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									                                                                              MORGAN            STANLEY             RESEARCH
                                                                              NORTH         AMERICA


                                                                              Morgan Stanley & Co. Incorporated   Vincent Andrews
                                                                                                                  Vincent.Andrews@morganstanley.com
                                                                                                                  +1 (1)212 761 3293

                                                                                                                  Megan Davis
                                                                                                                  Megan.Davis@morganstanley.com
                                                                                                                  +1 (1)212 761 0031


                February 7, 2010


Industry View   Ag Products / Fertilizer
Attractive
                Updating Phosphate
                                                                              Recent Reports
                Replacement Cost Analysis                                     Title                                                               Date
                                                                              Agricultural Products: Weekly Farmer,                       Feb 1, 2010
                                                                              Fertilizer, & Ag Processor Data Points
                Investment conclusion: The replacement cost of both           Vincent Andrews / Megan Davis / Gregory A Van
                Mosaic and Potash Corp.’s phosphate assets is higher          Winkle
                than we originally modeled. Following Vale’s purchase         Potash Corp: Thoughts following 4Q;                        Jan 28, 2010
                                                                              Overweight
                of Bunge’s wholesale phosphate assets, we have                Vincent Andrews / Megan Davis
                updated the assumptions in our replacement cost model.        Bunge Ltd.: Between a Phosphate Rock and                   Jan 28, 2010
                Our initial work on Bunge’s phosphate assets estimated        a Hard Place
                                                                              Vincent Andrews / Megan Davis
                replacement cost at $4.4B vs. $3.3B now. However, our         Ag Products / Potash: Quick Comment: ICL                   Jan 19, 2010
                original estimate: i) Assumed that Fosfertil’s Salitre mine   China Settlement in Line with Russian
                                                                              Contrac
                was 765K mt of phosphate rock instead of the actual 2M        Vincent Andrews / Megan Davis
                mt ; ii) Included Bunge’s JV with OCP which was               Ag Products / Fertilizer: Quick Comment:                   Jan 19, 2010
                ultimately not included in the sale to Vale; iii)             Potash & Phosphate Inventories Move Lower
                                                                              Vincent Andrews / Megan Davis
                Under-estimated nitrogen greenfield costs; and iv) Did
                                                                              Fertilizers: A Redefinition of the Fertilizer Map          Jan 15, 2010
                not consider the Ma’aden phosphate project’s capital          in Brazil
                costs. Key valuation implications of Vale’s purchase          Javier Martinez de Olcoz Cerdan / Vincent
                                                                              Andrews / Carlos De Alba / Alessandro P Baldoni
                and our incremental analysis are:                             / Megan Davis / Bruno Montanari
                                                                              Agricultural Products: WASDE Report                        Jan 12, 2010
                1) We now believe that Vale purchased Bunge’s                 Bearish Corn
                                                                              Vincent Andrews / Megan Davis / Gregory A Van
                phosphate assets at an estimated 1.15-times                   Winkle
                replacement cost versus 0.86-times previously. Potash         Mosaic Company: No Surprises in F2Q; Corn                    Jan 6, 2010
                                                                              Supportive of Favorable 2010
                Corp. and Mosaic presently trade at ~0.7-times despite        Vincent Andrews / Megan Davis
                what we believe are higher quality, more profitable           Ag Products / Potash: Price Deck Reset                       Jan 5, 2010
                assets in better geographies with superior growth.            Starts New Cycle; Corn Price Supportive
                                                                              Vincent Andrews / Megan Davis
                Applying the Vale purchase multiples to Mosaic and
                Potash would imply share values of $79 for Mosaic and
                $162, for Potash Corp. Note our price targets are $69
                and $132, respectively.

                2) Potash assets are attractive. Assuming the
                Vale/Bunge multiple for Mosaic and Potash’s phosphate
                assets implies that their potash assets are trading at
                7.4-times and 6.7-times NTM EBITDA, respectively.

