Good morning, ladies and gentlemen, and welcome to The Mosaic Company's fiscal 2011 first quarter earnings conference call. (Operator Instructions) Your host for today's call is Christine Battist, Director of Investor Relations of The Mosaic Company.

Thank you, Veronica. Welcome to Mosaic's fiscal 2011 first quarter earnings conference call. With us today are Jim Prokopanko, President and Chief Executive Officer; Larry Stranghoener, Executive Vice President and Chief Financial Officer; and Dr. Mike Rahm, Vice President, Market and Strategic Analysis; and other members of the senior leadership team. After my introductory comments, Jim will review our first quarter results, comment on execution against our strategic priorities and update financial guidance. Then he'll provide an update on South Fort Meade. Following Jim's remarks, Mike will provide an in-depth review of supply and demand for the phosphate and potash markets. The presentation slides we are using during this call are available on our website at www.mosaicco.com. We will be making forward-looking statements during the conference call. The statements include, but are not limited to, statements about future financial and operating results. They are based upon management's beliefs and expectations as of today's date, October 5, 2010, and are subject to significant risks and uncertainties. Actual results may differ materially from those projected in the forward-looking statements. Additional information concerning factors that could cause actual results to differ materially from those in the forward-looking statements is included in our press release issued yesterday and in our reports filed with the Securities and Exchange Commission. This call is the property of Mosaic. Any distribution, transmission, broadcast or rebroadcast in any form without the expressed written consent of Mosaic is prohibited. I have just one housekeeping item to share with you. We plan to file our 10-Q with the SEC on October 12. Now I'll turn the call over to Jim.

Thank you, Christine, and good morning everyone on what is a beautiful harvest morning in Minnesota. It is a great time to be the largest combined phosphate and potash producer in the world. As I said on our last call in late July, market sentiment was beginning to catch up with fundamentals. That has now happened. Several factors have tightened agricultural commodity markets, bolstering crop prices and farm profitability. This is driving strong demand for crop nutrients at a time when producer inventories are low and concerns are growing about crop nutrient supplies, creating a positive outlook for Mosaic. The steady drumbeat on the food story continues. Now, let's shift to our quarterly results. We are executing against our strategic plans and delivering results. Earnings per share was $0.67 in the quarter, nearly triple the amount last year. We generated $556 million in cash flow from operations this quarter, primarily due to an increase in net earnings and customer prepayments. These prepayments are an indicator of the strong demand for our products. Our phosphates business segment generated $178 million in operating earnings, nearly a four-fold increase over a year ago. The improvement in the first quarter operating earnings was primarily due to higher selling prices, partially offset by higher sulfur and ammonia cost and the unfavorable impact of reduced rock production at South Fort Meade. The segment gross margin was respectable at 15%, driven by strong sales volume into North America and Brazil. We operated near full out at our concentrate plants, while our mining production was impacted by close to $30 million this quarter due to idling South Fort Meade, which I'll speak more about in a few minutes. Potash sales volumes this quarter were double compared to last year and 200,000 tons above the high end of our…

Thank you, gentlemen, and good morning or bom dia as they say in Portuguese. I am gladly going to talk about the market outlook this morning, because with all the merger and acquisition saga currently playing out in the industry, that story has overshadowed the great fundamental developments that have occurred in the past few months. Despite the sell-off in grain market last week, rallies in a broad array of agricultural commodity prices during the last few months are fueling an increasingly positive outlook for phosphate and potash demand. Large increases in shipment so far this year have taken P and K markets. Producer stocks have declined. Phosphate prices have increased sharply. And potash prices have begun to move up. Given the positive demand outlook, we project that P and K markets will remain tight until new capacity comes on later this decade. Let's start by reviewing developments in agricultural commodity markets during the last few months. Several rallies were sparked by two reports released by the USDA on June 30. The reports show that U.S. farmers planted less corn than expected last spring and that corn inventories were smaller than expected on June 1. Then several severe weather developments, particularly the terrible drought in Russia, combined to dump the equivalent of a tanker truck of gasoline on (the spark). The most recent supply issue and potentially the most potent in my view is the size of the U.S. corn crop coming off fields right now. Although farmers planted the crop early and condition scores tracked the high values associated with record yields last year, excessive rainfall and warm nighttime temperatures in many areas robbed yields from this year's crop. The USDA lowered its estimate to 162.5 bushels per acre in September and most analysts expect another downward adjustment in…

To wrap up, this was a strong quarter that again reinforced the advantages of having the strategy focused on a balanced nutrient portfolio. The demand for both phosphates and potash continues to expand globally, placing Mosaic in a unique position to capitalize in markets worldwide. We're excavating well against our long-term strategy to create shareholder value. And for fulfilling our mission of helping world grow the food it needs. We are excited and optimistic about prospects for the 2011 fiscal year. Now back to you Christine.

