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DISCLOSURE APPENDIX AT THE BACK OF THIS REPORT CONTAINS IMPORTANT DISCLOSURES, ANALYST

CERTIFICATIONS, LEGAL ENTITY DISCLOSURE AND THE STATUS OF NON-US ANALYSTS. US Disclosure: Credit

Suisse does and seeks to do business with companies covered in its research reports. As a result, investors should be aware

that the Firm may have a conflict of interest that could affect the objectivity of this report. Investors should consider this report

as only a single factor in making their investment decision.

4 February 2019

Americas/United States

Equity Research

Fertilizers

Agricultural Sciences Sector

QUARTERLY

Research Analysts

Christopher S. Parkinson

212 538 6286

christopher.parkinson@credit-suisse.com

Chris Counihan

44 20 7883 7618

chris.counihan@credit-suisse.com

Victor Saragiotto

55 11 3701 6303

victor.saragiotto@credit-suisse.com

Amanda Foo

603 2723 2089

amanda.foo@credit-suisse.com

Fahd Niaz, CFA

65 6212 3035

fahd.niaz@credit-suisse.com

Graeme Welds

212 538 8463

graeme.m.welds@credit-suisse.com

Ian Miller

55 11 3701 6336

ian.miller@credit-suisse.com

Kieran de Brun

212 538 3440

kieran.debrun@credit-suisse.com

Harris Fein

212 538 3064

harris.fein@credit-suisse.com

Stable Ag Macro, but Still a Crowded Space

■ '19 Outlook Healthy on Probable Trade Resolution, FMC Top Ag Pick:

After multiple years of our "L-shaped recovery" call on the ag macro, we're

modestly more constructive in '19 due to: (i) healthy coarse grain / oil seed

demand, (ii) specialty crop growth, (iii) upside optionality from a potential

US / China trade resolution, and (iv) a favorable election cycle backdrop

(India, Argentina, etc.). In our view, corn and soy prices will likely push

towards the upper end of CSe LT ranges of $3.70-$4.20 and $8.50-$10.00,

respectively. Given the high degree of volatility likely to persist in soft

commodity markets, we recommend being selective in stock selection,

stressing FMC / Corteva (DWDP) are the best ways to play the ag macro.

■ US / China Trade Optionality Drives Cautious Optimism: It's difficult to

predict the outcome of US/China trade negotiations, but we believe the risk

(from here) is to the upside. There have been positive signs such as China

granting new trait approvals, but tensions between the two nations clearly

remain elevated in light of ongoing legal actions. We believe there are clear

incentives for both parties to reach a deal. The US is well positioned to

"help" China reach its E10 goal, while restoring / growing Chinese grain

demand would be a boon for a key component of the Trump support base.

■ Plenty of Supply Availability in Global Ferts, Potash Is Best Balanced:

Within ferts, we retain our view all 3 macro fertilizers will remain supply-

driven, w/ potash preserving the best 1H19 S/D balance. The nitrogen S/D

remains at risk (vs. expectations) given: (i) ample new supply (FSU, ME &

Africa), and (ii) moderating 4

quartile input costs. We view gas availability

improvements in EE, T&T and Central Asia and / or any shift in rhetoric on

Iranian sanctions as key supply risks. CF and NTR are arguably reflecting

some of this risk, but we still view upside as limited (for now). Phosphate

prices continue to decline in the Americas / Asia, which investors are

shrugging off, citing lower inputs. We anticipate ample new supply (MENA,

etc.) to meet stable '19 demand, posing slight downside risk to bullish

expectations despite lower raws. Expect only slight declines in Chinese

exports as more efficient producers ramp to offset environmental closures.

■ CPC Outlook Is Producer Dependent–Asian / Latam Volume Growth:

We believe global CPC markets will only muster 1-2% growth in '19, which

is underscored by a mostly-healthy Asia, solid Latam and stable US.

European growth will likely be fairly muted, given weak crop economics

and a challenging local regulatory environment (glyphosate, chlorpyrifos,

neonicotinoids, etc.) – new product launches / EE exposure are integral to

Euro growth. On the cost front, AI inflation appears to be easing, but input

headwinds will likely still be prevalent in 1H19, a theme across the sector.

