11 july 2016 agricultural sciences sector ... - credit suisse

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11 July 2016Americas/United States

Equity ResearchFertilizers

Agricultural Sciences Sector QUARTERLYResearch Analysts

Christopher S. Parkinson212 538 6286

[email protected]

Chris Counihan44 20 7883 7618

[email protected]

Semyon Mironov7 495 662 8510

[email protected]

Tan Ting Min60 3 2723 2080

[email protected]

Viccenzo Paternostro55 11 3701 6043

[email protected]

Victoria Petrova49 69 75 38 2272

[email protected]

Mathew Hampshire-Waugh44 20 7888 0194

[email protected]

Kieran de Brun212 538 3440

[email protected]

Matthew Freedman212 325 5379

[email protected]

Victor Saragiotto55 11 3701 6303

[email protected]

Remain Cautious Post Ag Cycle's False AlarmWe would like to give investors an update of our global team's view on the ag cycle, fertilizer prices and our general expectations as we hit the halfway mark on the US growing season and approach Latam's Summer Season planting:■ Adjusting Targets and Estimates for North American Ag Coverage: In

conjunction with our updated views on global ag and nutrient prices, we are adjusting our TPs and EPS estimates on MOS ('16 CSe of $0.55, new TP $21), POT ('16 CSe of $0.57, new TP $11), CF ('16 CSe of $1.90, new TP $30), AGU ('16 CSe of $5.40, new TP $92), IPI ('16 CSe of -$0.74, TP $1).

■ False Hope Still Exists, Ag Cycle Rebound to Elude Investors in 2016: We believe there remains "false hope" for an ag cycle rebound, predicated purely on supply-side driven factors ranging from a "La Nina" event to over estimating the effects of recent adverse weather in Latam. It is not worth playing meteorologist in our view, but thus far we would argue the weather in the US has been favorable (offsetting Latam production deficits). It is worth highlighting key corn/soy producing states are receiving favorable precipitation rates and moderate weather, which should be a positive for yields. As we head into '17/'18 we will continue to focus on key demand drivers ranging from export trends to protein consumption; we believe growth from various biofuels markets will moderate. Bottom line, it remains too early to call the cycle "bottom" and we remain cautious on the sector.

■ N-P-K Markets to Remain Supply Side Driven; P&K Remain at Risk: Even if we are completely wrong on our views on soft commodity prices, we stress that all three macronutrient markets remain supply driven and in our view, there exists more than ample supply to meet any incremental demand needs over the next 2-3 years. In our view, potash markets are the most at risk as regional price decline now yield net backs $20-40/t lower than most investors' expectations. Despite declines in ammonia and sulfur, phosphate profitability may also disappoint as key export market pricing remains choppy. Nitrogen markets remain the most irrational (a negative in the NT), as urea and ammonia are both trading below their transportation parity marginal costs of production. As expectations remain the lowest for N, we still believe it is the best house in a horrible neighborhood, but stress the entire sector will likely remain volatile for the balance of '16 and into '17.

■ EM Volatility Still Lingering; Credit Still a Growth Impediment: Despite the BRL and other currencies "stabilizing", we note that credit and end market demand for ferts remain an issue; this is well "known", but the length of the headwind impeding demand may very well continue. We still see growth in key markets (e.g. Brazil) despite such headwinds, but stress it remains one of the most material headwinds affecting the sector. Fertilizer inventories generally receded over 2Q, but we argue this is more of a structural shift in purchaser behavior rather than a 2H opportunity.

11 July 2016

Agricultural Sciences Sector 2

Table of contentsUS Summer Growing Season Update 3

Latin America Update...............................................................................................4

Indian Monsoon Pickin' Up Post Slow Start .............................................................5

Quick Data Points to Digest…..................................................................................5

Global Nitrogen Overview 6

Global Price Outlook ................................................................................................6

Global Nitrogen Market Outlook...............................................................................6

Key Nitrogen Input Prices ........................................................................................8

Nitrogen Price Performance.....................................................................................9

Global Potash Overview 10

Global Potash Price Outlook ..................................................................................11

Global Potash Market Outlook ...............................................................................11

Potash Price Performance .....................................................................................14

Global Phosphates Overview 15

Global Phosphate Price Outlook ............................................................................15

Global Phosphate Market Outlook .........................................................................15

Phosphates Price Performance .............................................................................16

Global Soft Commodity Overview 17

Global FX Overview 18

Material Changes 20

Recommended Reading 21

CS Global Agriculture Team 22

11 July 2016


US Summer Growing Season UpdateThe US growing season is far from over, but it's looking pretty good thus far. At this juncture, we believe the US is likely to post corn yields slightly above trend-line based on very favorable conditions in IA, NE, MN and IL offsetting the negative "mix" effect from higher planted acres in KA, MO and ND; the latter refers to a higher proportion of acres being planted in slightly below trend-line states. As of July 3rd, the percent of acres reported as "good" or "excellent" is now 75% vs. last year's 69% and the 5-yr avg of 64%.

Figure 1: Corn Condition Rated Excellent & Good Figure 2: Soy Condition Rated Excellent & Good

Source: USDA, Credit Suisse Source: USDA, Credit Suisse

The US corn crop is now entering the "red zone" in terms of development and with the forecast appearing favorable over the next two weeks we would argue the risk to yields may still reside to the upside. It appears that corn futures are beginning to swiftly remove the weather premium, but we argue that if demand estimates prove to be too optimistic, further downside may exist; we see Dec '16 corn futures in the $3.30-3.80/bu range.

Figure 3: US Corn Conditions for Week Ending July 3, 2016

Source: USDA

Turning to soy beans, the picture is slightly different as conditions in the US are not as favorable, adverse weather in Latam persists and export demand remains strong; in our view, this will result in a more "neutral" view, rather than our cautious one on corn (which, as highlighted above, is now being priced into futures). Following the prospective planting report on June 30th, it was clear that many investors (and traders) previously expected a greater rise in soy acres at the expense of corn (and a little wheat), which was clearly not the case, as corn posted an unexpected and material increase in acreage (+547K increase vs. an expectation for a 705K decline).

11 July 2016


Figure 4: US Soy Conditions for Week Ending July 3, 2016

Source: USDA

We ultimately believe that favorable weather will keep soy prices in check, but not pressure to the same negative magnitude we have seen in corn markets. In our view, Brazilian soy planting intentions will be integral to performance during the next 2-3 months; overall, we expect roughly a 2-4% yr/yr increase (see more on Brazil below).

Figure 5: 8-14 Day Temperature Outlook Figure 6: 8-14 Day Precipitation Outlook

Source: NOAA Source: NOAA

Latin America UpdateIn Brazil…Despite ongoing political turmoil, the situation in Brazil appears to have stabilized. We maintain that farmer credit (and potential defaults) will be an ongoing issue, but perhaps a manageable one. After a lackluster Safrinha crop, the summer season is right around the corner. We still have our concerns about near term growth due to credit, but as of now we estimate there may be some modest increase in summer corn acreage (low-single digits), which will be the first summer corn acreage increase in a long time. To put this in perspective for domestic fertilizer and crop chemical demand, the projected investment in those acres will be the key. As it pertains to soybeans, we see growth remaining in the 2-4% range. The biggest question will be if La Nina actually shows up or if she is simply a headline risk; in any event, we remain constructive on Brazil's long term potential.

In Argentina…In Argentina favorable weather in Buenos Aires state as well as an unexpected 9% increase in corn acreage (reported by the Buenos Aires Grain Exchange) should be supportive of slightly better production than originally expected. However, it is possible that a delayed harvest may mute the effect of the excess grain until well into the 2H. Overall, most reports of the Argentine corn harvest peg production in the 26mm to 28mm range.