We would now like to open the call to your questions. Please hold your questions to one per person, so we can take questions from as many people as possible. You are welcome to rejoin the queue for a follow-up question.

(Operator Instructions) And your first question comes from the line of PJ Juvekar from Citi.

This is Anthony Pettinary for PJ. With reference to the South Fort Meade mine you've referenced your mitigation plan of using purchase phosphate rock, and how that could potentially impact margins? Do you anticipate any additional CapEx to be required in order to potentially pursue this mitigation plan?

No, we are not expecting anything material. We may have to do a bit of onsite work to allow imports or receipt of phosphate rock into our ports. But nothing that we have to call out.

Your next question comes from the line Vincent Andrews from Morgan Stanley

Can you just give us an update of where inventory levels are through the channel from a P and K perspective? I know in the past calls we've been talking about basically bins being bare, but as went through sort of December fill season and prices started to go up as we entered the fall. What your customers telling you they want to be when fall's over?

Vincent, I am going to turn this over to Rick McLellan, leader of our Commercial group who is just back from a spin through the mid west visiting customers and dealers.

I think one, customers still haven't positioned 100% of what they were going to require in North America for the fall season. They've got about 80% of the P and K they would require in place. Everyone still has the same battle [cribe]. They want to end the season with this little inventory as possible like they did in the spring. The issue is, is there is some damages being caused by that, because buyers for P and K in North America waited 75 to 60 days ago to purchase. And as we traveled, we found everyone was waiting for potash shipments or phosphate shipments. So they've got to the back of the bin and there is some impact. The good part is this is a fall season. It will be able to drag out for the next 45 to 60 days. But people are living with some of the issues of just-in-time inventory.

Your next question comes from the line of Jeff Zekauskas from JPMorgan.

It's a two-part question. Have you already negotiated the rock prices for the additional rock that you will need in second half of your fiscal year? And are all those prices roughly $120 to $130 per ton FOB from wherever they are being shipped, and this is x the (inaudible) mile? And second, what are your original costs for your Fosfertil to your investment? What's the tax basis for that?

I'll take the first question and Larry Stranghoener will take the second one. The first one is an easy question. The answer is yes, we do have rock contract with core and the cost is going to be in that $100 to $120 a ton higher price range than what it currently cost us to deliver it from our Florida operations. So that's the delivered increase I am talking about $100 to $120.

Your next question comes from the line of Robert Koort from Goldman Sachs.

Give us an update on the litigation around the Esterhazy issue? And then secondly, Jim, can you talk a little bit more about what you mean when you say that the Indian DAP contract provides you flexibility on shipping?

The only update I would have for you is the court has set a trial day which is now scheduled for September of 2011. And we are currently shipping the PCS. And based off of our current mining plans and current calculations, we believe that the expiration of the tolling agreement will occur in June of 2011 with one important point that I would make to that. That assumes that we are delivering 900,000 tones of potash product that is in dispute currently under the litigation as it relates to a force majeure declaration made by PCS during calendar 2009.

Robert, to your second question about the flexibility we have with the Indian contract, that was a fixed price contract of 2 million tones we negotiated. And rather than have a fixed volume set per month we've agreed to work with one another to what is convenient for our respective sides to receive the product. So it's worked extremely well that when we have a product that we'd like to move and make some space in our inventory, they have been willing to take it and they have had some port congestion. And we've been able to work at moving that product and keeping it in North America for a period of time. So it's just best efforts on both sides to make that work. And it's worked well, served us well and served them well.

Your next question comes from the line of Jacob Bout from CIBC.

First, what are your thoughts on the future of Canpotex if BHP is successful in the bid for PCS? And would Mosaic look at playing more of a role of swing producer if PCS is taken out? And then my second question would be just on the new shaft at Esterhazy, what will be the hoisting capacity for the new shaft?