                3) We now believe that the replacement cost of Mosaic’s
                phosphate assets is now $33 per share versus $20              Morgan Stanley does and seeks to do business with
                previously, and Potash Corp’s is $24 versus $10               companies covered in Morgan Stanley Research. As
                previously. This brings our total estimate of replacement     a result, investors should be aware that the firm may
                cost for each company’s total assets to $82 per share for     have a conflict of interest that could affect the
                Mosaic and $155 per share for Potash Corp. Mosaic             objectivity of Morgan Stanley Research. Investors
                                                                              should consider Morgan Stanley Research as only a
                currently trades for $55 per share, Potash Corp. for          single factor in making their investment decision.
                $103.
                                                                              For analyst certification and other important
                                                                              disclosures, refer to the Disclosure Section,
                                                                              located at the end of this report.
                                                                      MORGAN           STANLEY            RESEARCH

                                                                      February 7, 2010
                                                                      Ag Products / Fertilizer




Investment Case
Summary & Conclusions                                                       ii)   It costs ~$1.07M/mt to build a phosphate
                                                                                  processing plant. Using Fosfertil’s CapEx estimate
We believe that Vale’s purchase of Bunge’s wholesale
                                                                                  for its Uberaba MAP plant, and adjusting it for the
phosphate assets has favorable implications for the
                                                                                  change in FX, we calculate that the project would cost
sector. We now believe that Vale paid ~1.15-times
                                                                                  R$443 million, or R$1.07 million per tonne. We then
replacement cost for Bunge’s mining assets (see discussion
                                                                                  assumed that the R$1.07/mt replacement cost
below). However, we also believe that the price was influenced
                                                                                  estimate for Uberaba could be applied to all of
by Bunge’s ability to utilize tax loss carry-forwards that lowered
                                                                                  Bunge’s phosphate processing plants.
its capital gains tax rate from 36% to 8% and that the price may
have been higher had the credits not been available. We
                                                                            iii) It costs R$1.77M/mt to build a nitrogen plant.
believe that these credits had a limited life span (i.e., may not
                                                                                 Potash Corp. estimates that it costs ~$1 billion to build
still have been available at mid or top of the next cycle). In this
                                                                                 a 1 million tonne ammonia/urea complex.
note, we outline:
                                                                      Exhibit 1
    1.   The revisions to our underlying phosphate                    We Believe that Vale Purchased Bunge’s Mining
         replacement cost estimates;                                  Assets for 1.15-times Replacement Cost
                                                                           Total Bunge Mining Replacement Cost
    2.   The valuation implications of our replacement cost                                                             million US$
         revisions to Mosaic and Potash Corp; and                          Bunge Wholesale                                   $1,948 C/S
                                                                           Fosfertil (42% economic interest)                 $1,351 Q/S * 42.3%
                                                                           TOTAL Bunge Mining                                $3,299
    3.   The valuation implications of the Vale/Bunge deal to              Bunge Replacement Cost
         Mosaic and Potash Corp.                                                                                      000 tonnes/yr
                                                                      A    Phosphate rock capacity                            1,438
                                                                      B    SSP Production                                     2,575
1 - Our revised replacement cost estimate for Bunge’s
                                                                      C    Total Bunge Wholesale (millions)                R$3,448 A*P + B*N
mining assets values it at $3.3 billion versus $4.4 billion
previously                                                                 Fosfertil Replacement Cost
                                                                                                                      000 tonnes/yr
Our original replacement cost analysis was based on Fosfertil’s       D    Phosphate rock capacity                            3,389
cost estimates for the expansion of its Salitre mine.                 E    SSP Production                                       730
Unfortunately, we incorrectly assumed that the Salitre                F    TSP Production                                        83
                                                                      G    MAP Production                                     1,213
expansion would provide Fosfertil with 765,000 incremental            H    DAP Production                                         8
tones of phosphate rock capacity rather than the 2,000,000            I    Nitrogen Production                                1,035
tonnes of capacity that will actually be provided. As such, we        J    Uberaba expansion (MAP Production)                   415
                                                                      K    Salitre expansion (MAP Production)                 1,200
have revised our cost per tonne estimates, and now believe
                                                                      L    Salitre expansion (rock capacity)                  2,000
that it would cost ~R$0.49/mt for versus ~$R1.27/mt previously.
                                                                                                                         million R$
Additionally, given that the JV with OCP was not included in the      M Estimated Uberaba Capex                              R$443
deal, we no longer include it in our estimate of replacement          N Production capex per tonne                          R$1.07 M/J
cost. Our overall methodology is predicated on three key              O Estimated Salitre mine expansion cost               R$973
assumptions:                                                          P Mine capex per tonne                                R$0.49 O/L
                                                                                                                                   N*(E+F+G+H
                                                                      Q Total Fosfertil, excl. expansions                  R$5,652
                                                                                                                                   )+I*1.77+D*P
    i)   It costs R$0.49M/mt to build a phosphate mine.                                                                            N*(E+F+G+H
         Using Fosfertil’s CapEx estimate for the Salitre mine             Total Fosfertil, incl. expansions               R$8,349 +J+K)+I*1.77
         that it is currently in the process of opening, and                                                                       +(D+L)*P
         adjusting it for the change in FX since the estimate
                                                                      S    BRL/USD                                         R$1.77
         was released, we calculate that the project would cost
                                                                      Source: Company data, Morgan Stanley Research
         R$973 million, or R$0.49 million per tonne. We then
         used the R$0.49 million per tonne replacement cost
         estimate for all of Bunge’s phosphate mines.