11 July 2016


Indian Monsoon Pickin' Up Post Slow StartWhile the monsoon rains in India began a week later than usual this year, expectations for the season overall are for above average precipitation. Despite the late start, it appears that aggregate rainfall has already "bounced back" to a normal trend line; currently at ~1% above "normal". As of the week ending July 6, 32 out of 36 states in India are witnessing normal to excess rainfall. Regionally, 3 out of 4 regions have been wetter than usual, with the exception being East/North India which has experienced ~18% less rainfall.

Quick Data Points to Digest… France has experienced heavy rainfall this spring (about twice the normal rainfall

from May-June), leading to doubts about the overall size/quality of this summer's harvest. In our view this could potentially lead to choppy 2Q results for chemical producers despite a previously healthy outlook.

The European Commission indicated it will extend the EU glyphosate authorization to the end of 2017.

The Senate passed a bill late Thursday that would create the first nationwide labeling standard for foods containing GMOs, also preempting any state disclosure mandates. The bill, which represents a compromise among both sides of the issue, would offer 3 options for disclosure: 1) text on the packaging, 2) a symbol, or 3) an electronic link that would direct consumers to a website for more information. The vote now moves to the House, where it is expected to pass.

EuroChem Group AG announced on July 6 that it has acquired a controlling stake of 50 percent plus one share in Fertilizantes Tocantins, a leading fertilizer distribution company in Brazil. The transaction is expected to close by the end of August, subject to regulatory approvals. Financial details were not disclosed.

11 July 2016


Global Nitrogen OverviewWhile nitrogen prices materially surprised to the upside to start off 2Q16, the move was clearly short lived. As it pertains to urea markets, NOLA prices remain comfortably below transportation adjusted parity prices (i.e., delivered Chinese product), as MENA continue to be active during a seasonal demand lull. While we do not believe this to be a sustainable long term trend, it is clear that in the very short-term, prices will likely remain slightly below the mentally critical ~$200/st level. Overall, we see NOLA prices rebounding in the intermediate term to ~$200/st (assumes an RMB of 6.7). At this juncture the forward relationships between urea, UAN and ammonia will be integral to performance.

As Eastern European producers remain the marginal cost producer of UAN and ammonia, recent declines in gas prices and weaker European demand are steering prices lower. Ultimately, we believe Black Sea and NOLA UAN prices have found a floor; ASPs for producers will be contingent on sales cadence; CF and Koch have yet to offer summer fill prices. Previously there was hope for solid US demand for side dress applications, but the recent decline in corn prices will swiftly curb any optimistic expectations. Going forward we will be closely monitoring producer activity in North Africa and Eastern Europe, as well as any 2H demand increase in Argentina on the back of an expected increase in corn acres.

The July Tampa ammonia contract of $285/t reflects lower Black Sea prices, a reduction in seaborne transportation rates and lower industrial demand; as it pertains to the latter, we are also focusing on demand for processed phosphates. We note that a Tampa price below $300/t is below transportation adjusted Black Sea prices (low end: $250/t + $55/t in shipping = $305/t), but with lower demand, it appears producers are simply focused on locking in cargos in the near term. In the intermediate term, we expect prices to adjust very slightly upward, which will ultimately depend on emerging 3Q demand in India (incl. of processed phosphates) and the length of maintenance shut-downs across Europe.

Global Price OutlookFigure 7: CS Nitrogen Price Forecasts

Full Year 1Q 2Q 3Q 4Q Full Year 1Q 2Q 3Q 4Q Full YearAmmoniaBlack Sea FOB ($/mt) $476 $493 $407 $393 $387 $349 $384 $263 $273 $255 $255 $262 $270 $285Tampa CFR ($/mt) $544 $545 $494 $463 $455 $404 $454 $319 $311 $285 $300 $304 $325 $340UreaBlack Sea Prilled FOB ($/mt) $361 $316 $296 $276 $268 $250 $273 $208 $198 $200 $200 $202 $200 $200US NOLA Granular ($/st) $341 $355 $309 $323 $282 $238 $288 $229 $202 $185 $200 $204 $210 $210

2015 2017E2013 2014 2018E2016E

Source: Credit Suisse Ag Science Team

Global Nitrogen Market OutlookBased on our assumptions above, we believe global nitrogen prices will remain volatile, but believe we are at (or very near) a bottom. Ultimately, we believe relative price stability on the back of incredibly low investor expectations will be enough for an intermediate term bounce for the stocks, but acknowledge without price momentum it will be difficult for an extension into year-end; we continue to view nitrogen as the best house in a horrible ag neighborhood. During 3Q, the largest "deltas" we will be monitoring will be (i) demand in India, (ii) Chinese urea export trends (down ~28% YTD), (iii) global energy prices and (iv) potential for supply-side curtailments (EE, Caribbean, etc.); the Southwest Fertilizer conference on July 16th to 20th will likely be an important catalyst for US prices in the 2H.

11 July 2016


Figure 8: Monthly China Urea Exports (000s MT) Figure 9: Midwest UAN vs. Urea Premium $/N-Unit

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Source: CRU, China Fert Weekly, Credit Suisse Ag Science Team Source: CRU, Credit Suisse Ag Science Team

Coinciding with our view of cost curve economics, we believe NOLA urea prices will rebound very slightly to the $200/st level in the intermediate term, but this will likely be contingent on emerging demand in India, as Latam demand thus far has disappointed. Despite the extreme volatility in the NOLA price, inland prices have still held comfortably above $200/st across the board, with most regions recently settling in the $210-$215/st range; Canada remains in the C$450/t range, which should benefit both CF and AGU.

If we aren't "bearish enough" on ammonia prices (implies Tampa below Black Sea parity), the next step will be to evaluate the effects of potential supply curtailments in Eastern Europe or T&T (for various reasons). In the absence of a demand pick-up, we would stress that any voluntary (or involuntary) shut-in could have material effects on the market.

On a per-unit basis, inland UAN prices held in well through 2Q16, but all eyes will inevitably be on the Midwest summer fill price, which we believe will eventually end up in the $180/st - $200/st range; the former being in the Southern Plains and the latter being in the central corn belt. However, it will be prudent for producers to hold off on offering fill prices until absolutely necessary given buyer reluctance (and skepticism), as well as spot prices "holding in" for what little prompt material is trading in the near term. Overall, most Midwest UAN indices previously held above $7/unit (roughly $224/st), so the fill price will likely represent a material pullback in order to spur demand, especially after farmers and distributors will have a difficult time being optimistic following the recent grains report. We believe NOLA prices in the $140/st range +/-$10/st will likely persist in the ultra near term.