A couple of questions you have there. And the first on Canpotex, this is an organization that's been established and proven itself over 38 years. And when I say proven itself, it's developed a brand and a reputation for being a organization that delivers quality products. And is an organization whose word is its bond. It does and delivers what it says it's going to do. And third I'd say there're strong relationships in the business. Many of our customers have been lifetime careers in the crop nutrient business, as many of the Canpotex people are. So it's really been a strong relationship established between customers and that organization. As well it's remarkably efficient organization to move vast volumes of product from the center of Canada to destinations around the world. I think you can take from that and I'm a big fan of Canpotex. They've done a wonderful job and they serve Mosaic very well. What BHP is going to do, I don't know. Various comments are being printed in the press and I guess time will tell. But when you get to know us, you'll get to love us. And I expect that BHP prevails, and who knows that they will or not. They're reasonable business people, and I expect they'd give it a change. But I think it's a ways to go yet to see if they're going to get to that point. And your second question was about Esterhazy shaft and the capacity, and that's going to be a 7 million ton lifting capacity that will be available through that. And I think that answers. Is that clear Jacob?

If I could just qualify that, Jim, that would bring Esterhazy to a total of 7 million tons. The shaft expansion itself would add an incremental 900,000 to 1 million ton of capacity.

Your next question comes from the line of Don Carson with Susquehanna.

A few questions on forward pricing in P and K. You know we've seen some very high nitrogen ammonia prices particularly in Midwest for forward delivery next spring. May be Rick McLellan can just talk a bit about what the forward order book for P and K looks like. And also specifically on phosphate, does PhosChem have any optional tonnage with India? And if so, would you choose to still ship it at $500 CFR? And then no one has asked you about your potash guidance, but three-ten at the low end would be a sequential decline from the most recent quarters. Wondering is that a mix issue or why that low end of the range?

Your question on phosphate into forward selling, we've been offering up tons for shipment into December at around that 520 Central Florida price. And some spot tonnage at 570 for export phosphates. So prices are strong and we've been positively impressed by the willingness of buyers to step up to buy into those marketplaces. They expect their bins will be empty once we get through this fall. But they're willing to step in and see that price matches up with the farm margins. Second part of the question was on PhosChem, flexibility for us to ship extra? Yes, there is. And we have agreements with our Indian customers, as you know the subsidy will change the subsidy scheme and the prices supported there will change in March. And so we've agreed that we won't, neither one of us will execute against those options. For potash guidance, yes, there's two things that are going on with potash. One, is we're shipping against legacy contracts into India and into China. And those because of the product mix are drawing down the netbacks.

Your next question comes from the line of David Silver with Bank of America.

Two questions on cost. On the potash side I was hoping Larry could update us on the brine inflow cost for this quarter and whether there was anything unusual. And then as far as South Fort Meade goes, I estimated that the fixed cost absorption effect this quarter was in the range of $40 million to $50 million. And I was just wondering if you could comment on that broadly, I don't need an exact number, but if that effect is roughly correct?

With respect to the brine inflow question, the brine inflow cost were $37 million in the quarter, up from $25 million the quarter before that, and don't read anything into that number that's going to vary a bit from quarter-to-quarter. We still expect to spend $120 million to $130 million this year in mitigating the brine inflow. But it was up a bit sequentially. With respect to Phosphate cost, your number is not a bad one. Jim mentioned the $30 million expense hit at South Fort Meade that essentially is the effect of South Fort Meade becoming an idle plant and its cost running straight to the P&L has opposed to inventory. In addition to that because of lower rock production at our other mines as well there were other fixed cost absorption issues that totaled up to about $50 million including $30 million for South Fort Meade. So, again your estimates are a pretty good one.

Your next question comes from the line of Mark Connelly from CLSA.

The conference of board report yesterday, Canada suggested that may be Canada should change the way they provide incentives for new capacity. And I am curious if you could comment on your position and perspective on whether that would be of beneficial thing for the potash industry. And secondly I was in China last week and nearly every body I talked to said that if the price of potash goes over 350 demand will not grow this year. That doesn't seem to square with record profitability. But I wonder if you could comment on what you are hearing in terms of price sensitively in China?

Two questions, the first about taxes. I saw that report and read it with interest. And how the taxes may or may not change I just think it's premature to talk about that. The concern I have on the tax piece is that however the Saskatchewan government chooses to tax potash, they're going to have to just be mindful of where that moves potash production along the cost curve. At present it's a very flat cost curve amongst all producers. There is a tail and a nose of 10% on either side that are sort of in extremes, but small, small volumes. And in between you have this group of producers that there isn't a lot of differentiation between what the cost is and you add taxes on that. Saskatchewan is already a higher taxed geography to be producing potash. So, they are mindful of it, we remind them of that. And if they add or increase the taxes, they will push Saskatchewan producers to the right of the cost curve and have the impact on the profitability of the industry, et cetera, et cetera. So time will tell on that. In terms of the China question about profitability, we've seen the profitability to the farmer if potash prices go up. We've had, I think now three consecutive years of reduced potash application rates in China. And over that period of time, we've seen China grow the amount of grains and oilseeds that they're importing into the country. So the potash will go to the highest bidders. And if there are other countries that will be willing to pay for the potash and demand the potash then I think China will continue on that escalator up or they continue to import grains and oilseeds that others are growing. It's an issue that the Chinese have to deal with. And by the way manage food prices in country and allow prices to increase so that the farmers in China can have a greater incentive to produce more crops.