                                                                                                                                               2
                                                                            MORGAN           STANLEY            RESEARCH

                                                                            February 7, 2010
                                                                            Ag Products / Fertilizer




Exhibit 2                                                                   Exhibit 4
Sensitivity Analysis to Mine & Plant Capex Costs per                        Recent Phosphoric Acid Transactions Imply
Tonne (millions)                                                            Phosphate Asset Values of $13.7B for Mosaic and
Vertical: Phosphate processing plant capex per tonne;                       $7.4B for Potash Corp.
Horizontal: Phosphate mine capex per tonne                                        Ma'aden (excludes railroad)
                                                                                  Project financing:                           (M US$)
    $3,360     R$0.30      R$0.40     R$0.50    R$0.60    R$0.70   R$0.80
    R$0.70     $2,344      $2,506     $2,669    $2,831    $2,993   $3,155         IPO                                           $2,700
    R$0.80     $2,538      $2,700     $2,863    $3,025    $3,187   $3,349         Loan                                          $1,100
    R$0.90     $2,732      $2,895     $3,057    $3,219    $3,381   $3,543         Syndicate                                     $2,660
    R$1.00     $2,926      $3,089     $3,251    $3,413    $3,575   $3,738         Saudi development fund                          $135
    R$1.10     $3,120      $3,283     $3,445    $3,607    $3,769   $3,932
    R$1.20     $3,315      $3,477     $3,639    $3,801    $3,964   $4,126         Total Funds                                   $6,595
    R$1.30     $3,509      $3,671     $3,833    $3,995    $4,158   $4,320         Ammonia facility                              $1,000
Source: Company data, Morgan Stanley Research                                     Funds available for phosphate facility        $5,595