11 July 2016


Key Nitrogen Input PricesFigure 10: Henry Hub Natural Gas Figure 11: Western Europe Natural Gas

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Source: the BLOOMBERG PROFESSIONALTM service Source: the BLOOMBERG PROFESSIONALTM service

Figure 12: AECO Natural Gas Figure 13: Chinese Anthracite Coal (RMB/t)

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Nitrogen Price PerformanceFigure 14: Global Urea Price Tracker (as of July 7, 2016)

Urea Price PerformanceCurrent 1 Week 1 Month 3 Months 1 Year

Price Price % Δ Price % Δ Price % Δ Price % ΔNOLA FOB ($/ST) $169 $177 -4.5% $178 -5.1% $238 -29.2% $288 -41.5%Midwest FOB ($/ST) $208 $210 -1.2% $218 -4.6% $280 -25.9% $410 -49.4%Black Sea FOB ($/MT) $183 $186 -1.6% $193 -5.2% $217 -15.7% $286 -36.1%China* FOB ($/MT) $201 $202 -0.7% $208 -3.6% $225 -10.7% $285 -29.5%Middle East* FOB ($/MT) $167 $172 -2.9% $183 -8.8% $240 -30.6% $282 -40.9%

Location

Source: CRU, Credit Suisse Ag Science Team; *indicates prilled product

Figure 15: Global UAN Price Tracker (as of July 7, 2016)UAN Price Performance

Current 1 Week 1 Month 3 Months 1 YearPrice Price % Δ Price % Δ Price % Δ Price % Δ

NOLA FOB ($/ST) $138 $138 0.0% $175 -21.4% $205 -32.9% $213 -35.3%Mid Cornbelt FOB ($/ST) $205 $205 0.0% $230 -10.9% $242 -15.4% $291 -29.5%Baltic FOB ($/MT) $126 $126 0.0% $130 -3.1% $188 -32.8% $188 -32.8%Black Sea FOB ($/MT) $118 $118 0.0% $119 -1.3% $194 -39.3% $191 -38.3%

Location

Source: CRU, Credit Suisse Ag Science Team

Figure 16: Global Ammonia Price Tracker (as of July 7, 2016)Ammonia Price Performance


NOLA FOB ($/ST) $296 $296 0.0% $358 -17.5% $365 -18.9% $444 -33.4%Tampa CFR ($/MT) $285 $285 0.0% $315 -9.5% $310 -8.1% $460 -38.0%Mid Cornbelt FOB ($/ST) $385 $385 0.0% $485 -20.6% $550 -30.0% $560 -31.3%Caribbean FOB ($/MT) $255 $255 0.0% $275 -7.3% $270 -5.6% $420 -39.3%Black Sea FOB ($/MT) $255 $260 -1.9% $275 -7.3% $273 -6.4% $385 -33.8%Middle East FOB ($/MT) $300 $305 -1.6% $335 -10.4% $355 -15.5% $398 -24.5%

Location

Source: CRU, Credit Suisse Ag Science Team

11 July 2016


Global Potash OverviewAs recent supply-side euphoria has tapered fairly significantly (and justifiably so), it's fairly surprising that some investors believe in an eventual price rebound, which we believe will elude us for years, not quarters. Since our last quarterly publication, potash prices have continued their free fall and in many cases are acting in contrast to seasonal strength (e.g., Brazil). There is certainly a contingent of investors willing to "trade through" the rough times, but what we believe remains under-appreciated is how long prices can remain at low levels and still move lower, as well as the consequent effects on producer cash flows and balance sheets. As we have consistently highlighted, there are significant risks to our demand estimate of 56-58mm tonnes, especially if key producers continue to delay spot contracts; we are not of the view that there will be a massive demand "catch-up" next year.

It is also important that producer netbacks are likely to deteriorate further in both 2Q and 3Q, despite some optimism that prices will likely stabilize. From a Canadian producer perspective, we believe 2Q16 international netbacks will be in the ~$170/t range, before deteriorating to $160/t (or below) for the balance of 2016 depending on the China contract; in 2017 we see international netbacks in the $145-155/t based on current freight rates. In the US prices aren't faring much better, with prices deteriorating to the $210-220/st range pre-summer fill; NOLA prices remain in the $170/st range; implies domestic netbacks in the ~$170/t range or lower (adj. to metric tonnes), further pressuring profits and cash flow.

To add a bit of substance to the above remarks, we believe the following points are being overlooked by the majority of investors, including (i) despite curtailments the industry is still poised to substantially over-produce in '16, which should lead to curtailments in the 2H even with a "catch-up" if/when a China contract is signed, (ii) there remains 15-25% downside to marginal cost economics, which still assumes Canpotex and Belaruskali will continue to "balance the market"; we believe if POT and/or Belaruskali elect to run "all out" it will likely shift the current marginal cost producer "to the right", (iii) even if global demand rises above historical growth rates, annual supply increases through 2020 are poised to push op rates lower, and (iv) replacement costs are much lower than many believe, due to the confluence of brownfield projects (incl. many in the FSU) as well as several economically viable projects in China, Laos, etc.; the latter tend to be ignored.

We maintain our view that persistent market oversupply is the primary culprit for weaker prices and is therefore moving the market toward marginal cost economics; in our view this structural shift is long term in nature and the magnitude (per our comment above) is being underappreciated by the market. The notion that "the market isn't that oversupplied" is problematic in our view given the ongoing precipitous decline in prices in '15/'16, which, based on that argument, would have still resulted at a materially higher op rate, especially considering several mine closures. Given our S/D outlook through 2020, we believe pressure will persist and producers will struggle between market share losses and pricing.

If current spot rates persist, we believe POT's current dividend pay-out is unsustainable, leading to another cut in the near/intermediate term; it ultimately will be dependent on how long POT is comfortable funding the payout from its balance sheet. Based on our updated assumptions for the potash and nitrogen segments, we believe POT will need to cut the dividend by 35-55%; $0.55/shr is our new base case vs. the current $1.00/shr payout.

We had previously removed our assumption for a MOS buyback in '17 and we now believe there are significant risks to its dividend payout as well over the next ~2 years. The three largest trends to monitor going forward are (i) any rebound in DAP/MAP prices, which thus far have disappointed (esp. in India), (ii) the projected per-unit cost reduction at Esterhazy to reduce brine in-flows (CSe cost at $165mm per annum) and (iii) how much "free" cash MOS has on its b/s to "bleed down" in the interim as 2018 should hold better prospects). We do give credit to MOS for taking the very necessary steps to reduce costs across the

11 July 2016


board, but simply believe the negative market dynamics in both P&K markets may ultimately offset management's ongoing efforts.

Global Potash Price OutlookFigure 17: CS Potash Price Forecasts

Full Year 1Q 2Q 3Q 4Q Full Year 1Q 2Q 3QE 4QE Full YearMOP (CFR unless otherwise stated)

China ($/mt) $400 $305 $305 $315 $315 $315 $313 $315 $315 $210 $210 $263 $200 $190Southeast Asia ($/mt) $408 $321 $327 $328 $314 $300 $317 $271 $245 $225 $220 $240 $210 $200Brazil ($/mt) $404 $347 $360 $335 $317 $289 $325 $235 $227 $215 $210 $222 $205 $200NW Europe CIF (€/mt) € 337 € 280 € 302 € 306 € 306 € 294 € 302 € 286 € 262 € 220 € 220 € 247 € 210 € 200India ($/mt) $427 $335 $322 $332 $332 $332 $330 $332 $324 $227 $227 $278 $220 $210US Midwest FOB:

($/mt) $466 $426 $443 $423 $377 $340 $396 $282 $252 $230 $235 $250 $225 $220($/st) $423 $386 $402 $384 $343 $309 $360 $256 $229 $209 $214 $227 $205 $200

20132014 2015 2016E

2017E 2018E


Global Potash Market OutlookChina

We now see any 2016 contract being signed no higher than $210/mt given global price pressures, particularly on the back of Belaruskali signing with India at $227/t. The delay has also led to an increase in pricing pressure in local (and foreign) markets, especially in SE Asia, where spot prices are now as low as $210/t. The longer producers wait to sign a contract, the more pricing pressure evolves in key regional markets, which in turn gives the Chinese more bargaining power on a go forward basis as they are likely unwilling to sign at parity with an importer a fraction of the size (i.e., a negative cascading cycle).

