Mosaic anticipates a significant working capital release of $300 million to $500 million in 2026, primarily driven by inventory reduction and demand normalization, supporting cash flow improvement and strategic capital deployment.
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What is the timing and magnitude of the $300M–$500M working capital release you expect in 2026?
Magnitude of Working Capital Release:
Mosaic expects a working capital release in the range of $300 million to $500 million in 2026. This figure reflects a combination of several factors including inventory reduction, demand normalization, and improved production efficiency 12.
Specifically, as of the end of 2025, Mosaic held about 240,000 tonnes of excess phosphate inventory compared to the prior year, amounting to roughly $140 million of potential working capital release from demand recovery alone over the next few quarters 13.
Additionally, there is excess phosphate rock and stockpiles, along with movements in other raw materials such as sulfur and ammonia, which together could contribute further to the working capital release 124.
The CFO, Luciano Pires, confirmed this $300M–$500M estimate reflects expected cash flow contribution from normalization of demand and reduction of excess inventories in both finished goods and raw materials. Part of this is tied to Brazil’s market, where slowed sales and accounts payable dynamics also affected working capital 2.
Timing and Phasing:
The working capital release is expected to start unfolding over the next few quarters after Q4 2025 with an emphasis on the second and third quarters of 2026, when the typical seasonal inventory build in Mosaic Fertilizantes will have less offsetting effect and demand recovers 1.
Early 2026 (Q1) will see some offset due to seasonal inventory patterns in Brazil (a seasonal build expected in Q1), which will partly counterbalance working capital reductions from demand recovery in finished product inventory 1.
Beyond demand-driven inventory unwinding, higher phosphate production rates in 2026 will accelerate working capital reduction, primarily by consuming excess phosphate rock inventories, estimated to potentially release an additional $170 million to $180 million from rock inventory alone 4.
Improvements in production efficiency and plant utilization (with operating factors improving toward ~80% in key phosphate facilities by mid-2026) will support reducing in-process and raw material inventories 54.
Additional Considerations:
The working capital release will support improved cash flow conversion, which in 2025 was at a low point (mid-30% conversion of EBITDA to operating cash flow) but is expected to normalize closer to 70% conversion in 2026 as working capital unwinds 1.
This working capital release and associated cash flow improvement are critical to Mosaic’s broader financial strategy in 2026, enabling investment in capital expenditures (CapEx projected around $1.5 billion) and supporting free cash flow generation above minimum dividends, focusing on debt reduction and shareholder returns 13.
The timing of working capital unwind is tied to market demand recovery post-2025 weakness, especially in phosphate markets where affordability and credit issues, notably in Brazil, affected volumes but are expected to gradually stabilize 126.
| Aspect | Detail | Citation(s) |
|---|---|---|
| Projected Working Capital Release | $300M–$500M in 2026, from demand recovery, excess inventory liquidation, and raw materials release | 124 |
| Excess Inventory at 2025 Exit | 240,000 tonnes of phosphate excess inventory (~$140M value) releasing over next few quarters | 13 |
| Timing | Partial offset in Q1 2026 (seasonal build in Brazil), more significant release expected in Q2–Q3 | 1 |
| Contribution from Phosphate Rock | Excess rock inventory release ~$170M–$180M expected as production increases | 4 |
| Impact on Cash Flow | Working capital unwind expected to increase EBITDA to operating cash flow conversion from ~35% to ~70% | 1 |
| Geographic Focus | Includes Brazil and North America; Brazil experienced inventory build due to slowed sales late 2025 | 26 |
| Use of Released Cash | Support CapEx (~$1.5B), debt reduction, free cash flow generation, and ultimately shareholder returns | 13 |
Mosaic anticipates a significant working capital release of $300 million to $500 million occurring mostly over the second and third quarters of 2026, driven primarily by:
This working capital release is a key factor in Mosaic’s expected substantially improved cash flow in 2026 and will help the company meet its capital spending and debt reduction goals while positioning for enhanced shareholder returns 124.
References: See inline numeric brackets corresponding to the company transcript excerpts provided.
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