateThe interim 19/20 Indian govt budget was published last week,which includes increased allocations for urea subsidies by 11%.Most of the allocation increase is dedicated towards accommodating spend arising from the startup of new domestic urea capacity(Matix,Chambal,etc.).However,the allocation for offshore urea has also been increased slightly.The marginal increase in the allocation for offshore urea suggests little expectation for growth in urea imports.However,its worth highlighting that last years subsidy budget for offshore urea was far exceeded,given the weakness of domestic production.With general elections set to be called in 2019,we believe the government is likely to be very accommodative of farmers needs.As a result,we expect Indian fertilizer demand to be well supported.This should bode as a positive across all nutrients,but the Indian government clearly remains intent on establishing a strong domestic sector in nitrogen and phosphate.Given the challenges with gas and acid availability in 18,domestic production is entering 2019 on a very low base.Any improvements in