As Chinese port inventories remain inflated (up ~75% yr/yr), domestic importers are under little pressure to secure product as the spring application window has now diminished. Recent news of the Chinese demanding a contract of $180/t would certainly weigh on markets if realized, but we do not believe producers will sign this low (as of now), as that level could be perceived as close to the marginal cost of production for certain mines.

That said, over time we do believe the Chinese Cfr price will move below that mentally important $200/t level; it will simply take new supply coming online in both the domestic and international markets. On that note, we would highlight to investors that domestic Chinese production will be important to monitor as we currently asses op capacity in the 6.5mm to 7mm tpy range, which may materially rise during the balance of the decade.

India

The recent BPC contract at $227/t (includes 180 of credit) offers some much needed price discovery, although this level has yet to be officially embraced by Uralkali or Canpotex; some sources have indicated that cargos deriving from the latter have been achieved at a similar price despite no official contract being signed. With port inventories back down to normal levels and muted demand due to a slow start of the monsoon season, we remain comfortable with our 3.2-3.5mm tonne estimate for 2016; most producers forecast >4mm.

We believe India has the most upside for long term demand growth, but believe long term cadence will be more dependent on FX, subsidies and MRPs vs. actual agronomic need. The recent cut to the MOP MRP to INR 11,000/mt by India's DoF for potash will likely be a positive for future demand growth (we do believe there is elasticity of demand in India), but even in conjunction with the subsidy program, it also limits potential upside for prices in the intermediate term; balancing P&K usage vs. N will inevitably remain a key issue in India.

11 July 2016


Brazil

Despite our view that the Brazilian market will continue to suffer from political turmoil and a lack of necessary credit support, we actually view the market as a bright spot in the very near term for the global market on a relative basis. Recent strength in the BRL, depleting inventories, and stable inland demand deriving from favorable soy and sugar economics should set up for very modest yr/yr growth. Given the recent pullback in prices to $210/t for large buyers (in direct contrast to seasonal strength), sellers will likely be able to achieve slightly firmer prices in the late summer, but we believe this trend will be very short term in nature due to the confluence of granular supply and falling prices in the US and Europe. In 2016, we believe demand will accrue to the 8.6-8.9mm tonne range, with further growth in 2017 expect; in our view, LT potash demand in the region will grow in the 3-5% range.

North America

In the US, potash prices continue to suffer from moderating summer demand, pressure from NOLA imports and a reluctance of distributors to hold inventories; there is also a long term continuing shift toward consignment tonnage. NOLA prices are now stable at $170/st, with Midwest prices now at $210-220/st, which is roughly $20/st above implied parity; implies $20/st in barge fees plus distributor margin. We continue to believe US prices will remain at lower levels, particularly as "La Nina" euphoria continues to wane in the form of corn and soy price declines. While we believe demand will likely be muted in the 2H due to lower soft commodity prices, it appears inventories are normal (or in some cases thin) post spring planting, which takes a potential headwind "off the table" in the near term. As we head into the balance of the year we see US potash demand in the 8.7-9.0mm range.

SE Asia

Consistent with prior years, SE Asia remains one of the most competitive regions among producers, with current price levels ranging from $210/t (in Indonesia and Malaysia) to $250/t in smaller importing countries. In our view, there has likely been some demand destruction due to regional droughts (Thailand, etc), as well as purchase deferrals due to the delay in the China contract. That said, we believe aggregate demand in the region is likely to surprise to the downside, even after a China contract is signed. If producers are able to secure a China contract above $200/t (still uncertain), SE Asian potash prices will likely stabilize around $220/t for larger importers and as high as $260/t for bulk; it is important to note that Indonesia/Malaysia represent the majority of regional imports. We see Indonesia/Malaysia demand of 4.5-4.8mm tonnes, lower than most industry guidance.

NW Europe

European prices have been quietly falling since May, with current levels assessed around €230-250/t CIF vs. spring levels of €270-290/t. As demand tapers, prices are likely to fall further to the ~€210/t range for the off-season; in our view, €220/t or lower will be seen as a material negative surprise. Given the precipitous price declines since the spring season, any pressure on Canpotex to ship to more aggressively to Europe will likely wane as the suggested netback spread vs. alternative export markets has materially narrowed.

11 July 2016


Figure 18: China MOP Inventories (000s MT) Figure 19: Estimated Canpotex Volumes ('10-'18E)

-20%0%20%40%60%80%100%120%140%160%180%

0

500

1,000

1,500

2,000

2,500

3,000

3,500

Jul-1

4

Oct

-14

Jan-

15

Apr

-15

Jul-1

5

Oct

-15

Jan-

16

Apr

-16

Jul-1

6

China MOP Inventories (000s MT) yr/yr

0

2,000

4,000

6,000

8,000

10,000

12,000

2010 2011 2012 2013 2014 2015 2016E 2017E 2018E

Canpotex Volumes (000s MT)

Source: China Fert Weekly Source: Canpotex, Credit Suisse Ag Science Team

Figure 20: Global MOP Capacity '16-'18E (000s MT) Figure 21: Global MOP Demand '15-'16E (000s MT)

71,939

76,387

80,493

67,50068,50069,50070,50071,50072,50073,50074,50075,50076,50077,50078,50079,50080,50081,500

57,7932,385 0

683 4 8

60,413

21512 90

22 21

55,50056,00056,50057,00057,50058,00058,50059,00059,50060,00060,50061,000

Source: Company data, Credit Suisse Ag Science Team, CRU Source: Company data, Credit Suisse Ag Science Team

Figure 22: Global MOP Supply/Demand (000s MT) Figure 23: Potash 2016 Global Production Bridge

52,000

54,000

56,000

58,000

60,000

62,000

64,000

66,000

68,000

70,000

2016E 2017E 2018E

Demand Global Supply at 85% Op Rate

61.5

0

10

20

30

40

50

60

70

UR

KA

Bel

arus

kali

PO

T

MO

S

Chi

na ICL

K+

S

AG

U

AP

C

SQ

M

VALE

Oth

er

2016

Tot

al

Million KCL tonnes

Source: Company data, Credit Suisse Ag Science Team Source: Company data, Credit Suisse Ag Science Team, CRU

11 July 2016


Potash Price PerformanceFigure 24: Potash Price Tracker (as of July 7, 2016)

MOP Price TrackerCurrent 1 Week 1 Month 3 Months 1 Year

Price Price % Δ Price % Δ Price % Δ Price % ΔNOLA ($/ST) $175 $175 0.0% $173 1.4% $193 -9.1% $320 -45.3%Midwest ($/ST) $220 $220 0.0% $225 -2.2% $235 -6.4% $355 -38.0%Brazil ($/MT) $215 $215 0.0% $225 -4.4% $230 -6.5% $333 -35.3%NW Europe (€/MT) €240 €240 0.0% €245 -2.0% €285 -15.8% €308 -22.0%China ($/MT) $315 $315 0.0% $315 0.0% $315 0.0% $315 0.0%India ($/MT) $227 $227 0.0% $332 -31.6% $332 -31.6% $332 -31.6%SE Asia ($/MT)* $238 $230 3.3% $235 1.1% $260 -8.7% $320 -25.8%

Location

Source: CRU, Credit Suisse Ag Science Team; *Indicates standard grade product

11 July 2016


Global Phosphates OverviewThe phosphates sector is one of the most heavily debated topics among investors, with some believing that demand in India will surprise to the upside and that margins will beat expectations in 2H due to falling raw materials. The bear argument entails that a falling RMB makes Chinese DAP exports more competitive off of low regional op rates, and that phosphoric acid prices will lead implied prices lower. We believe prices will be range bound between $310/t and $340/t FOB Tampa in the 2H, which implies Indian DAP prices in the $330/t to $360/t range (assumes $18-22/t in transportation); we note this is only modestly lower than the equivalent US Gulf prices (~$300/st NOLA as of July 7th).