Additionally, on a phosphoric acid basis, Vale’s purchase                         Implied cost per tonne P2O5 capacity          $3,333
price is relatively inline with the estimated greenfield cost                     Vale/BG cost per tonne P2O5 capacity          $2,906
of Ma’aden – the only large scale phosphate operation under
                                                                                  Mosaic P2O5 capacity (M mt)                       4.4
construction. We believe that Vale paid ~$2,900/mt of
                                                                                  Implied replacement cost of Mosaic           $13,727
phosphoric acid for Bunge (based on the prospective estimated
cost of the greenfield phosphate mines that Fosfertil intends to                  Potash Corp. P2O5 capacity (M mt)                2.37
construct), or slightly below the ~$3,333/mt estimate for                         Implied replacement cost of Potash Corp       $7,394
Ma’aden’s phosphate project (Ma’aden is arguably a more                     Source: Company data, Morgan Stanley Research
complex facility).
                                                                            2 - The valuation implications of our replacement cost
Exhibit 3                                                                   revisions to Mosaic and Potash Corp
We Believe that Vale Paid ~$2,900 per tonne of P2O5                         We have updated our phosphate replacement cost analysis for
      Vale purchase price                                     $3,800        both Mosaic and Potash Corp. and now believe that the
                                                                            replacement cost of Mosaic’s phosphate assets is now $13.7
                                                         000 tonnes/yr
                                                                            billion versus $9.1 previously, and Potash Corp’s is $7.9 billion
      Bunge processing capacity (MT P2O5)                          515
      Fosfertil processing capacity (MT P2O5)                      793      versus $3.5 previously. The key change to our replacement
      Total P2O5 capacity                                        1,308      cost estimate is that we now use an average of the ~$3,333/mt
                                                                            phosphoric acid that we believe Ma’aden is spending to build
      Implied price (P2O5 basis)                              $2,906        its phosphate project and the ~$2,900/mt phosphoric acid that
Source: Company data, Morgan Stanley Research                               we believe Vale spent on Bunge’s nutrients business.
                                                                            Additionally, we have incorporated ~$1B in value for Mosaic’s
                                                                            19.9% stake in Fosfertil based on Vale’s recent purchase from
                                                                            both Bunge and Yara. These adjustments bring our total
                                                                            estimate of replacement cost for each company’s total assets
                                                                            to $82 per share for Mosaic (versus $69 previously) and $155
                                                                            per share for Potash Corp (versus $141 previously). See
                                                                            Exhibits 5 & 6.




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                                                                    MORGAN           STANLEY            RESEARCH

                                                                    February 7, 2010
                                                                    Ag Products / Fertilizer




Exhibit 5                                                           Exhibit 7
Updated MOS Replacement Cost                                        Implied Vale Multiple Would Value MOS & POT
  $18,672     Replacement cost of existing potash mines             Shares at $94 and $178
   $3,100     Cost of brownfield mine expansions                                                 MOS       POT
  $21,772     Value of Mosaic's total potash assets                    MSe replacement cost      $82       $155
  $13,727     Replacement cost of phosphate assets
                                                                       Vale purchase multiple     1.15      1.15
   $1,008     Value of Fosfertil investment
  $14,734     Value of Mosaic's total phosphate assets
                                                                       Implied share value       $94       $178
                                                                    Source: Company data, Morgan Stanley Research
  $36,506     Sum of the parts equity value
  ($1,258)    Net Debt
  $35,248     Enterprise value
                                                                    ii) Vale paid 1.6-times adjusted for a more normalized
                                                                    capital gains tax rate on the transaction (Bunge will pay 8%
      $82 Sum of the parts share price                              capital gains rather than the traditional 36% rate). This is
      $55 Current share price                                       relative to Mosaic and Potash Corp. trading at 0.68-times our
    -32.5% Discount to Sum of the parts                             estimate of replacement cost. Applying the Vale multiple to
                                                                    MOS and POT would imply share values of $132 and $249 per
Source: Company data, Morgan Stanley Research                       share, respectively;
Exhibit 6                                                           Exhibit 8
Updated POT Replacement Cost                                        Implied Vale Multiple Would Value MOS & POT
   $23,216     Replacement cost of existing potash mines            Shares at $132 and $249
    $7,064     Value of Potash Corp.'s publically traded subs
   $30,280     Value of Potash Corp.'s existing potash assets
                                                                                                 MOS       POT
    $5,849     Cost of brownfield mine expansions                      MSe replacement cost       $82      $155
   $36,129     Value of Potash Corp.'s total potash assets             Vale purchase multiple     1.6       1.6
    $3,478     Replacement cost of nitrogen assets                     Implied share value       $132      $249
    $7,394     Replacement cost of phosphate assets                 Source: Company data, Morgan Stanley Research
   $47,000     Sum of the parts equity value
    $3,715     Net Debt                                             iii) Assuming the 1.15-times multiple of replacement cost
   $50,715     Enterprise value
                                                                    for both Mosaic and Potash Corp.’s phosphate assets, we
                                                                    believe that the implied per share value of each company’s
       $155 Sum of the parts share price
       $103 Current share price                                     potash assets is $18 and $49, respectively. This implies
      -33.1% Discount to Sum of the parts                           potash EBITDA multiples of 7.4-times NTM for Mosaic and
                                                                    6.7-times for Potash Corp. and 4.0-times normalized for
Source: Company data, Morgan Stanley Research                       Mosaic and 3.3-times normalized for Potash Corp.

