Potash prices could be dropping

Potash prices have been a hot topic of discussion as of late as major players in the world market have been at odds.

For years, the Belarusian Potash Company (BPC) — the marketing group that includes Belarussia’s Belaruskali and Uralkali out of Russia — along with Canpotex in Canada have controlled the world potash market with a combined 70% of global sales.

As demand has risen in recent years, so have the potash prices and these two dominant cartels have garnered significant price control in the $22 billion global market. In recent weeks, though, things have changed.

“What has happened recently is that one of the two major potash cartels in the world has decided to break up. The main entity that has decided to do this is Uralkali out of Russia. What that has done is sort of throw the world potash market into chaos,” said Barry Ward, Ohio State University Extension leader of production business management for the Department of Agricultural, Environmental, and Development Economics. “This is going to throw more volume onto the world market and should impact potash prices to a certain degree, but we don’t know how much yet.”

For Ohio agriculture, this has potentially significant potash price implications.

“For those who have purchased potash or have some agreement in place, I am sure those are not going to be changed at this point. For those that have already gotten potash priced in for fall or early this spring, they are basically stuck at where they are,” Ward said. “If they don’t have prices locked in, in my opinion, there is very little upside price risk at this point and more downside potential. I think it is good for producers to keep their ear to the ground on this particular subject. The president and CEO of Uralkali that left the potash consortium has indicated that prices could decrease by $100 to $200 per metric ton. There is some potential and I think the best thing is for producers out there to keep an eye on this situation.”

The prices for other kinds of fertilizer will likely remain unaffected.

“The nitrogen and phosphorus markets tend to have their own fundamentals,” Ward said. “They tend to operate quite differently than the potash market.”

While there is plenty of discussion on this topic, many in the potash business feel that there will be less price movement than is being speculated because the cartel break will only be temporary.

“Take a deep breath and relax,” said Bill Doyle, CEO of Potash Corp in Canada. “Everything is going to be just fine.”

Print Friendly

Tags: , ,

Related Posts

Leave a Reply