The major offsets to our expected price decline on a sequential basis is that the Tampa ammonia contract is likely to remain at subdued levels (see Figure 25), along with sulfur prices. For domestic producers these reductions should be margin accretive in 2H16, factoring in a 1-3 month lag dependent on inventory. It is also worth monitoring the P₂0₅ price levels in North Africa, as well as on a Cfr basis as it will in part dictate the balance between non-integrated producers and key importers in Central Asia. Finally, turning quickly to Brazil, demand for the summer season should pick-up for MAP in the coming weeks, which should stabilize prices in the region after declines throughout 2Q16.

Global Phosphate Price OutlookFigure 25: CS Phosphates Price Forecasts

Full Year 1Q 2Q 3Q 4Q Full Year 1Q 2Q 3QE 4QE Full YearDAPTampa export fob ($/mt) $446 $472 $483 $469 $465 $419 $459 $366 $351 $330 $330 $344 $340 $350

2013 2014 2015 2017E 2018E2016E


Global Phosphate Market OutlookDespite some investor optimism, we remain cautious on phosphates as expectations for a rebound appear abundant from both a price and margin perspective. Ultimately we believe Indian demand will be healthy, but slightly below expectations; we highlight the current India Cfr price indicates a Tampa parity price below spot, which may lead prices modestly lower, which arguably will be at least partially offset by the recent decline in ammonia.

Heading into the 2H, we will be closely monitoring (i) Chinese op rates, (ii) export trends for India/Brazil, (iii) the balance between P₂0₅ and DAP exports from North Africa and (iv) any shifts in ammonia and sulfur prices. As we approach '17/'18, all eyes will be on developments in North Africa (Morocco) and the Middle East (Ma'adan), as the evolution in these geographies (and consequent shifts in exports) will likely be integral to LT prices.

11 July 2016


Phosphates Price PerformanceFigure 26: Global DAP Price Tracker (as of July 7, 2016)

DAP Price PerformanceCurrent 1 Week 1 Month 3 Months 1 Year

Price Price % Δ Price % Δ Price % Δ Price % ΔCentral Florida ($/ST) $325 $325 0.0% $355 -8.5% $355 -8.5% $430 -24.4%NOLA Barge ($/ST) $300 $308 -2.6% $307 -2.3% $335 -10.6% $430 -30.3%Mid Cornbelt ($/ST) $332 $337 -1.5% $342 -2.8% $376 -11.6% $460 -27.8%US Gulf Export ($/MT) $343 $345 -0.7% $347 -1.2% $360 -4.9% $473 -27.5%India CFR ($/MT) $343 $346 -1.0% $346 -1.0% $348 -1.4% $479 -28.4%

Location

Source: CRU; Credit Suisse Ag Science Team

Figure 27: Global MAP Price Tracker (as of July 7, 2016)MAP Price Performance


Tampa ($/MT) $343 $345 -0.7% $347 -1.2% $360 -4.9% $473 -27.5%NOLA Barge ($/MT) $309 $311 -0.8% $307 0.7% $350 -11.9% $442 -30.1%Baltic/Black Sea ($/MT) $337 $337 0.0% $336 0.3% $345 -2.5% $473 -28.8%Brazil CFR ($/MT) $350 $350 0.0% $353 -0.7% $360 -2.8% $488 -28.2%

Location

Source: CRU; Credit Suisse Ag Science Team

11 July 2016


Global Soft Commodity OverviewFigure 28: US Corn Futures December '16 Figure 29: US Soybean Futures November '16

$3.40

$3.60

$3.80

$4.00

$4.20

$4.40

$4.60

Jun-

15

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5

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$7.50

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Jun-

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16

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16


Figure 30: Cotton Futures July '16 Figure 31: Wheat Futures July '16

$0.50

$0.52

$0.54

$0.56

$0.58

$0.60

$0.62

$0.64

$0.66

$0.68

$0.70

Jun-

15

Jul-1

5

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5

Aug

-15

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-16

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16

$4.00

$4.50

$5.00

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$6.00

$6.50

Jun-

15

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5

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5

Aug

-15

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16

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16

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16

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-16

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Apr

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16

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16


Figure 32: Sugar Cane Futures July '16 Figure 33: Palm Oil Futures July '16

$0.10

$0.12

$0.14

$0.16

$0.18

$0.20

$0.22

Jun-

15

Jul-1

5

Jul-1

5

Aug

-15

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16

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Apr

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16

$400.00

$450.00

$500.00

$550.00

$600.00

$650.00

$700.00

$750.00

Jun-

15

Jul-1

5

Aug

-15

Sep

-15

Oct

-15

Nov

-15

Dec

-15

Jan-

16

Feb-

16

Mar

-16

Apr

-16

May

-16

Jun-

16


11 July 2016


Global FX OverviewFigure 34: Brazilian Real Figure 35: Indian Rupee

1.50

2.00

2.50

3.00

3.50

4.00

4.50

Oct

-14

Nov

-14

Dec

-14

Jan-

15

Feb-

15M

ar-1

5

Apr

-15

May

-15

Jun-

15

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5

Aug

-15

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ar-1

6

Apr

-16

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16

56.00

58.00

60.00

62.00

64.00

66.00

68.00

70.00

Oct

-14

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-14

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15

Feb-

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ar-1

5

Apr

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16M

ar-1

6

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16


Figure 36: Canadian Dollar Figure 37: Russian Ruble

1.00

1.05

1.10

1.15

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1.25

1.30

1.35

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1.45

1.50

Oct

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6

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16

30.00

40.00

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70.00

80.00

90.00

Oct

-14

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-14

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15Fe

b-15

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-15

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16Fe

b-16

Mar

-16

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16


Figure 38: Chinese Rimibi Figure 39: Euro

5.80

5.90

6.00

6.10

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6.30

6.40

6.50

6.60

6.70

6.80

Oct

-14

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5

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1.00

1.05

1.10

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1.20

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5

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Jan-

16

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11 July 2016


Figure 40: Malaysian Ringgit Figure 41: Indonesian Rupiah

3.00

3.20

3.40

3.60

3.80

4.00

4.20

4.40

4.60

4.80

5.00

Oct

-14

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5

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11,000.00

11,500.00

12,000.00

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15,000.00


Figure 42: Argentine Peso Figure 43: Australian Dollar

4.00

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10.00

12.00

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Oct

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0.60

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Feb-

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ar-1

6

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16


11 July 2016


Material ChangesPrice Price Rating Target Price Year EPS EPS FY1E EPS FY2E EPS FY3E

Company Ccy 08 Jul 16 Prev Cur Prev Cur End Ccy Prev Cur Prev Cur Prev CurAgrium Inc. (AGU.N) US$ 89.25 O 100.00 92.00 Dec-15 US$ 5.80 5.40 6.95 6.30 6.80CF Industries Holding Inc. (CF.N)

US$ 24.86 O 38.00 30.00 Dec-15 US$ 2.50 1.90 3.05 2.00 2.50

Intrepid Potash Inc. (IPI.N) US$ 1.34 U*[V] - 1.00 Dec-15 US$ -.53 -.74 -.24 -.37 -Mosaic Co. (MOS.N) US$ 25.48 N 22.00 21.00 Dec-15 US$ .85 .55 1.15 1.00 -Potash Corp - Saskatchewan (POT.N)