Your next question comes from the line of Edlain Rodriguez from Gleacher Company.

Can you talk about potash prices? I mean it appears that Canpotex has successfully implemented the fix dollar price increase in Brazil. Can you comment about price in there?

Canpotex continues to sell into Brazil and the announcement last week that they had oat is that they're sequentially increasing prices from where they're at today up to four ten for product ordered and shipped into January. So those netbacks are going to increase sequentially over the next few months. But it's a very positive side. And right now you're getting ready for the planting season in Brazil. And the inventory is needed there and buyers are stepping in to buy at these sequentially higher prices.

Your next question comes from the line of Mark Gulley from Soleil Securities.

My question has to do with relative pricing amongst the three nutrients. It's just really interesting to see how much nitrogen prices are up, how much DAP prices are up, how much grain prices are up? And yet the potash prices have been flat now for some time and it isn't building up all that much. I know it all relates to inventories, but at a high level, Jim, can you talk about why potash has lagged so much when it is just supposed to be the best nutrient when it comes to like a Michael Porter five factor analysis?

I've said this before. There are a number of nutrients that are important to growing a crop. Two of them are our children, we love them both equally. And what is necessary is a balanced crop nutrient regiment for any farmer anywhere in the world. And to single out one nutrient as the silver bullet to success is just not good science or good agronomics. And it depends on what the field conditions are, different geographies, it's different. And in the case of potash and phosphate, farmers can take holidays and defer paying for those nutrients or using those nutrients. But you can only defer, you can't completely avoid and it does catch up with you. And I think there is history and psychology that goes into it. We've got probably 30 years of history where potash is sold for probably all but 24 months of that period under $200 per ton. And producers are used to paying $150 per ton or $200 per ton for potash. And what do you mean it's $300 or $400 or $500, they're just not comfortable with that notion. Whereas there is a greater understanding that in the case of nitrogen that is driven by gas prices and world S&B on gas and energy products. And phosphates as well, we've seen more volatility and people are used to it by way of the raw materials that go into it. The sulfur and ammonia that could move it around. But potash is just something that I advise dealers and farmers get used to the cost that we are in a period of higher highs and higher lows, it'll remain cyclical. But the cost of producing this stuff, although there is not much in the way of raw materials, replacing the mining equipment, the mill has gotten considerably more expensive. So this past season we've seen phosphate prices I think take the medicine earlier in terms of adjusting. And producers are back to buying. And I think this will also occur in potash, taking a little longer, but its coming.

Your next question comes from the line Elaine Yip from Credit Suisse

Can you comment on the Chinese potash negotiations for next year? I understand that you started or Canpotex started talking with the Chinese at the TFI conference. What is the anticipated timing of the contract settlement? And do you expect to go back to annual contracts or are you working towards shorter duration contracts like you did this year?

Dealing with the Chinese, we're always talking to the Chinese and we're always negotiating with the Chinese, speaking for Canpotex. And so we've been ongoing discussions over the year. My judgment that we are nearing an agreement with the Chinese and going into the detail is going to be a year or less. We're asking for a less than a year and their buying behavior over the last couple of years have been in line with that. They have ended up settling on less than four-year contracts, and that's the way it's become. So we're going to probably look to achieve something like that. But I think we'll by the end of this calendar year have something in place and announce. That's all I can say on it, Edlain.

Your next question comes from the line of Fai Lee from RBC Capital Markets.

I just want to may be ask Mike Rahm a question. Mike, with respect to your outlook for perhaps lower corn yields in the U.S. and we've also seen the impact of weather having a negative impact on crop yields in other areas, have buyers made any connection between perhaps the notion that maybe having a better nutrient balance would have helped farmers with respect to yield in withstanding the negative weather impacts that we've seen this year?

I'd say no. That's a great question and one that is not an easy one to answer. Obviously, there have been a lot of weather events that have impacted yields, but you have to think that the lack of proper nutrition may have played a role. I think as we get details on what yields actually are, people will begin to sort that out. But you have to think that nutrition comes into play.

Your next question comes from the line of Farooq Hamed from Barclays Capital.

