Canada’s potash reserves are world famous, but their role in the decline of the country’s economic growth is nothing to brag about. Few realize just how big a part of Canada’s economy the Saskatchewan potash industry really is.
Virtually every agricultural commodity price on a steep upward trend, however, PotashCorp's Wayne Brownlee expects less volatility in potash prices.
Universal Potash Corporation (PINK:UPCO) announces its short term Growth Plans.
The past week has been an eventful one for the potash sector following BHP Billiton's (NYSE:BHP) unsolicited bid to takeover Potash Corporation of Saskatchewan (NYSE:POT).
On Tuesday, Canada's Potash Corporation received an unsolicited $38.6 billion takeover offer by BHP Billiton. The offer, the biggest of the year in any industry, was dismissed by Potash Corp as "grossly inadequate” with at least one major shareholder immediately rejecting the offer.
The potash market is primarily controlled by Canpotex and Belarusian Potash Company (BPC). Canpotex is the marketing arm for North American potash producers, responsible for negotiating the long term contracts with potash consumers such as China and India.
While higher grain prices are a positive for potash producer shares, the overall near term outlook for the sector is bleak; at least according to Goldman Sachs.
China’s recent growth slowdown put a huge dent in the commodities rally- but how will threats of stalling Chinese growth impact the potash market? Fortunately for potash, demand is not a China-only-story.
The underlying structure of the potash market is changing to reflect the new world economy, but one thing will stay the same; people need to eat. The long-term fundamentals of the potash market are supported by increasing populations around the world, and decreasing arable land.
Goldman Sachs released a report claiming that potash applications by farmers may remain below average this year. Companies were hoping for a blockbuster year, after last year’s economic collapse pushed farmers to postpone fertilizer applications.
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