US$ 15.79 U 12.00 11.00 Dec-15 US$ .65 .57 .75 .60 .75

*O - Outperform, N - Neutral, U - Underperform, R - Restricted [V]= Stock consider volatile ( see Disclosure Appendix).Company data, Credit Suisse estimates

11 July 2016


Recommended ReadingFigure 44: Global Research

Global Potash Update - Better Late than Never; Awaiting K Contract; Credit Suisse Global Ag Team; 1 June 2016

Global Agricultural Sciences Sector: The Brazilian Ag Bear Is Only Hibernating; Parkinson/Paternostro; 1 June, 2016

Agricultural Sciences Sector: Ag M&A Theme Still Alive & Well in Germany; Credit Suisse Global Ag Team; 12 May, 2016

Global Agriculture Quarterly: March Madness in Ferts; Ag Cycle Stagnant; Credit Suisse Global Ag Team; 30 March, 2016

Figure 45: Americas Research LatAm Sugarcane Crusher: No Reason to Worry About Sugar Price; Viccenzo

Paternostro; 3 July, 2016

LatAm Agribusiness: A Potential Nightmare Called La Niña; Viccenzo Paternostro; 30 June, 2016

Agricultural Sciences Sector: India Inks K Contract; Netbacks Deteriorating; Christopher Parkinson; 27 June, 2016

FMC: LT Thesis Evolving Favorably; NDR Key Points; Christopher Parkinson; 27 June, 2016

AGU: AGU Analyst Day Quick-Takes: Retail Still Key; Christopher Parkinson; 9 June, 2016

Agricultural Sciences Sector: Live from Lincoln - It's Planting Season!!!; Christopher Parkinson; 12 May, 2016

SLCE3: SLC Agricola - 1Q16: Confirming Weak Agricultural Yields; Viccenzo Paternostro; 12 May, 2016

Figure 46: EMEA Research Fertilizers: Weekly Fertilizer Prices Monitor; Semyon Mironov; 1 July, 2016

Global Chemicals & Agriculture Conference: Spreads holding - volumes ticking positive; Chris Counihan; 23 June, 2016

SDFGn.DE: K+S AG - Better Late than Never; Awaiting K Contract; Chris Counihan; 2 June 2016

SDFGn.DE: K+S AG - Potash Price Still Pressured; Chris Counihan; 11 May, 2016

Figure 47: APAC Research Asian Daily: Asia Palm Oil Sector - NOAA Said 75% Chance of a La Nina; Tan

Ting Min; 10 June, 2016

Malaysia Palm Oil Sector. Results Review: Don't Despair-a Rebound in Sight; Tan Ting Min; 31 May, 2016

Asia Palm Oil Sector. The Second Wind; Tan Ting Min; 3 May, 2016

11 July 2016


CS Global Agriculture TeamAmericas Analyst Email Phone # of StocksNorth American Chemicals & Agriculture Christopher Parkinson [email protected] 212 538 6286 22South American Ag Products & Agribusiness Viccenzo Paternostro [email protected] 55 11 3701 6043 18EMEA Analyst Email Phone # of StocksEuropean Chemicals Chris Counihan [email protected] 44 20 7883 7618 14EMEA Materials Semyon Mironov [email protected] 7 495 662 8510 10EMEA Materials Mikhail Priklonsky [email protected] 7 495 662 8511 6EMEA Food Retail Victoria Petrova [email protected] 49 69 75 38 2272 11APAC Analyst Email Phone # of StocksMalaysia Palm Oil Sector Tan Ting Min [email protected] 60 3 2723 2080 7Indonesia Palm Oil Sector Priscilla Tjitra [email protected] 62 21 2553 7906 16

11 July 2016


Unless otherwise indicated, all prices are taken at the close of the trading session of the pricing date quoted.Companies Mentioned (Price as of 08-Jul-2016)Agrium Inc. (AGU.N, $89.25, OUTPERFORM, TP $92.0)Astra Agro Lestari Tbk (AALI.JK, Rp14,450)CF Industries Holding Inc. (CF.N, $24.86, OUTPERFORM, TP $30.0)FMC Corporation (FMC.N, $46.48)IOI Corporation (IOIB.KL, RM4.28)Indofood Agri Resources Ltd (IFAR.SI, S$0.48)Intrepid Potash Inc. (IPI.N, $1.34, UNDERPERFORM[V], TP $1.0)K+S AG (SDFGn.DE, €17.82)Kuala Lumpur Kepong (KLKK.KL, RM23.2)London Sumatra (LSIP.JK, Rp1,375)MHP (MHPCq.L, $9.0)Mosaic Co. (MOS.N, $25.48, NEUTRAL, TP $21.0)Potash Corp - Saskatchewan (POT.N, $15.79, UNDERPERFORM, TP $11.0)Sime Darby (SIME.KL, RM7.41)Soquimich (SQM.N, $25.54)Wilmar International Ltd (WLIL.SI, S$3.27)Yara International ASA (YAR.OL, Nkr263.3)

Disclosure AppendixImportant Global Disclosures Christopher S. Parkinson, Chris Counihan, Semyon Mironov, Tan Ting Min, Viccenzo Paternostro, Victoria Petrova and Mathew Hampshire-Waugh each certify, with respect to the companies or securities that the individual analyzes, that (1) the views expressed in this report accurately reflect his or her personal views about all of the subject companies and securities and (2) no part of his or her compensation was, is or will be directly or indirectly related to the specific recommendations or views expressed in this report.

3-Year Price and Rating History for Agrium Inc. (AGU.N)

AGU.N Closing Price Target Price Date (US$) (US$) Rating 31-Jul-13 85.00 110.00 O 24-Feb-15 113.77 131.00 06-May-15 107.13 125.00 07-Aug-15 100.78 110.00 20-Dec-15 92.07 102.00 09-Feb-16 83.69 90.00 30-Mar-16 90.36 93.00 09-Jun-16 94.70 100.00 * Asterisk signifies initiation or assumption of coverage.

Target Price Closing Price AGU.N

1- Jan- 14 1- Jul- 14 1- Jan- 15 1- Jul- 15 1- Jan- 16 1- Jul- 1680

100

120

140

O U T PERFO RM

3-Year Price and Rating History for CF Industries Holding Inc. (CF.N)

CF.N Closing Price Target Price Date (US$) (US$) Rating 08-Aug-13 38.38 44.00 N 19-Feb-14 47.52 45.60 19-Nov-14 54.41 63.00 O 14-Jan-15 57.87 66.00 06-Aug-15 63.00 70.00 05-Nov-15 46.84 61.00 20-Dec-15 41.61 57.00 19-Feb-16 33.00 42.00 30-Mar-16 31.98 40.00 05-May-16 30.79 38.00 * Asterisk signifies initiation or assumption of coverage.

Target Price Closing Price CF.N


30

40

50

60

70

N EU T RA LO U T PERFO RM

11 July 2016


3-Year Price and Rating History for Intrepid Potash Inc. (IPI.N)

IPI.N Closing Price Target Price Date (US$) (US$) Rating 31-Jul-13 12.78 11.00 U 31-Jul-14 14.81 13.00 28-Jul-15 8.11 10.00 12-Oct-15 6.64 7.00 27-Oct-15 4.75 5.00 20-Dec-15 2.91 3.00 01-Mar-16 0.67 1.00 * Asterisk signifies initiation or assumption of coverage.

