Market Update October 218
Forward Looking Statements 2 Certain statements and other information included in this presentation constitute "forward-looking information" or "forward-looking statements" (collectively, "forwardlooking statements") under applicable securities laws (such statements are often accompanied by words such as "anticipate", forecast, "expect", "believe", "may", "will", "should", "estimate", "intend" or other similar words). All statements in this presentation, other than those relating to historical information or current conditions, are forward-looking statements, including, but not limited to: our market outlook for 218, including potash, nitrogen and phosphate outlook and including anticipated pricing of and supply and demand for our products and services, expected market and industry conditions with respect to crop nutrient application rates, planted acres, crop mix, crop ending stocks, prices and the impact of currency fluctuations and import and export volumes. These forward-looking statements are subject to a number of assumptions, risks and uncertainties, many of which are beyond our control, which could cause actual results to differ materially from such forward-looking statements. As such, undue reliance should not be placed on these forward-looking statements. All of the forward-looking statements are qualified by the assumptions that are stated or inherent in such forward-looking statements, including the assumptions referred to below and elsewhere in this document. Although Nutrien believes that these assumptions are reasonable, this list is not exhaustive of the factors that may affect any of the forward-looking statements and the reader should not place an undue reliance on these assumptions and such forward-looking statements. The additional key assumptions that have been made include, among other things, assumptions with respect to Nutrien's ability to successfully integrate and realize the anticipated benefits of its already completed (including the merger of Agrium and PotashCorp) and future acquisitions, and that we will be able to implement our standards, controls, procedures and policies at any acquired businesses to realize the expected synergies; that future business, regulatory and industry conditions will be within the parameters expected by Nutrien, including with respect to prices, margins, demand, supply, product availability, supplier agreements, availability and cost of labor and interest, exchange and effective tax rates; the completion of our expansion projects on schedule, as planned and on budget; assumptions with respect to global economic conditions and the accuracy of our market outlook expectations for 218 and in the future; the adequacy of our cash generated from operations and our ability to access our credit facilities or capital markets for additional sources of financing; our ability to identify suitable candidates for acquisitions and divestitures and negotiate acceptable terms; our ability to maintain investment grade rating and achieve our performance targets; assumptions in respect of our ability to sell equity positions, including the ability to find suitable buyers at expected prices and successfully complete such transactions in a timely manner; the receipt, on time, of all necessary permits, utilities and project approvals with respect to our expansion projects and that we will have the resources necessary to meet the projects approach. Events or circumstances that could cause actual results to differ materially from those in the forward-looking statements include, but are not limited to: general global economic, market and business conditions; the failure to successfully integrate and realize the expected synergies associated with the merger of Agrium and PotashCorp, including within the expected timeframe; weather conditions, including impacts from regional flooding and/or drought conditions; crop planted acreage, yield and prices; the supply and demand and price levels for our products; governmental and regulatory requirements and actions by governmental authorities, including changes in government policy, government ownership requirements, changes in environmental, tax and other laws or regulations and the interpretation thereof; political risks, including civil unrest, actions by armed groups or conflict and malicious acts, including terrorism; the occurrence of a major environmental or safety incident; innovation and security risks related to our systems; the inability to find suitable buyers for our equity positions and counterparty and transaction risk associated therewith; regional natural gas supply restrictions; counterparty and sovereign risk; delays in completion of turnarounds at our major facilities; gas supply interruptions at our Egyptian and Argentinian facilities; any significant impairment of the carrying value of certain assets; risks related to reputational loss; certain complications that may arise in our mining processes; the ability to attract, engage and retain skilled employees and strikes or other forms of work stoppages; and other risk factors detailed from time to time in Agrium, PotashCorp and Nutrien reports filed with the Canadian securities regulators and the Securities and Exchange Commission in the United States, including those relating to Nutrien s business disclosed in our business acquisition report dated February 2, 218, related to the merger of Agrium and PotashCorp. Nutrien disclaims any intention or obligation to update or revise any forward-looking statements in this document as a result of new information or future events, except as may be required under applicable U.S. federal securities laws or applicable Canadian securities legislation.
Nutrien Has a Unique Global Footprint 3 North American Integrated Footprint South America Australia LEGEND: RETAIL POTASH NITROGEN PHOSPHATE ESN GRANULATION LOVELAND PRODUCTS AND AFFILIATED FACILITIES AGRICHEM INVESTMENTS AND JV S OFFICES >26Mmt Combined sales tonnes of potash, nitrogen, phosphate & sulfate 1 29 Production facilities in North America and Trinidad 1,7+ North American distribution touch points ~1,6 Retail locations worldwide NOTE: European distribution and our ownership stakes in Sinofert and the MOPCO nitrogen facility are not included on these maps. 1 217 proforma sales tonnes (excluding Conda phosphate and North Bend nitric acid facilities). Refers to manufactured product.