3 – The valuation implications of the Vale/Bunge
transaction to Mosaic and Potash Corp. We believe it is a
worthwhile exercise to apply the Vale/Bunge transaction
multiples to both Mosaic and Potash Corp.’s phosphate assets.
In particular, we think the implications are best examined: i) On
a simple replacement cost basis; ii) On a tax adjusted
replacement cost basis; iii) By backing out the implied value of
each company’s potash assets assuming the phosphate
transaction multiple; and iv) By applying the simple transaction
EBITDA multiple to NTM consensus estimates.

i) Vale paid 1.15-times our estimate of replacement cost.
This is relative to Mosaic and Potash Corp. trading at
0.68-times our estimate of replacement cost. Applying the Vale
multiple to MOS and POT would imply share values of $94 and
$178 per share, respectively;




                                                                                                                               4
                                                                         MORGAN          STANLEY    RESEARCH

                                                                         February 7, 2010
                                                                         Ag Products / Fertilizer




Exhibit 9                                                                Our price targets are: $132 for POT and $69 for MOS. We
Vale Multiple Implies Normalized Potash EBITDA                           derive our price targets based on an equal-part mix of
Multiples of 4.0-times for MOS and 3.3-times for POT                     replacement cost and normalized earnings using 6-times for
                                     MOS        POT                      nitrogen, 8-times for phosphate, and 10-times for potash. We
Enterprise Value                 $23,343 $34,290                         believe this methodology is warranted given that the macro
Net debt                          ($1,258)   $3,715                      operating environment continues to improve, providing
Market cap                       $24,601 $30,575                         investors with comfort that the likelihood of the Bear Case
Public subs                        $1,008    $7,064                      playing out continues to decline.
Net                              $23,593 $23,511
Est. N Replacement Cost                      $3,478                      Risks include: Soft commodity prices, particularly corn;
Implied P & K Replacement Cos    $23,593 $20,033                         Potash prices; Oil and natural gas; Weather and environmental
Phosphate replacement cost       $13,727     $7,394                      factors; Mine disruptions; Politics and government; The US
Vale/BG Multiple (1.15-times)    $15,786     $8,503                      dollar; Potential greenfield projects.
Implied Potash Replacement Co      $7,807 $11,530
Potash value per share             $17.50    $37.93

MSe NTM EBITDA                                    $1,055      $1,729
Implied EV/EBITDA multiple                           7.4          6.7

MSe Normalized EBITDA                             $1,951      $3,486
Implied EV/EBITDA multiple                           4.0          3.3
Source: Company data, Morgan Stanley Research


iv) Vale paid 12.6-times EBITDA for Bunge; MOS and POT
are currently trading at ~10-times 2010 consensus EBITDA
despite having higher quality assets. Applying the same
multiples to MOS and POT would net share values of $77 and
$110, respectively.

Exhibit 10
Vale/Bunge Transaction Multiple of 11-13 times
2010e EBITDA Implies a ~$13B Value for Mosaic’s
Phosphate Business and a ~$4.6B Value for Potash
Corp’s Phosphate Business
                                                         Implied Value
2010e EBITDA                                             11x      13x
Mosaic                                          $1,091 $12,006 $14,189
Potash Corp.                                     $387 $4,255 $5,029
Source: Company data, Morgan Stanley Research




                                                                                                                                    5
                                                                                                MORGAN                          STANLEY        RESEARCH

                                                                                                February 7, 2010
                                                                                                Ag Products / Fertilizer




