Potash supplier forecasts demand surge in 2010
Price also could rebound from tight supply
By Tom Stundza -- Purchasing, 6/12/2009 12:18:00 PM
Demand and prices for potash, a key component in fertilizers, will rebound briskly in 2010, forecasts Bill Doyle, CEO of Saskatchewan-based Potash Corp., speaking this week at a RBC Capital Markets' global mining and materials conference.
A Scotiabank Commodity Report explains the 2009 price slippage by noting that “overseas market conditions remain quiet for potash and U.S. farmers have yet to step up their overall fertilizer purchases for spring planting,”
However, Doyle believes that 2010 will be a record year for the fertilizer industry as farmers worldwide, who have been cutting fertilizer use in response to the global recession, re-enter the market in droves. A report of the meeting by The Canadian Press news service has Doyle predicting that farmers in India, Brazil, China, North America and Europe will expand fertilizer purchasing next year, triggering a surge in potash consumption. “We are confident that 2010 is going to be a gangbuster year,” Doyle says.
Potash prices plunged dramatically in the second half of 2008 as financial markets crashed and the economy contracted. Market prices averaged $762/ton in the fourth quarter of 2008 and have continued to fall this year to a second quarter average of $650.
June spot prices in the Midwest are being discounted as low as $600 this month because of high inventory in the supply chain.
Still, since many natural resource companies have shuttered higher-cost operations and put new projects on hold, any surge in fertilizer demand could trigger a potash price spike in early 2010, Doyle tells the conference.
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