Joc O'Rourke
President and Chief Executive Officer at Mosaic
Good morning. Thank you for joining our first quarter 2023 earnings call. Mosaic delivered revenues of $3.6 billion, adjusted EBITDA of $777 million and adjusted earnings of $1.14 per share. The fundamentals of the agriculture market remain quite attractive. Global stock to use ratios for grain and oilseeds are at 25 year lows. To put that in context, it would take two to three years of perfect weather and adequate fertilizer applications in every major growing region around the world just to get back to normal levels. With weather patterns shifting to an El Nino environment, the likelihood of that happening is low and would be exacerbated by under-fertilization.
We are beginning to see the negative impacts on crop production. Yields in the European Union turned lower in 2022 because of poor weather and under-fertilization and will remain under pressure this year if fertilizer applications remain down. We're seeing a similar story in rice. The combination of El Nino and under-fertilization could further threaten yields in key growing regions. With reduced supply of sunflower seed oil because of the ongoing war in Ukraine, the global market needs alternative edible oils and is looking to palm oil as an important substitute. Lack of fertilization particularly potash will impact Southeast Asian production. All of these factors are expected to support global crop prices for the foreseeable future.
Switching to fertilizer markets. Farmer affordability for phosphates and potash globally is very good with prices that are much more sustainable than the levels we saw a year-ago. This is bringing growers back into the market. Those supply constraints are still a concern. In potash, Belarusian exports remain limited because of sanctions. We've seen volumes move by rail into China and to a lesser extent through excess Russian pork capacity, but transportation costs are high and total exports remain well below pre-sanction levels.
This year, we expect total exports from Belarus to be roughly 7 million tons. In addition, we also continue to see indications of reduced Russian product as well. It is clear that today's potash market is tight and supply chain is under pressure, but this extends beyond just Belarus and Russia. This vulnerability is highlighted by the recent failure of the walkway on a conveyor Canpotex's 4 million ton per year Portland terminal. Canpotex is still assessing the total damage, but expects to redirect much of the lost volume to other North American ports, albeit at some additional cost.
In phosphates, China remains committed to a structural shift away from exports while it's possible to see a modest increase in exports over the 2022 total of 6.4 million tons. Domestic fertilizer demand, rising industrial consumption and environmental restrictions will cap China's shipments to other markets. These supply constraints remain even as demand in our key customer markets is seeing a recovery. In North America, spring planting season is well underway and farmers have returned to the market, but retailers have been slow to adjust their prices to global wholesale market prices. Despite that resistance, growers are still committing and taking tons. Retailers are replenishing their inventories.
In April, Mosaic's volumes saw a significant rebound in the North American shipments for both potash and phosphate. Combined Mosaic shipped over 1 million tons of potash and phosphates to North American customers in April alone. This is the highest total we've seen in the last five years. In Brazil, the barter ratio is supportive of demand and we expect commitments for the third quarter to ramp-up with prepays for fertilizer ahead of the softer season. We expect Brazil will see a 9% to 10% increase in fertilizer shipments in 2023 over last year. In India, inventories for potash remain depleted as all purchases are going straight to the ground. After a year of reduced potash applications, a potash contract was signed in April at a price of $422 per ton.
In addition to providing necessary supply to Indian farmers, the contract helped stabilize global pricing. In Southeast Asia with the shortfall in edible oils globally, the palm market is driving strong demand. Globally, we're seeing good farmer economics, which suggest strong demand for phosphates and potash in 2023. Given this landscape, we believe our business is well positioned to benefit from today's market conditions. In phosphate, after two years of production issues caused by multiple hurricanes, raw material shortages and other issues, the segment's performance has improved. Volumes during the quarter were higher than any quarter in 2022 and our stripping margins also benefited from lower raw materials costs. We expect both of these trends to continue in 2023.
In the second quarter, we anticipate total sales volumes of 1.8 million to 2 million tons with DAP FOB prices at the plant in the range of $550 to $600 per ton. In potash, volumes began to move over the last week of the first quarter and that has continued into the second quarter, especially in North America. We expect demand to continue recovering throughout the year. Our operations at Esterhazy and Belle Plaine are performing well. Esterhazy is one of the most efficient mines in the world and Belle Plaine should see benefit from lower natural gas costs in 2023. At Esterhazy, the last of the 13 miners is expected to come online later this year. In total, Esterhazy's annual operational run rate should increase from 5.5 million tons last year to well over 6 million tons by the end of 2023.
We're committed to producing enough potash to meet market demand. With the incremental output from Esterhazy, we believe we're producing what the market needs, which means we'll only restore clumps when it's needed. We don't think this will be before the second half of the year. In the second quarter, we expect total sales volumes of 2 million to 2.2 million tons with MOP prices at the mine in the range of $325 to $375 per ton. In Brazil, first quarter results reflected the impact of declining prices and inventory destocking. As we said in February, we expected our Q1 results to be impacted by destocking of high priced inventory and now that is largely behind us.
Looking ahead, we expect distribution margins to trend back towards the range of $30 to $40 a ton. In the second quarter, 90% of those tons are already committed and priced. Finally, I want to reiterate that we are committed to our capital allocation strategy of maintaining a strong balance sheet, investing in our business and returning capital to shareholders. We've met our commitment of reducing long-term debt by $1 billion. As such, we expect to refinance that $900 million that matures later this year.
Our capex spending expectation this year remains unchanged at $1.3 billion to $1.4 billion. We're focused on high returning modest spend projects like our distribution facility in [Indecipherable], expansion of MicroEssentials at Riverview and the exploration of purified phosphoric acid. Beyond that, all excess free cash flow will be returned to shareholders through dividends and share buybacks. During the quarter, we returned $608 million, which included $456 million of share repurchases and $152 million in special and regular dividends. Over the last 18 months, we have repurchased 15% of our float and still believe our shares represent very good value. Our regular dividend today is $0.80 per share and our business positions us to consider further increases over time.
Before we move to the Q&A, let me summarize. The global ag market remains constructive. Grain and oilseed supplies are tight and growers are incented by favorable economics to apply nutrients. We are already seeing the recovery in shipments in North America and expect the rest of the world to follow. Our production operations are performing well. Phosphate production has recovered and potash is benefiting from the most efficient mines in the world with swing capacity available to meet demand growth. Our balance sheet is strong and sustainable over the long-term and we remain committed to returning significant capital to shareholders while continuing to invest efficiently in the business.
With that, I'd like to move on to the Q&A portion of the call.