Nov 18 Dec 18 Oct 18 Dec 18 Supportive Fundamentals in Key Offshore Markets 4 Selected Crop Prices (As at September 24, 218) 3-Year Average 218 Futures $9.66 $8.44 $3.63 $3.62 1, 1,233 2,566 2,163 US Soybean (US$/bu) Regional Highlights US Corn (US$/bu) Brazil Soybean (BRL/mt) Palm Oil (MYR/mt) India Other Asia North America Latin America China Increased crop support prices and normal monsoon forecast should support fertilizer demand Government implemented higher import duty on several crops including oilseeds, wheat and pulses Palm oil prices remain at profitable levels Plantations implemented yield recovery programs following drought in 216 Population and income growth support demand for a wide-range of crops Total US crop planted acreage is up year over year in 218 despite changes in crop mixes Despite increases, fertilizer prices remain at affordable levels Soybean acreage expansion expected, driven by historically high prices The dispute on road freight in Brazil has improved and we expect a strong application season driven by increased soybean area Farm consolidation supporting fertilization practices; continued shift to high-value, nutrientintensive crops Government reduced subsidized corn prices, but proposed new ethanol (E1) target by 22 Source: Bloomberg, S&P Global Market Intelligence
Declining Global Grain and Oilseed Stocks 5 Global Grain & Oilseeds Ending Stocks World World excl. China 529 686 72 767 751 76 66 339 382 42 414 446 426 392 212 213 214 215 216 217E 218F US Corn Ending Stocks China Corn Ending Stocks 21 31 44 44 58 52 43 68 81 11 111 12 8 59 212 213 214 215 216 217E 218F 212 213 214 215 216 217E 218F Improvement in underlying fundamentals increases grain supply risks for 219 Source: USDA, Nutrien * 218F represents the 218/19 crop year
Cash Grower Margins 6 Cash Grower Margins 1 Local Currency Margin/Acre 35 3 25 2 15 1 5 US Corn US Soybeans US Wheat US Cotton CAN Canola BRZ Soybeans 1,6 1,4 1,2 1, 8 6 4 2 Prospective 219 margins supportive of fall input demand, driven by favorable US corn and wheat and Brazilian soybean margins Source: USDA, Green Markets, CME GROUP, IMEA, Nutrien 1 216 and 217 margins are based on average realized cash crop prices and estimated average fertilizer costs; 218F margins are based on new crop 218 futures prices less estimated basis and estimated average retail fertilizer prices; 219F margins are based on new crop 219 futures prices less estimated basis and estimated spot retail fertilizer prices; Brazilian grower margins are based on IMEA cost of production and price estimates for Mato Grosso
27/8 28/19 29/1 21/11 211/12 212/13 213/14 214/15 215/16 216/17 217/18 Jan-15 May-15 Sep-15 Jan-16 May-16 Sep-16 Jan-17 May-17 Sep-17 Jan-18 May-18 Sep-18 Chinese Soybean Imports and Brazil-US Price Spread 7 Chinese Soybean Imports Brazil-US Price Spread & US Export Sales $/bu Spread Export Sales (mmt) 1 9 8 7 6 5 4 3 2 1 24 US Other 57 66 43 49 53 22 28 28 36 38 13 19 22 24 24 22 28 3 3 36 28 2. 1.5 1..5. -.5 1 9 8 7 6 5 4 3 2 1 U.S. Export Sales Brazil-USG Spread Chinese soybean imports have grown at 8.5% CAGR U.S. supply is likely needed to meet growth Brazil soybean price premium is historically high, which tends to support U.S. export demand Source: USDA, Bloomberg, Nutrien
Global Potash Prices 8 Selected Potash Prices 4 Brazil CFR ($/mt) US Midwest FOB ($/mt) US NOLA FOB ($/mt) 35 3 25 2 15 Jan Mar May Jul Sep Nov Jan Mar May Jul Sep Nov Jan Mar May Jul Sep 216 217 218 Near-term Themes International Stocks are flat-to-down in most major international markets. Consumption has remained strong in key markets. US Midwest Normal potash demand supported by affordable prices and the need to replace another year of record yields. US NOLA Offshore imports remain at elevated levels but imports are down 12 percent from a year ago. Source: Fertilizer Week, Nutrien