I just want to maybe follow up on South Fort Meade. My first question really on that is are you proceeding with an EIS kind of in the background while you are waiting for the appeal to be ruled upon and preparing for trial? So that's my first question. And then the second question is that I believe in your prepared comments you said that you think there will be no impact to your finished phosphate production this year. So to me that means that you're going to be using a lot more third-party rock and Miski Mayo rock. I was just wondering if you could let us know how much of that rock you're expecting to take from Miski Mayo this year and what the rock costs are there?

Farooq, this is Rich Mack. With respect to the area-wide EIS, I think what we would say with respect to that is that it's in its infancy stages right now. I don't think that the Army Corps of Engineers has a specific game plan with respect to how they want to approach an area-wide EIS. In fact, there are meetings ongoing tomorrow and Thursday in Florida, which is essentially an informational workshop where they are going to learn more about various interests with respect to an area-wide EIS. From our perspective, we have future permits, but we have a fairly long lead time before we meet those permits, and we will be actively engaged with the Army Corps of Engineers with respect to the scope of the area-wide EIS and obviously the timing as it relates to any future needs that we might have. So I guess in sum, a lot is yet to be determined in terms of how that proceeds. With respect to the use of phosphate rock in terms of meeting our production needs for the fourth quarter, it's a combination, as I think Jim outlined. We're using up obviously our existing phosphate rock inventories. We are importing some rock from Morocco. We are just beginning the Miski Mayo imports from Peru which we're happy to begin. And finally, we're using down our finished phosphate fertilizer inventories that we currently have available. It's too early to give any information out in terms of cost as it relates to Miski Mayo, but I think it's safe to say that the cost is going to be purchased from the joint venture at arm's length and we would benefit through our equity investment that we've made and closed upon this last quarter.

Your next question comes from the line of Charles Neivert from Dahlman Rose.

If I look at the midpoints of your numbers for Brazil, for China, for India and then sort of the midpoint of your range for next year at the $52 million to $55 million, that indicates an increase in 5 million tons, but the pieces that you've given for the biggest players comes out to 3 million tons. Can you tell me where are the other 2 million tons of demand might be coming from? I'm assuming that the U.S. and the European Union are generally not going to see much of an increase because they generally apply pretty much what they need. So could you tell us sort of just where the other couple of million tons is going to come from?

We are seeing significant rebounds in places like Western Europe and we expect more shipments in the U.S. as well. So part of that increase is the continued recovery in those two areas. In addition to that, there's very good demand outlooks in other parts of the world, whether it's the other Southeast Asian markets, other Latin American countries and the like. So it's very much broad-based led by the big customers, but contributions coming from all parts of the world.

Your next question comes from the line of Horst Hueniken from Stifel Nicolaus.

You mentioned the cost to idle the South Fort Meade mine is approximately $30 million. Was this booked in the first quarter or will it be booked in the second or a combination of both?

The $30 million number was the first quarter number. The number in subsequent quarters will be lower on the order of $20 million or so per quarter.

Your next question comes from the line of Hari Sambasivan from National Bank.

Just a clarification please on the sequential margins for potash. I mean the gross margins declined from give or take around the 50% mark to the 40% mark in the quarter. And I'm just wondering is that primarily due to, I would say, a lower production and the brine issue or are there other issues sort of affecting that margin. And the second question I had is, in terms of Esterhazy with the capital expenditure programs that you have, I'm just wondering how much of your brine inflow cost could be effected by the capital expenditures when you look at it over the longer term. I'm just kind of wondering is there a reduction in sort of a brine inflow cost that you're anticipating once you sort of get over this CapEx program?

The answer to your first question, potash margins were down sequentially, you're right, because of significantly lower production volume in the first quarter versus the fourth quarter. It was not unexpected. We signaled it in our fourth quarter conference call. And it relates to the summer shutdowns and turnarounds we schedule in our potash mines during our first quarter. And to your second question about the impact of the expansion at Esterhazy and how that would affect our brine inflow, it's a project separate from the current mine workings. So no, it won't have any direct impact on the brine inflow. However, sinking a second shaft will be separate from and will have a good distance from the current mine working. So heaven forbid if there's ever a catastrophic failure, which we don't foresee happening, we will have a facility that will continue uninterrupted. We'll have the new mine shaft separate from the current workings using the existing infrastructure and mill works above ground. Well, with that, we'll conclude our Q&A session. The demand for nutrients to produce more food will inevitably expand. The world is not getting less hungry. With our balanced portfolio and strong competitive position, Mosaic is well situated to create value for our shareholders and customers for years to come. Thank you for joining us today. Please log off the call now. Thank you.