By Leia Michele Toovey- Exclusive to Potash Investing News

After weathering a tumultuous 2009; potash producers are holding their breath in anticipation of a better 2010.  Analysts are confident that producers will get what they desire; predicting demand for potash will bounce back this year as purchasers return to the market.

The recent drawdown in potash inventories supports the suspected rebound.  North American potash inventories fell sharply in January, falling by over 550,000 tonnes to roughly 2.5 million tonnes, the lowest level since December 2008. North American inventories have now fallen substantially for a third straight month and inventories are now only 6 per cent above the prior five-year average. Tightening inventories will push potash prices higher.

Credit Suisse raised its 2010 forecasts for potash, by as much as US$ 10, depending on region, the bank said in a note to clients today.”We have seen solid demand for all three nutrients,” analysts including Lars Kjellberg wrote, adding they anticipated a strong demand recovery.The potash market began to sour in the latter part of 2008, as farmers stung by the credit crunch and falling grain prices, sharply cut fertilizer use. The price of potash began to retreat in 2009, as producers were forced to cut prices in a bid to boost demand.

In a regulatory filing, Mosaic claimed “Signs suggest a recovery in demand for nutrients is underway. We expect shipments and applications to return to more normalized levels in calendar 2010.” Mosaic forecasts higher potash volumes in the third quarter, and expects to be at the high end of its outlook range for potash sales. Mosaic expects third-quarter potash sales volumes of 1.7 to 2 million metric tonnes, at selling price of $340 to $360 per tonne.

Company News

Rio Tinto Group is interested in reentering the potash business. Chief executive officer Tom Albanese told reporters “The company is looking for exploitable resources. Potassium is part of the future of the agriculture world. I’ve tasked our geologists to find the next potash basins.”  Rio sold its Rio Colorado potash project in Argentina to Vale for $850 million last January. “Vale saw the benefits in having resources that would be useful for the Brazilian agricultural sector and offered us a price that our shareholders felt more than fair,” Albanese said, commenting on the reason for selling the Argentine assets.

The Indian Farmers Fertilizer Co-operative (IFFCO) announced last week that it had acquired a 10 per cent stake in Americas Petrogas, along with a 20 per cent stake in GrowMax Agri Corp.  These moves were part of the cooperative’s overall strategy to acquire interests in potash due to the countries complete reliance on imports.  Commenting on future plans, IFFCO managing director U S Awasthi claimed “After this deal, we will keep looking for projects that can come into production quickly.”

“GrowMax’s Bayovar potash project is adjacent to Brazilian mining giant Vale’s phosphate development in Peru “This should be an extraordinarily unique potash project, involving relatively low risk and low capital expenditures,” said IFFCO Managing Director Awasthi. Bayovar is scheduled to begin production in 2012 with an initial output of 250,000 tonnes of potash annually at a cost of $125 million. GrowMax plans to ramp-up annual production at the site to about 1 million tonnes over a five to six year period.