■ New Estimates: MOS ('19 EPS $2.25 TP $30), NTR ('19 EPS $3.60, TP

$55), CF ('19 EPS $2.71, new TP $46), FMC ('19 EPS $5.80, TP $114).

4 February 2019

Agricultural Sciences Sector 2

Table of contents

Global Ag Market Updates 4

Global Market Summary ..........................................................................................4

Latam Market Update...............................................................................................5

Ag Chemical Outlook ...............................................................................................5

Central Asia Update .................................................................................................6

Other Global Data Points .........................................................................................6

Global Nitrogen Overview 8

Global Nitrogen Price Outlook................................................................................11

Key Nitrogen Input Prices ......................................................................................13

Nitrogen Price Performance...................................................................................13

Global Potash Overview 15

Global Potash Price Outlook ..................................................................................16

Global Potash Market Outlook ...............................................................................17

Potash Price Performance .....................................................................................18

Global Phosphates Overview 19

Global Phosphates Price Outlook ..........................................................................20

Phosphates Price Performance .............................................................................21

Asian Palm Oil Sector: The Tide Is Shifting 22

2018 was a ‘perfect storm’ .....................................................................................22

CPO price recovery in sight ...................................................................................22

A rising tide lifts all boats........................................................................................25

Pakistan Fertilizer Sector Update 26

Global Soft Commodity Overview 29

Global FX Overview 30

Recommended Reading 32

CS Global Agriculture Team 33

CF Industries Holding Inc. (CF) 34

Mosaic Co. (MOS) 36

Nutrien Ltd. (NTR) 38

FMC Corporation (FMC) 40

4 February 2019

Agricultural Sciences Sector 4

Global Ag Market Updates

Global Market Summary

Global crop prices remain at stable levels early in '19. In North America, US-China trade

negotiations and farmer planting intentions are the two key NT drivers of sentiment for the

ag macro. Negotiations between the US and China are offering hope to financial markets

for a prompt conflict resolution, but the timing and terms of a solution remain uncertain.

Recent events suggest a potential de-escalation in the confrontation between the two

nations, which we suspect will eventually lead to a deal (though uncertainty remains).

The focus remains on soybeans (poised for a large "reaction" in the event of a resolution),

but we stress much more could be at stake. In late December China announced its

intentions to purchase US rice for the first time ever, promptly after resuming US soy

imports. It's reasonable to assume the US ag trade balance with China will subsequently

improve over the coming years, spanning oil seeds / coarse grains, among other goods.

Regardless of one's political views, from our perspective the US farmer will eventually be

better off. Given growing Brazilian competition in the global ag trade, we argue improving

US-Chinese ag trade relations is key to maintaining the US' industry leading position.

In 2019 we maintain our expectation for US farmers to plant ~3-4mm incremental acres of

corn (vs. ~89.1mm in '18/'19 marketing year). The USDA has not released any of its usual

reports thus far in January as a consequence of the ongoing government shutdown in the

US, but media wires indicate past reports will be released on February 8th. The lack of US

data indicates domestic markets have been largely sentiment driven since the year began.

The key catalyst remains the USDA prospective plantings report on March 29

. Our early

expectations are for acreage numbers to roughly align with our current view, but any trade

breakthroughs may lead to shift in farmers' intentions for some key marginal acres.

Given the success of the US farmer on the yield front (thank Bayer & DuPont for yield

enhancing tech and better population densities), we expect trend-line yields for corn and

soy to be in the 175-177 bu/ac and 50-52 bu/ac ranges, respectively. The key delta to the

US stock:use ratios (other than yields) will still be export expectations, which may vary

greatly, dependent on any trade deal with China – bottom line, export #s are likely to rise.

Developments in the Latin America growing season will be crucial in establishing market

fundamentals for 2019 (more details below). South American corn and soybean production

was strong in 2018 despite poor weather conditions in Argentina. Normalized weather

conditions will likely allow for another large crop which should dampen the prospects for

significant price appreciation (notwithstanding geopolitical changes as described above).