Risk-Reward Snapshot: Mosaic Company (MOS, $55, Overweight, PT $69)
Risk-Reward View: Strong Fundamentals Drive Upside Potential
                                                                                                                                           Concentration in P & K
    $180
                                                                                                                                           • Largest fully integrated phosphate
     160
                                                                                                                                             producer (15% global share; 59% US
     140                                                                                                                                     share).
                                                                                                                                           • Second largest, low-cost, producer of
     120
                                                                                                                                             the highest margin nutrient (potash)
     100                                                                                                                                     with the greatest barriers to entry,
      80                                                                                               $81 (+47%)
                                                                                                                                             demand and pricing potential.
                                                                                                    $69.00 (+25%)                          • Controls ~30% of potential industry
                                                                              $ 55.18
      60                                                                                                                                     potash expansion at the lowest capital
                                                                                                         $51 (-8%)
      40
                                                                                                                                             cost (i.e., brownfield), with the
                                                                                                                                             greatest tax incentives, and on the
      20
                                                                                                                                             shortest timeline.
       0                                                                                                                                   • No nitrogen exposure and therefore
       Feb-08             Aug-08           Feb-09            Aug-09           Feb-10         Aug-10                                          limited natural gas exposure.
           Price Target (Feb-11)               Historical Stock Performance             Current Stock Price
                                                                                                          WARNINGDONOTEDIT_RRS4RL~MOS.N~
                                                                                                                                           • Physical assets in India, China, Brazil,
Source: FactSet, Morgan Stanley Research                                                                                                     Argentina, Japan, Mexico.
 Price Target $69                   Derived from base-case scenario.                                                                       • Management building a track record
 Bull              10-times         Corn stays well above $4 and favorable farm economics                                                    of cooperative competitive behavior.
 Case              Normalized       incentivize farmers to increase fertilizer application rates.                                          Key Value Drivers
 $81               EBITDA           Phosphate rock prices and nitrogen prices rebound higher on
                   $3.4B            strong demand. China settles its 2009 potash contract near                                             • $100 per tonne increase in potash =
                                    current spot prices for 7 million tonnes and global shipments reach                                      $1.30 of EPS; phosphate = $1.50.
                                    56 million tonnes KCl.                                                                                 • USD/Canadian dollar exchange rate.
 Base              Avg. of          Corn stays above $3.50, and potash shipments reach 48 million                                          • Phosphate rock cost increases for
 Case              Replacement      tonnes KCl in 2010. China gets a $50/mt volume discount to the                                           non-integrated producers.
 $69               Cost and         $460/mt Indian settlement. Phosphate rock prices maintain at                                           • Limited global phosphate rock supply
                   Normalized       ~$150/tonne and nitrogen profitability continues to benefit from low                                     expansion.
                   EBITDA           cost natural gas.
                                                                                                                                           Potential Catalysts
 Bear              8-times          Corn prices move to $3/bushel. Phosphate and potash demand
 Case              C2010            increase only modestly from 2009’s depressed levels. India
                                                                                                                                           • Annual Chinese and Indian
 $51               EBITDA           pushes out its contract negotiation and retailers remain unwilling to                                    negotiations with Canpotex.
                                    build any inventory.                                                                                   • US farmer demand.
                                                                                                                                           • Brazilian farmer demand.
F2010 EPS: $2.25 Base Case                                                                                                                 • New crop corn and soybean prices.
 $3.00                                                                                                                                     • Chinese export tariffs.
                                                 0.15                                                                                      • Potential for substantial
 $2.75                                 0.10 0.09                                                                                             one-time/ongoing dividend payments.
 $2.50                            0.16                $2.75
                       0.10                                                                                                                • Cargill owns 64% of float, which it
 $2.25       0.16 0.04
                                                                                                                                             could monetize in the event of share
 $2.00                      $2.25
                                                                                                                                             repurchases.
 $1.75 $1.95
 $1.50
                Bear Volume: - PotashPhosphate Base Volume: Price PotashPhosphate Bull
                Case 500k mt COGS              Case +500k mt moves COGS          Case
                                                          higher post
                                                             China