Potash Consumption Trend Expected to Continue 9 Potash Fertilizer Consumption Growth 213-218F CAGR* Potash Shipment Growth 213-218F KCl 9% 8% 8.1% 1.1.4 66. 7% 2.7 6% 5% 4% 4.9% 4.1% 3.4% 4.1% 1.6 2.4 3% 2% 2.1% 4.5 1% 53.3 % China India Other Asia Latin America North America World 213 China India Other Latin North Rest of 218F** Asia America America World Affordable prices and agronomic need expected to drive strong potash consumption growth, particularly in offshore markets Source: CRU, Fertecon, Industry Publications, Nutrien * Based on CRU potash fertilizer consumption forecast as at August 218 ** Based on global shipment forecast for 218 as at August 218
218 Highlights Record Global Potash Demand Projected in 218 1 Global Potash Shipments by Region KCl 2 Previous Record: 15.8mmt (215) 15 1 Previous Record: 6.3mmt (21) Previous Record: 1.1mmt (217) Previous Record: 11.1mmt (1997) Previous Record: 12.2mmt (217) Previous Record: 13.7mmt (1997) 5 15 16 17E 18F 15 16 17E 18F 15 16 17E 18F 15 16 17E 18F 15 16 17E 18F 15 16 17E 18F India Other Asia North America Latin America China Other 4.5 5. mmt 1. 1.5 mmt 9.5 1. mmt 12.5 13. mmt 15.5 16. mmt 12.5 13. mmt Expect modest demand growth in line with positive consumption trends despite reduced subsidy rates for 218/19 FY Demand supported by record palm oil production and robust crop economics for a wide range of key crops Steady demand supported by strong affordability and significant removal of nutrients following consecutive large harvests Improved crop economics and acreage growth in nutrient deficient regions has supported strong potash demand Strong consumption trends supported by affordability and a shift to more potassium-intensive crops like fruits and vegetables Good affordability and growing demand for NPK fertilizers, including in Africa, are expected to boost potash demand Source: CRU, Fertecon, IFA, Nutrien
Record Global Potash Sales Expected in 218 11 Global Potash Sales Changes by Region KCl 68 67 66 65 64 63 62 61 6 217 Producer Sales North America FSU Asia South America Europe Middle East 218F Producer Sales North American producers are expected to fill the void left by lower 218 production in the rest of the world Source: CRU, Fertecon, Company Reports, Nutrien
Relatively Tight Potash Supply & Demand 12 Global Potash S&D KCl Global Utilization Rate 1 Percent 8 7 Demand Growth @ 3.%/yr Demand Growth @ 2.8%/yr Operational Capability 1% 95% Demand Growth @ 3.%/yr * Demand Growth @ 2.8%/yr* 6 5 9% 4 85% 3 8% 2 1 75% 7% Expect demand growth and capacity closures to offset capacity additions; operating rates expected to be at or above historical average Source: CRU, Fertecon, IFA, Nutrien 1 Based on estimated operational capability * Demand growth based on 2 year CAGR 22 to 222
Global Urea Prices 13 Selected Urea Prices 4 China FOB ($/mt) US NOLA FOB ($/mt) US Midwest FOB ($/mt) 35 3 25 2 15 Jan Mar May Jul Sep Nov Jan Mar May Jul Sep Nov Jan Mar May Jul Sep 216 217 218 Near-term Themes China Domestic availability is tight after significant shutdowns and higher feedstock prices. India Indian inventories began 218 at historically low levels, supporting robust imports in 218. US NOLA Prices supported by international markets; trade balance fully adjusted to new domestic production. Source: Fertilizer Week, Nutrien
Increased Energy Costs Support Nitrogen Prices 14 Brent Crude Oil Price (US$/Barrel) $19 $99 $52 $44 $54 $76 Chinese Anthracite Coal Prices (US$/MT) $175 $151 $127 $16 $149 $18 213 214 215 216 217 218 Current 213 214 215 216 217 218 Current NYMEX Natural Gas (US$/MMBtu) $3.73 $4.26 $2.63 $2.55 $3.2 $2.8 European Hub Natural Gas (TTF) (US$/MMBtu) $1.55 $8.22 $6.47 $4.54 $5.71 $9. 213 214 215 216 217 218 Current 213 214 215 216 217 218 Current Increased global energy prices support marginal nitrogen costs and prices Source: Bloomberg, NYMEX, CRU, Fertecon, Nutrien
