Potash production remains stagnant as Potash Corp and Uralkali cull output in response to low farmer purchasing. However, short-term prospects look slightly positive as producers are certain global demand will pick up.
The CDN $15.4 billion class action suit against the federal government is just the latest in the fallout of the Canadian Wheat Bard dissolution. Farmers continue to operate despite the legal uncertainty surrounding the law.
In an interview with Potash Investing News, Gary Deathe from Encanto Potash commented on the nuances of the potash industry as a whole, and those that are unique to Saskatchewan.
Tight supplies and high prices of agricultural products including corn and wheat are expected to increase demand for fertilizers, through the near future, however, sometime past 2012, more plentiful supplies should halt potential shortages.
India is just one of the many nations in the world dealing with a food crisis. While the country is experiencing unprecedented population growth, the amount of arable land is shrinking, thereby increasing the need for fertilizers.
A class action suit alleging price fixing by the world’s top potash producers: Potash Corporation of Saskatchewan, Mosaic and Agrium Silvinit (now merged with Uralkali) , IPC, and Belaruskali has been tossed out by a federal appeals court.
Kazakhstan has long been known to contain potash reserves; however, no mine has been developed. Preliminary estimates suggest that the country, which is favourably located in close proximity to the Asian markets, may hold enough potash reserves to make it one of the world’s top producers.
Low inventories have granted potash and phosphate producers plenty of reasons to hike prices, and purchasers have been bearing these increases, fearing that if they don’t agree to contracts in a timely manner they may miss out on securing supplies.
Potash prices were on the upswing in the latter half of 2010, and have amplified this trend so far in 2011, buoyed by strength in the grain markets.
Despite uncertainty over the stability of the global economic recovery, the fertilizer market is holding up very well, and will be buoyed over the coming years by supply shortages.
Thursday, February 2, 2012