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.
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.
The shares of fertilizer producers continue to be underpinned by the weak global macroeconomic picture, despite the bullish projections on the near and long-term outlook for the sector.
Reuters reported that Saskatchewan's provincial election results have ensured stability of potash revenues for the next four years.
Last week Potash Corporation of Saskatchewan announced doubled quarterly earnings, however, the statement resulted in some negative sentiment regarding the fertilizer market reaching maximum output.
Recently, record-setting earnings have been the norm for fertilizer producers, however, late last month the markets were roiled by a quarterly earnings report by Mosaic, the world’s largest phosphate producer, which showed that profits missed analyst’s earnings per share (EPS) expectations.
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.
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.
When applied to phosphorus, the Hubbert Peak Theory has created quite a stir in phosphate market, spawning a great deal of animated discussion and scientific analysis into the implications of peak phosphate.
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.
Thursday, February 2, 2012