Trinidad S. Arabia Iran US SE. Asia Algeria Russia Canada Ukraine Qatar W. Europe India Morocco S. Korea China US Ammonia: Key Regional Trade Balances 15 Key Ammonia Exporting Regions 6 5 4 3 2 1-4% 4.5 4.3-2% 1.5 1.4 +1%.8.8 +52%.6.4 +16% 1.7 1.5 Prev. 3 year Avg % 1.1 1.1-7% 3.4 3.2-2% 1.1 1.1 218F -18% -7%.7.6.3.1 Key Ammonia Importing Regions 6 5 4 3 2 1 +3% 4.1 4. +9% 2.6 2.4 Ammonia imports in China nearly doubled in the last 3 years and are expected to further increase in 218 +3% 1.4-2% 1.1 1.1 1.1 +9%.5 1. -43% 4.6 2.6 New U.S. capacity has reduced net import demand and global trade flows; however marginal capacity closures and growth in non-us imports have offset U.S. reductions Source: Fertecon, CRU, Nutrien
Tight Chinese Urea Supplies Reduce Exports 16 Chinese Urea Exports 13.6 13.8-36% -47% China s Urea Capacity Closures () 4 3 2 1 8.3 8.9 213 214 215 216 217 218F 4.7-36% 2.-3. Chinese Port Urea Inventories () (mid-september) 1..63.24 213 214 215 216 217 218F 216 217 218 Chinese urea operating rates have increased, but port inventories remain low Source: CRU, Fertecon, Profercy, Nutrien
Increased US Domestic Nitrogen Production 17 US Ammonia Production +45% US Urea Production +171% US UAN Production +31% 15.5-16.5 5.5-6.5 12.5-13.5 11.4 11.7 12.5 14.6 4.9 1.3 1. 11.2 12.1 3.4 2.4 2.6 214 215 216 217 218F 214 215 216 217 218F 214 215 216 217 218F US nitrogen expansions are complete and increased domestic production has led to lower imports and increased exports when netbacks are favorable Source: TFI, CRU, Fertecon, Nutrien
Tightening Global Nitrogen Supply & Demand 18 Global Nitrogen S&D Nitrogen Global Utilization Rate 1 Percent 18 Demand Operational Capability 16 14 12 1 8 6 4 2 1% 95% 9% 85% 8% 75% 7% Demand Growth @ 2.%/yr* Relatively stable capacity utilization in 219 followed by rapid tightening Source: CRU, Nutrien 1 Based on estimated operational capability * Demand growth based on 2 year CAGR 22 to 222
Global Phosphate Prices 19 Selected Phosphate Prices 5 Tampa DAP FOB ($/mt) China DAP FOB ($/mt) Brazil MAP CFR ($/mt) 45 4 35 3 25 Jan Mar May Jul Sep Nov Jan Mar May Jul Sep Nov Jan Mar May Jul Sep 216 217 218 Near-term Themes China Significant environmental and production economics pressure. US Midwest Reduced US production and strong international prices are supporting US domestic prices. Brazil Strong Latin American demand expected to continue into 219. Source: Fertilizer Week, Nutrien
Phosphate Raw Material Costs 2 Selected Raw Material Prices US$/Tonne 4 35 Tampa Liquid Sulfur FOB Tampa Ammonia 3 25 2 15 1 5 Jan Mar May Jul Sep Nov Jan Mar May Jul Sep Nov Jan Mar May Jul Sep 216 217 218 Production costs and global phosphate prices continue to be impacted by higher year-over-year sulfur prices Source: Fertilizer Week, Nutrien
Expect Lower China DAP/MAP Exports 21 China P 2 O 5 Capacity Operating Rate Percent Chinese DAP/MAP Exports 23 22 21 Operating Rate Capacity 85 8 12 1 1.8 8.8 8.9 7.5-8.5 2 75 8 7.2 19 6 18 7 4 4.5 4.5 17 16 65 2 15 212 213 214 215 216 217 218F 6 212 213 214 215 216 217 218F Environmental pressures are expected to continue to impact Chinese production and future export capabilities Source: CRU, Nutrien
Select Region Phosphate Trade 22 US DAP/MAP Trade India DAP Phosphate Imports 3 2 1-1 -2-3 -4-5 -6-7.1-6.4 21 Imports.9.5-6. -6.6 212 Exports.6.8 1.2-4.4-4.7-5.2 214 2.4 1.8 1.4-3.2-3.8-4.2 216 218F 8 7 6 5 4 3 2 1 7.6 6.4 6.2 Imports 3.5 3.6 Inventory* 5.8 4.3 21 212 214 216 4. 5. 218F US and Chinese production reductions and tight inventories in India supportive of stronger DAP imports in 218 Source: Fertecon, CRU, Nutrien * 217 inventory estimate is from December 217
Expect Improvement in Global Phosphate Market 23 Global Phosphate Operational Capability & Demand P 2 O 5 Global Utilization Rate 1 Percent 6 Demand Operational Capability 1% 5 95% 4 9% 3 85% 2 8% 1 75% 7% Low operating rates in China projected to balance the market in the short-term; demand growth projected to exceed capacity additions from 22-forward Source: CRU, Nutrien 1 Based on estimated operational capability
Thank you! For further information please visit Nutrien s website at: www.nutrien.com Follow Nutrien on: twitter.com/nutrienltd facebook.com/nutrienltd linkedin.com/company/nutrien MARKET OUTLOOK PRESENTATION