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.
While recapping their record-setting Q2 2011 earnings, Potash Corporation CEO Bill Doyle said that the potash industry is entering a period of “unprecedented opportunity.”
Potash has risen from relative obscurity, to one of the most talked about commodities in the global market, thanks to its application as a fertilizer. As the world’s population increases, and the amount of arable land shrinks, the necessity to get the most food production from a finite land base has resulted in a skyrocketing interest, and demand for potash.
Shrinking potash inventories are providing a clear signal that the market can bear another price increase. Potash inventories held by North American producers dropped by 183,000 tonnes in March, leaving inventories at 1.8 million tonnes, 26 percent below the five-year average.
The stocks of potash producers are predicted to outshine those of more nitrogen focused companies, due to what brokerage firm Goldman Sachs calls “peaking corn prices.” In a statement issued this past Monday, Goldman Sachs (NYSE:GS) noted that the current corn price of $6 to $7 per bushel is unsustainable.
The merger between Russian potash miners Uralkali (LON:URKA) and Silvinit has been put on hold after an arbitration court in Russia agreed to hear minority shareholder Acron’s complaints.
The share prices of many potash and phosphate producers are battle-scarred this week, as instability in the Middle East and Africa has sent markets on a tailspin. One of the key markets impacted by the turmoil is the grain markets.
Potash inventories held by North American miners have dropped below average levels, according to data released by Potash Corporation of Saskatchewan.
Last week, the potash market anxiously awaited Q4 earnings release from Potash Corporation of Saskatchewan. It was not the 2010 earnings recap that had market stakeholders holding their breath; it was Potash Corporations statements on their 2011 potash market expectations.
The potash market is waiting with baited breath for Thursday, when Potash Corporation of Saskatchewan (NYSE:POT) will release its Q4 earnings as well as its targets for the 2011 season.
Wednesday, August 24, 2011