Source: Company data, Morgan Stanley Research




                                                                                                                                                                                  6
                                                                                                               MORGAN                          STANLEY        RESEARCH

                                                                                                               February 7, 2010
                                                                                                               Ag Products / Fertilizer




Risk-Reward Snapshot: Potash Corp. (POT, $103, Overweight, PT $132)
Risk-Reward View: Strong Fundamentals Drive Upside Potential                                                                                              Best Positioned Fertilizer Co.
                                                                                                                                                          • Largest low-cost producer of the
    $300

                                                                                                                                                            highest margin nutrient (potash) with
     250                                                                                                                                                    the greatest barriers to entry, demand
                                                                                                                                                            and pricing potential.
     200                                                                                                                                                  • Controls 50% of potential industry
                                                                                                                                                            potash expansion at the lowest capital
                                                                                                                      $160 (+55%)
     150                                                                                                                                                    cost (i.e., brownfield), with the
                                                                                                                  $132.00 (+28%)                            greatest tax incentives, and on the
                                                                                         $ 103.48
     100
                                                                                                                                                            shortest timeline.
                                                                                                                       $82 (-21%)                         • Second largest N producer with 73%
                                                                                                                                                            of natural gas needs locked in through
      50
                                                                                                                                                            2010 indexed to Tampa ammonia
                                                                                                                                                            price. Low cost gas supply (Trinidad)
       0
       Feb-08             Aug-08               Feb-09                Aug-09               Feb-10             Aug-10
                                                                                                                                                            close to US market.
           Price Target (Feb-11)                   Historical Stock Performance                        Current Stock Price
                                                                                                                         WARNINGDONOTEDIT_RRS4RL~POT.N~
                                                                                                                                                          • Third largest P producer. Fully
                                                                                                                                                            integrated with high quality rock and a
Source: FactSet, Morgan Stanley Research
 Price Target $132                       Derived from base-case scenario.                                                                                   diversified product mix.
                                                                                                                                                          • 20+ year management track record of
 Bull              10-times              Corn stays well above $4 and favorable farm economics                                                              rational competitive behavior.
 Case              Normalized            incentivize farmers to increase fertilizer application rates.
 $160              EBITDA                Phosphate rock prices and nitrogen prices rebound higher on                                                      Key Value Drivers
                   $4.5B                 strong demand. Global potash shipments reach 56 million tonnes
                                                                                                                                                          • $100 per tonne increase in potash =
                                         KCl.
                                                                                                                                                            $1.70 of EPS; phosphate = $0.30 of
 Base              Avg. of               Corn stays above $3.50, and potash shipments rebound to 48                                                         EPS; nitrogen = $0.20 of EPS.
 Case              Replacement           million tonnes KCl in 2010. Potash prices recalibrate downward                                                   • $20 long ton reduction in sulfur costs
 $132              Cost and              following the Chinese settlement. Phosphate rock prices maintain                                                   = $0.09 of EPS.
                   Normalized            at ~$120/tonne and nitrogen profitability continues to benefit from
                                                                                                                                                          • USD/Canadian dollar exchange rate.
                   EBITDA                low cost natural gas.
                                                                                                                                                          • Phosphate rock cost increases for
 Bear              8-times 2010 Corn prices move to $3/bushel. Phosphate and potash demand                                                                  non-integrated producers.
 Case              EBITDA       increase only modestly from 2009’s depressed levels. India
 $82                            pushes out its contract negotiation and retailers remain unwilling to
                                                                                                                                                          Potential Catalysts
                                build any inventory.                                                                                                      • Annual Chinese and Indian
2010 EPS: $4.85 Base Case                                                                                                                                   negotiations with Canpotex.
                                                                                                                                                          • Fertilizer prices.
                                                                                                                                                          • Corn and soybean prices.
 $7.00                                                                      0.25
                                                            0.55 0.05                                                                                     • Natural gas, sulfur, oil prices.
 $6.50
                                                                                                                                                          • 7.2 million tons of potash capacity
 $6.00                                                0.50                       $6.45
                                                                                                                                                            coming on line by 2015.
 $5.50                                         0.25                                                                                                       • Balance sheet capacity for substantial
                                0.25
 $5.00            0.25 0.15                                                                                                                                 return of cash flow.
 $4.50       0.20                        $4.85
 $4.00
 $3.50 $4.00
 $3.00 Bear Other Potash Potash Phosphate Base Potash Price Phosphate Taxes Other Bull
                 Case    income    volume: -   COGS     & Nitrogen   Case     volume:     moves & Nitrogen            income          Case
                                      1M                                        +1M     higher post
                                                                                           China




