Recent farm sector strength has pushed potash sales higher even though there has been a slide in the price of potash. And despite the increasing revenue stream, many fertilizer and potash company stocks have reached 52-week lows.
The first US mad cow disease case in six years years has spooked the potash-reliant corn and grain market, while US soybean prices hit four-year highs on news of South American drought damage reports.
Recent contract renewals have given potash markets positive cues for a stronger than expected 2012. Long-term investment into potash infrastructure will help keep markets well supplied.
Despite recent concerns around the health of the Chinese economy, recent potash contracts from China have given hope for investors banking on rising food and crop prices.
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.
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.
Legislation passed on Thursday by the Canadian Federal Government will dissolve the Canadian Wheat Board.
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.
Despite debt burdens and weak macroeconomics that threaten to derail the global economic recovery; the potash and phosphate markets are positioned to post a strong fourth quarter.
Get our independent commentary on potash trends and companies delivered to your inbox.