Wheat production in Europe in 2018 was heavily impacted by a severe drought which

crippled yields across a broad expanse of the continent. This impacted EU producers in

Western Europe as well as Eastern European farmers in Russia and Ukraine. Russian and

Ukrainian wheat production are estimated to have fallen ~17% and ~8% respectively.

Wheat prices have been positively impacted as a result. Following the drought, there was

also an expectation among some traders that Russia might curb its exports in order to

ensure domestic availability of product, however the Russian ag ministry has given no

signs that it intends to place any limitations on exports.

Meanwhile, South Africa has also been in the midst of a drought which has compromised

planting of corn and soybeans in key Western growing areas. South Africa enjoyed strong

production in 16/17 and 17/18 but the current season is shaping up to be far more

challenging. Planted acreage is the smallest it has been since the drought of three years

ago and conditions for yields are far from ideal.

As a result of our key geographic views, we see corn and soybean prices in the ranges of

$3.70-$4.20/bu and $8.50-$10.00/bu, respectively – likely at the higher end of these

ranges.

4 February 2019

Agricultural Sciences Sector 5

Latam Market Update

The Soybean harvest is underway in Brazil with 2.1% of the nation's crop harvested so far,

but most states are reporting weaker yields yr/yr (2018 was a record year for yields).

Reported yields are down ~4-5% on average so far, and early planted / harvested

soybeans are being hit the hardest because of the dry conditions in December. CONAB

recently reduced its estimate for the 2018/19 soybean crop by 1.2mmt to 118.8mmt. This

was not as large a reduction as had been expected by many observers, but expectations

are for another cut to estimates in February.

Meanwhile, Safrinha corn planting has begun in Brazil. CONAB left its 2018/19 corn

production estimate unchanged at 93mmt but observers expect final production to come

below this estimate, though the final outcome will depend heavily on how the Safrinha

season develops. Concerns regarding the Safrinha crop are driven by low rainfall levels

which have characterized Brazil's typical rainy season.

The situation is quite different in Argentina where the weather has been very wet recently.

In the north, more rain is expected, which is weighing on the crop outlook there, but the

rest of the country appears to be benefitting from favorable weather. Crop conditions for

both corn and soybeans in Argentina is improving in recent weeks giving some optimism

for the outlook in 2019 following challenging conditions in 2018.

Ag Chemical Outlook

We expect modest single digit growth again in 2019 as crop chemical markets continues

their gradual recovery from the '15 / '16 downturn. Farm economics remain generally

stable amid lower soft commodity prices being offset by higher production. However, cost

inflation for active ingredients and other intermediates will likely flow through to pricing,

while acreage shifts may also be a positive for chemical consumption (corn is more input

intensive vs. soy). As always, weather / the regulatory environment will be swing factors.

Tighter regulatory scrutiny on several active ingredients represents an ongoing potential

headwind for crop chemical market growth. 2018 saw significant noise around glyphosate-

as a California court ruled against Monsanto with respect to the carcinogenic potential of

Roundup (now being appealed) and Brazil’s attorney general proposed to ban the use of

glyphosate (which was later overruled). The European Commission has taken a hard line

against a number of chemistries including neocotinoids and chlorpyrifos. The potential loss

of existing product registrations and / or delays in new registrations represents headwinds

to industry growth, accounted for in our global CPC growth est's.

We expect APAC and Latam to be the primary drivers of growth in 2019.

In North America, we expect LSD growth in 2019. While farmer economics remain

challenging, we believe an improving industry inventory position and a favorable switch

from soybean to corn will benefit the industry in 2019 and encourage volume growth on

stable demand.

In Latin America, we expect LSD growth in 2019 as channel inventories are at healthier

levels vs. the prior year. This should facilitate both higher volumes and pricing. Modest

acreage growth in Brazil should also benefit volumes and the new political regime installed

in Brazil has quickly shown itself to be a fierce ally of the agricultural sector. We anticipate

government support should boost acreage and access to credit in Brazil.

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