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February 7, 2010
Ag Products / Fertilizer




                                      8
                                                                                MORGAN          STANLEY        RESEARCH

                                                                                February 7, 2010
                                                                                Ag Products / Fertilizer




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Important US Regulatory Disclosures on Subject Companies
As of January 29, 2010, Morgan Stanley beneficially owned 1% or more of a class of common equity securities of the following companies covered in
Morgan Stanley Research: Archer Daniels Midland, Corn Products International Inc., Intrepid Potash, Monsanto Company.
As of January 29, 2010, Morgan Stanley held a net long or short position of US$1 million or more of the debt securities of the following issuers covered
in Morgan Stanley Research (including where guarantor of the securities): Agrium Inc., Archer Daniels Midland, Bunge Ltd., Corn Products
International Inc., Monsanto Company, Mosaic Company, Potash Corp of Saskatchewan Inc.
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Saskatchewan Inc.
Within the last 12 months, Morgan Stanley has received compensation for investment banking services from Archer Daniels Midland, Bunge Ltd., CF
Industries, Corn Products International Inc., Monsanto Company, Potash Corp of Saskatchewan Inc.
In the next 3 months, Morgan Stanley expects to receive or intends to seek compensation for investment banking services from Agrium Inc., Archer
Daniels Midland, Bunge Ltd., CF Industries, Corn Products International Inc., Intrepid Potash, Monsanto Company, Mosaic Company, Potash Corp of
Saskatchewan Inc.
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services from Agrium Inc., Archer Daniels Midland, Bunge Ltd., Corn Products International Inc., Monsanto Company.
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Potash, Monsanto Company, Mosaic Company, Potash Corp of Saskatchewan Inc.
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                                                                                              February 7, 2010
                                                                                              Ag Products / Fertilizer




                              Coverage Universe    Investment Banking Clients (IBC)
                                             % of                   % of % of Rating
Stock Rating Category            Count       Total     Count Total IBC Category
Overweight/Buy                     999          40%            296         41%           30%
Equal-weight/Hold                 1088          43%            333         46%           31%
Not-Rated/Hold                      21           1%              4          1%           19%
Underweight/Sell                   396          16%             90         12%           23%
Total                            2,504                         723
Data include common stock and ADRs currently assigned ratings. An investor's decision to buy or sell a stock should depend on individual
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.
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                                                                                             MORGAN           STANLEY            RESEARCH

                                                                                             February 7, 2010
                                                                                             Ag Products / Fertilizer




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                                                                                       MORGAN    STANLEY            RESEARCH




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Industry Coverage:Agricultural Products

Company (Ticker)                              Rating (as of) Price* (02/05/2010)


Vincent Andrews
Agrium Inc. (AGU.N)                                       ++                  $58.93
Archer Daniels Midland (ADM.N)                E (06/13/2008)                  $30.61
Bunge Ltd. (BG.N)                             E (03/19/2009)                  $58.75
CF Industries (CF.N)                                      ++                  $94.22
Corn Products International Inc.              E (01/29/2009)                  $31.02
(CPO.N)
Intrepid Potash (IPI.N)                      E (09/04/2008)                   $25.6
Monsanto Company (MON.N)                     O (05/14/2007)                  $76.74
Mosaic Company (MOS.N)                       O (09/04/2008)                  $55.18
Potash Corp of Saskatchewan Inc              O (09/04/2008)                 $103.48
(POT.N)

Stock Ratings are subject to change. Please see latest research for each company.
* Historical prices are not split adjusted.




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