Target Price Closing Price IPI.N


5

10

15

20

U N D ERPERFO RM

3-Year Price and Rating History for Mosaic Co. (MOS.N)

MOS.N Closing Price Target Price Date (US$) (US$) Rating 17-Jul-13 54.27 65.00 N 31-Jul-13 41.09 41.00 11-Feb-14 47.96 46.00 11-Feb-15 51.19 49.00 04-Aug-15 43.98 46.00 03-Nov-15 36.51 33.00 20-Dec-15 28.54 29.00 11-Feb-16 24.75 25.00 30-Mar-16 28.12 24.00 04-May-16 27.11 22.00 * Asterisk signifies initiation or assumption of coverage.

Target Price Closing Price MOS.N

1- Jul- 13 1- Jan- 14 1- Jul- 14 1- Jan- 15 1- Jul- 15 1- Jan- 16 1- Jul- 1620

30

40

50

60

70

N EU T RA L

3-Year Price and Rating History for Potash Corp - Saskatchewan (POT.N)

POT.N Closing Price Target Price Date (US$) (US$) Rating 25-Jul-13 37.44 43.00 O 31-Jul-13 29.00 27.00 U 24-Apr-14 35.43 29.00 25-Jul-14 36.47 30.00 29-Jan-15 36.08 32.00 30-Jul-15 27.06 29.00 29-Oct-15 20.72 21.00 21-Dec-15 17.07 18.00 28-Jan-16 15.47 15.00 29-Apr-16 17.72 12.00 * Asterisk signifies initiation or assumption of coverage.

Target Price Closing Price POT.N


20

30

40

50

O U T PERFO RMU N D ERPERFO RM

The analyst(s) responsible for preparing this research report received Compensation that is based upon various factors including Credit Suisse's total revenues, a portion of which are generated by Credit Suisse's investment banking activitiesAs of December 10, 2012 Analysts’ stock rating are defined as follows:Outperform (O) : The stock’s total return is expected to outperform the relevant benchmark* over the next 12 months.Neutral (N) : The stock’s total return is expected to be in line with the relevant benchmark* over the next 12 months.Underperform (U) : The stock’s total return is expected to underperform the relevant benchmark* over the next 12 months. *Relevant benchmark by region: As of 10th December 2012, Japanese ratings are based on a stock’s total return relative to the analyst's coverage universe which consists of all companies covered by the analyst within the relevant sector, with Outperforms representing the most attractive, Neutrals the less attractive, and Underperforms the least attractive investment opportunities. As of 2nd October 2012, U.S. and Canadian as well as European ratings are based on a stock’s total return relative to the analyst's coverage universe which consists of all companies covered by the analyst within the relevant sector, with Outperforms representing the most attractive, Neutrals the less attractive, and Underperforms the least attractive investment opportunities. For Latin American and non-Japan Asia stocks, ratings are based on a stock’s total return relative to the average total return of the relevant country or regional benchmark; prior to 2nd October 2012 U.S. and Canadian ratings were based on (1) a stock’s absolute total return potential to its current share price and (2) the relative attractiveness of a stock’s total return potential within an analyst’s coverage universe. For Australian and New Zealand stocks, the expected total return (ETR) calculation includes 12-month rolling dividend yield. An Outperform rating is assigned where an ETR is greater than or equal to 7.5%; Underperform where an ETR less than or equal to 5%. A Neutral may be assigned where the ETR is between -5% and 15%. The overlapping rating range allows analysts to assign a rating that puts ETR in the context of associated risks. Prior to 18

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May 2015, ETR ranges for Outperform and Underperform ratings did not overlap with Neutral thresholds between 15% and 7.5%, which was in operation from 7 July 2011.Restricted (R) : In certain circumstances, Credit Suisse policy and/or applicable law and regulations preclude certain types of communications, including an investment recommendation, during the course of Credit Suisse's engagement in an investment banking transaction and in certain other circumstances.Not Rated : Credit Suisse Equity Research does not have an investment rating or view on the stock or any other securities related to the company at this time.Not Covered (NC) : Credit Suisse Equity Research does not provide ongoing coverage of the company or offer an investment rating or investment view on the equity security of the company or related products.Volatility Indicator [V] : A stock is defined as volatile if the stock price has moved up or down by 20% or more in a month in at least 8 of the past 24 months or the analyst expects significant volatility going forward.Analysts’ sector weightings are distinct from analysts’ stock ratings and are based on the analyst’s expectations for the fundamentals and/or valuation of the sector* relative to the group’s historic fundamentals and/or valuation:Overweight : The analyst’s expectation for the sector’s fundamentals and/or valuation is favorable over the next 12 months.Market Weight : The analyst’s expectation for the sector’s fundamentals and/or valuation is neutral over the next 12 months.Underweight : The analyst’s expectation for the sector’s fundamentals and/or valuation is cautious over the next 12 months. *An analyst’s coverage sector consists of all companies covered by the analyst within the relevant sector. An analyst may cover multiple sectors.

Credit Suisse's distribution of stock ratings (and banking clients) is:

Global Ratings DistributionRating Versus universe (%) Of which banking clients (%)Outperform/Buy* 55% (42% banking clients)Neutral/Hold* 35% (17% banking clients)Underperform/Sell* 10% (40% banking clients)Restricted 0%*For purposes of the NYSE and NASD ratings distribution disclosure requirements, our stock ratings of Outperform, Neutral, and Underperform most closely correspond to Buy, Hold, and Sell, respectively; however, the meanings are not the same, as our stock ratings are determined on a relative basis. (Please refer to definitions above.) An investor's decision to buy or sell a security should be based on investment objectives, current holdings, and other individual factors.

Credit Suisse’s policy is to update research reports as it deems appropriate, based on developments with the subject company, the sector or the market that may have a material impact on the research views or opinions stated herein. Credit Suisse's policy is only to publish investment research that is impartial, independent, clear, fair and not misleading. For more detail please refer to Credit Suisse's Policies for Managing Conflicts of Interest in connection with Investment Research: http://www.csfb.com/research-and-analytics/disclaimer/managing_conflicts_disclaimer.htmlCredit Suisse does not provide any tax advice. Any statement herein regarding any US federal tax is not intended or written to be used, and cannot be used, by any taxpayer for the purposes of avoiding any penalties.

Target Price and RatingValuation Methodology and Risks: (12 months) for Agrium Inc. (AGU.N)

Method: Our $92 price target and Outperform rating for Agrium Inc. are based on ~8.5x our 2017 EBITDA estimate of $1.9bln, discounted back. Our multiple reflects a premium to AGU's peers on the back of its retail business which provides more stable returns.

Risk: There are significant risks to our 12-month price target of $92 and Outperform rating for Agrium (AGU) including the volatility of nitrogen markets and phosphate input costs, changes in potash prices due to shifts in global demand and general sentiment, impacts related to weather and the need for stable transportation and logistics.

Target Price and RatingValuation Methodology and Risks: (12 months) for CF Industries Holding Inc. (CF.N)

Method: Our $30 target price and Outperform rating for CF are based on a 50/50 blended approach between an EV/EBITDA multiple and FCF yield, specifically (i.) 6x our 2017 EBITDA estimate of ~$1.7bln, discounted back and (ii.) 10% FCF yield on our 'normalized' FCF in 2017 of ~$3/share, discounted back.

Risk: There are several risks to our $30 price target and Outperform rating for CF Industries (CF) including the volatility of nitrogen markets, adverse weather effects in key row crop growing regions and the need for stable transportation and logistics.

Target Price and RatingValuation Methodology and Risks: (12 months) for Intrepid Potash Inc. (IPI.N)

Method: Our $1 target price and Underperform rating for Intrepid Potash Inc. are based on ~4.2x our 2017 EBITDA (earnings before interest, tax, depreciation and amortization) estimate of ~$32mm, discounted back. Our multiple refelcts current potash market headwinds.

