Mosaic Co. warned Wednesday that fertilizer demand was lower than expected and it would respond by slowing production of key components, potash and phosphate. In this 2011 file photo, operator David Williams works the controls of a phosphate dragline at a Mosaic site near Tampa, Fla. (Evan Ramstad — Bloomberg/The Minnesota Star Tribune)

A decision by Mosaic Co. to cut production because of slower-than-expected sales of fertilizer weighed on its shares for a second day Wednesday.

The company's stock lost another 5.6 percent of its value, extending its loss to 12.2 percent since it announced the move late Monday.

Mosaic said that crop nutrient demand had fallen both in the U.S. and overseas since executives last gave investors an update on the company's performance in early August.

"The long-term positive outlook for crop nutrient demand has not changed, but the industry faces some near-term challenges in the current environment," said CEO Joc O'Rourke in a statement.

Currency volatility, lower commodity prices and macroeconomic uncertainties were also affecting the business, the company said.

Morgan Stanley analyst Vincent Andrews said he was not surprised about Mosaic's announcement because of overall weakness in the potash market. Andrews lowered the stock's price target from $50 to $42 but did not downgrade his rating of "overweight."

"However, our absolute outlook on the stock remains tempered by poor potash market fundamentals, which we do not see as improving in the near term," he said in a report.

Additionally, the overall ag environment "continues to be challenging" as a result of volatile foreign exchange rates and low crop prices, Andrews said.

J.P. Morgan also reduced earnings expectations for Mosaic, and decreased the stock's target value from $52 to $40, but also continued to rate the stock as "overweight." Weakening demand and price trends are an industrywide problem, the investment company said. It has also reduced earnings expectations for Potash Corp., another major fertilizer company.

Mosaic, which is based in Plymouth, said it now expects phosphate sales for the third quarter to be at the low end of its volume expectation but added that profit for that business would still be in line with previous guidance.

For potash, the company said sales also would be at the low end of its expectation. However, the average selling price for potash was dropping, so the company also needed to lower its profit expectation as a result. It now expects a gross margin in the low teen percent range, down from its previous expectation of the low 20 percent range.

Mosaic said it will cut production of potash by extending maintenance downtime at its Colonsay mine in Saskatchewan and maintain an already planned slower production of phosphates.

Tom Meersman • 612-673-7388

Evan Ramstad • 612-673-4241