Mosaic Co (MOS) shares tumbled Friday after the fertilizer producer released preliminary fourth-quarter results that painted a pretty bleak picture of recent market conditions. The stock dropped over 4% as investors digested news of sharply declining demand and lower-than-expected volumes.

When Winter Comes Early, Farmers Stay Home

North American fertilizer demand basically fell off a cliff in the fourth quarter, declining far beyond the typical seasonal slowdown. The culprit? A combination of squeezed farm economics and an early winter that essentially ended the application season before many growers could finish their work.

Phosphates bore the brunt of the weakness, facing what Mosaic described as the "greatest strain" due to lower affordability compared to potash. Regional phosphate shipments plunged about 20% year-over-year, while potash demand held up better with a more modest decline. All of this translated into fourth-quarter sales volumes of roughly 1.3 million tonnes of phosphate and about 2.2 million tonnes of potash.

Brazil Adds to the Pain

Things weren't much better south of the border. Mosaic adjusted its phosphate production plan during the quarter, shifting volumes toward stronger markets and keeping output roughly flat with the prior quarter. But weaker sales and rising inventories put pressure on cash flow.

Meanwhile, conditions in Brazil deteriorated as tighter credit and increased competition from low-grade Chinese phosphate imports hammered both demand and margins. The result? Mosaic Fertilizantes' volumes came in well below expectations, with full-year sales of about 9 million tonnes—flat year-over-year but reflecting the broader market slowdown that gripped the industry.

A Brighter 2026 on the Horizon?

Despite what the company acknowledges was a "very weak fourth quarter," management sees reasons for optimism heading into 2026. Phosphate markets are beginning to tighten as spring demand builds and reduced Chinese exports—following extended export restrictions—start to constrain global supply. That's already supporting higher prices.

On the potash side, markets remain balanced, with China's early contract settlement improving price stability and creating what Mosaic calls a "constructive outlook" for Canpotex. Industry forecasts are pointing toward potential record global shipments of both phosphate and potash in 2026.

In Brazil, ongoing credit tightness is expected to be offset by larger planted areas and strong yields, which should drive fertilizer demand as growers work to replenish soil nutrients.

Shedding Assets

In December, Mosaic announced an agreement to sell the Mosaic Potash Carlsbad mine and related assets to International Minerals Carlsbad, LLC for $30 million. The deal includes $20 million in cash at closing and $10 million in deferred payments beginning in 2029, with the buyer assuming the site's retirement obligations.

The company plans to release complete fourth-quarter 2025 earnings results on February 24, 2026.

MOS Price Action: Mosaic shares were down 4.02% at $26.47 at publication Friday.