Risk: There are several risks to our $1 target price and Underperform rating for IPI including continuing uncertainty in global potash markets, adverse weather during the North American planting season, disruption to its transportation infrastructure, FX risk for the Russian Ruble and $CAD, as well as execution and safety risks in its facilities and mines.

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Target Price and RatingValuation Methodology and Risks: (12 months) for Mosaic Co. (MOS.N)

Method: Our $21 price target and Neutral rating are based on a 50/50 blend of ~7x our 2017 EBITDA estimate of ~$1.3bln and a 4% dividend yield discounted back. Our target EV/EBITDA multiple is lower than the historical multiple of ~8.5x to reflect headwinds in the potash and phosphates industry.

Risk: There are significant risks to our 12-month price target of $21 and Neutral rating for Mosaic (MOS) including the volatility of nitrogen markets and phosphate input costs, changes in potash prices due to shifts in global supply/demand dynamics and general sentiment, impacts related to weather and the need for stable transportation and logistics.

Target Price and RatingValuation Methodology and Risks: (12 months) for Potash Corp - Saskatchewan (POT.N)

Method: Our $11 target price and Underperform rating for Potash Corp - Saskatchewan are determined on ~6.5x our normalized 2017 EBITDA estimate of ~$1.6bln discounted back. We are also including ~$4.50 per share of equity investments.

Risk: There are several risks associated with our $11 target price and Underperform rating for Potash Corporation of Saskatchewan (POT), including the volatility of nitrogen markets and phosphate input costs, changes in potash prices due to shifts in global demand and general sentiment, impacts related to weather, and the need for stable transportation and logistics.

Please refer to the firm's disclosure website at https://rave.credit-suisse.com/disclosures for the definitions of abbreviations typically used in the target price method and risk sections. See the Companies Mentioned section for full company names The subject company (AGU.N, CF.N, POT.N, YAR.OL, LSIP.JK, AALI.JK, SDFGn.DE, IFAR.SI, FMC.N) currently is, or was during the 12-month period preceding the date of distribution of this report, a client of Credit Suisse.Credit Suisse provided investment banking services to the subject company (LSIP.JK, IFAR.SI) within the past 12 months.Credit Suisse has received investment banking related compensation from the subject company (LSIP.JK, IFAR.SI) within the past 12 monthsCredit Suisse expects to receive or intends to seek investment banking related compensation from the subject company (AGU.N, CF.N, IPI.N, POT.N, SQM.N, YAR.OL, LSIP.JK, AALI.JK, SDFGn.DE, KLKK.KL, IOIB.KL, IFAR.SI, FMC.N) within the next 3 months.As of the date of this report, Credit Suisse makes a market in the following subject companies (CF.N, IPI.N, MOS.N, FMC.N).Credit Suisse may have interest in (SIME.KL, KLKK.KL, IOIB.KL)As of the end of the preceding month, Credit Suisse beneficially own 1% or more of a class of common equity securities of (YAR.OL, SDFGn.DE, FMC.N).Credit Suisse beneficially holds >0.5% long position of the total issued share capital of the subject company (SDFGn.DE).Credit Suisse beneficially holds >0.5% short position of the total issued share capital of the subject company (MOS.N).Credit Suisse has a material conflict of interest with the subject company (WLIL.SI) . Credit Suisse is acting as financial advisor to Goodman Fielder in relation to the receipt of the announced proposal from Wilmar International Limited and First Pacific Company Limited.For other important disclosures concerning companies featured in this report, including price charts, please visit the website at https://rave.credit-suisse.com/disclosures or call +1 (877) 291-2683. For a history of recommendations for the subject company(ies) featured in this report, disseminated within the past 12 months, please refer to https://rave.credit-suisse.com/disclosures/view/report?i=237026&v=1tfv081yyo9aigd2iophusyh5 . Important Regional Disclosures Singapore recipients should contact Credit Suisse AG, Singapore Branch for any matters arising from this research report.The analyst(s) involved in the preparation of this report may participate in events hosted by the subject company, including site visits. Credit Suisse does not accept or permit analysts to accept payment or reimbursement for travel expenses associated with these events.Restrictions on certain Canadian securities are indicated by the following abbreviations: NVS--Non-Voting shares; RVS--Restricted Voting Shares; SVS--Subordinate Voting Shares.Individuals receiving this report from a Canadian investment dealer that is not affiliated with Credit Suisse should be advised that this report may not contain regulatory disclosures the non-affiliated Canadian investment dealer would be required to make if this were its own report.For Credit Suisse Securities (Canada), Inc.'s policies and procedures regarding the dissemination of equity research, please visit https://www.credit-suisse.com/sites/disclaimers-ib/en/canada-research-policy.html.The following disclosed European company/ies have estimates that comply with IFRS: (YAR.OL).As of the date of this report, Credit Suisse acts as a market maker or liquidity provider in the equities securities that are the subject of this report.Principal is not guaranteed in the case of equities because equity prices are variable.Commission is the commission rate or the amount agreed with a customer when setting up an account or at any time after that.I, Viccenzo Paternostro, certify that (1) The views expressed in this report solely and exclusively reflect my personal opinions and have been prepared independently, including with respect to Banco de Investimentos Credit Suisse (Brasil) S.A. or its affiliates ("Credit Suisse"). (2) Part of my compensation is based on various factors, including the total revenues of Credit Suisse, but no part of my compensation has been, is, or will be related to the specific recommendations or views expressed in this report. In addition, Credit Suisse declares that: Credit Suisse has provided, and/or may in the future provide investment banking, brokerage, asset management, commercial banking and other financial services to the subject company/companies or its affiliates, for which they have received or may receive customary fees and commissions, and which constituted or may constitute relevant financial or commercial interests in relation to the subject company/companies or the subject securities.This research report is authored by:Credit Suisse Securities (USA) LLC .....................................................................Christopher S. Parkinson ; Kieran de Brun ; Matthew Freedman

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Bank Credit Suisse (Moscow) .........................................................................................................................................................Semyon MironovCredit Suisse Securities (Malaysia) Sdn Bhd. .....................................................................................................................................Tan Ting MinBanco de Investments Credit Suisse (Brasil) SA or its affiliates............................................................Viccenzo Paternostro ; Victor SaragiottoCredit Suisse International .................................................................................................................Chris Counihan ; Mathew Hampshire-WaughCredit Suisse Securities (Europe) Limited ......................................................................................................................................Victoria PetrovaTo the extent this is a report authored in whole or in part by a non-U.S. analyst and is made available in the U.S., the following are important disclosures regarding any non-U.S. analyst contributors: The non-U.S. research analysts listed below (if any) are not registered/qualified as research analysts with FINRA. The non-U.S. research analysts listed below may not be associated persons of CSSU and therefore may not be subject to the NASD Rule 2711 and NYSE Rule 472 restrictions on communications with a subject company, public appearances and trading securities held by a research analyst account.Bank Credit Suisse (Moscow) .........................................................................................................................................................Semyon MironovCredit Suisse Securities (Malaysia) Sdn Bhd. .....................................................................................................................................Tan Ting MinBanco de Investments Credit Suisse (Brasil) SA or its affiliates............................................................Viccenzo Paternostro ; Victor SaragiottoCredit Suisse International .................................................................................................................Chris Counihan ; Mathew Hampshire-WaughCredit Suisse Securities (Europe) Limited ......................................................................................................................................Victoria PetrovaFor Credit Suisse disclosure information on other companies mentioned in this report, please visit the website at https://rave.credit-suisse.com/disclosures or call +1 (877) 291-2683.

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11 july 2016 agricultural sciences sector ... - credit suisse

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