Potash use collapsed this year
Prices have fallen dramatically
Tom Stundza -- Purchasing, 10/23/2009 12:41:47 PM
Global potash use in 2009 could fall by 33% to the lowest levels in a decade, forecasts analyst Steve Byrne at Bank of America-Merrill Lynch Research, "with U.S. consumption the lowest in several decades."
While a pickup is expected in 2010 since distributor inventory levels in the U.S., Brazil, and China will need to be rebuilt, overall demand will only grow by 15% or so, analysts suggest, which won't trigger a dramatic surge in market prices.
Just months after declaring an end to the "depression" in potash prices, CEO Bill Doyle of Potash Corp. of Saskatchewan concedes to the Globe & Mail newspaper that "I fell on my face" when it came to predicting when the world's farmers would begin purchasing the nutrient again. "I've looked like a jerk all year long," he said, referring specifically to his failed prediction that the Chinese market would bolster demand and put a bottom on prices that have fallen from $1,100/net ton last year to $550-$570 this autumn.
Jim Prokopanko, CEO of Mosaic, another supplier, tells Bloomberg he is hopeful that farmers will increase crop nutrient application rates in response to high 2010 new crop prices and the need to replenish the large amount of nutrients withdrawn by the record crop this year." Potash is a key ingredient in fertilizers.
There are industry forecasts that 2009 global potash shipments will be one-third of 2007 levels, rebounding to just under 50 million metric tons in 2010, which would equal the 2004-2007 average. However, Byrne writes to clients that "U.S. fertilizer use contractions have historically been followed by a commensurate rebound the next year, as growers recognize the importance of maintaining soil fertility."
However, U.S. potash use for fertilizer-which has been consistently near 5 million tons-fell below 3 million tons in the 2008/2009 fertilizer year, the lowest level since the mid-1960s.
Potash Prices Up 76% in A Year
06/17/2009Potash CEO: Demand to rebound in 2010
07/15/2009
Now Playing: 