Overview
S&P Global Ratings has shifted its outlook on The Mosaic Co. to negative from stable but maintained the company's BBB issuer credit rating. The agency said it now expects funds from operations to debt to slip below 20% in 2026 - down from a previously cited 30% downside trigger - driven by margin pressure in the phosphate business caused by high sulfur and ammonia prices.
Earnings and margin outlook
S&P projected that its adjusted EBITDA estimate for Mosaic will decline to about $1.6 billion in 2026, down from $2.6 billion in 2025. The rating agency attributes much of the reduction to an acute shortage of sulfur sourced from the Persian Gulf - a region that supplies roughly 50% of global traded sulfur - and to elevated ammonia costs, both of which have weakened phosphate margins during the first half of the year.
Operational response and economics
Faced with spot sulfur prices exceeding $1,000 per ton and ammonia topping $600 per ton, Mosaic has curtailed marginal production because incremental phosphate stripping margins have become uneconomic. The company has reduced marginal output as input costs make additional production unprofitable.
Market dynamics and demand
Earlier in the year, an effective closure of the Strait of Hormuz and the resulting drop in global exports temporarily pushed phosphate prices higher in the first half of 2026. However, near-record fertilizer unaffordability combined with weak crop pricing has depressed demand, with farmers deferring purchases. That demand softness has prevented further price increases and has lowered both North American and global phosphate shipments.
Company management expects phosphate application to be down about 30% in both Brazil and North America, reflecting the demand pullback.
Cash flow, capital spending and liquidity
S&P expects Mosaic's discretionary cash flow to remain in a deficit of $400 million to $500 million in 2026, which would increase the company's debt load, before turning modestly positive in 2027. The negative free cash flow outlook stems from weak earnings and from maintenance and reliability spending in the phosphate segment.
Through June, the phosphate segment recorded EBITDA of $243 million while capex totaled $423 million. The company trimmed its 2026 capex guidance earlier in the year by $250 million.
As of June 30, Mosaic had about $1 billion of short-term borrowings, including $519 million of commercial paper and $500 million of inventory financing. In the second quarter, Mosaic drew a $1 billion delayed draw term loan to refinance around $500 million of commercial paper.
The company faces debt maturities of $700 million in 2027 and $547 million in 2028, plus an additional $500 million due before 2029.
Note: This article reports on S&P Global Ratings' outlook change and Mosaic's financial and operational metrics as detailed above.