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Potash Price - Where is it heading?

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LifeChoices

LifeChoices

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Diggers and Drillers did a nice piece on potash.

Naru and Ocean Island were made of the stuff. Colonist peeps raked in millions for decades, now Ocean Island doesn't exist and Naru is an ex-detention center. Maybe it's potash's time again?

With the GFC2 playing it's part in the background. Surely potash will be more useful than gold/silver if things really go belly up. At least you can sprinkle some potash on your home grown vegies when there's nothing else left. It would have to be more defensive than WOW?

I know STB is a asx potash stock and there are a few others.

Is potash another next 'buzz' or do you think in 10y time it may have some real growth?
 
LifeChoices said:
1. It would have to be more defensive than WOW?

2. Is potash another next 'buzz' or do you think in 10y time it may have some real growth?

3, With the GFC2 playing it's part in the background. Surely potash will be more useful than gold/silver if things really go belly up.
Click to expand...

1. WOW is a business, Potash is just a commodity. Are you saying Buying $10K of bulk Potash is more defensive than Buying $10K of a strong cash generating businesses like WOW.? Or are you saying a company that is mining Potash is better than WOW. Whether it is better than wow depends on the indiviual companies economics.

2, At the end of the day it's just another commodity you can mine and sell. Whether it is profitable depends on A) the running cost of your earth moving operation B) the volumes you can lift from the ground and C) the price you can sell it for. Each operation needs to be assessed separatly, just as with any other mining operation the commodity alone does not garantee profit for investors.

3. No doubt, But the biggest users of fertilizers are large scale intensive farming operations of the developed world, For big growth in fertilizer use we need to have good rainfall across the developed world and the developing world needs to eat more protein and use intensive farming techniques, So any downturn in the global economy will mean less demand for potash.
 
LifeChoices,

One of the most important things to get correct when dealing with investments is to get the facts straight.

Ocean Island and Nauru were phosphate resources, not potash resources. There is a great difference. What are you really looking at?

brty
 
The fertilizer industry faces the potential for a "large" production surplus in nitrogen by 2016 and "massive" surpluses in potash – if nutrient groups prove better at meeting deadline on $90bn in new projects.

Source >> Agrimoney, 13.06.2012
*****
 
The 8 year chart for potash appears to show the price of potash has just fallen on the downside of a symmetrical triangle as copper appears to also have done recently. Unlike the copper chart I put up I have not worked out the swing trade target for potash but it looks like it will be not much more than pennies once it hits its target.
 

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July 09, 2013
Pundits Ponder Potash Potential
By Ryan Jackson in Vancouver(Canada)

Mining and agriculture may seem to be an unlikely mix but the boundaries between the asset classes bleed together when it comes to potash.

For most of human history fertilizer production was a cottage industry serving the needs of local farmers.

But when the introduction of phosphate to the British Association of Science in 1840 marked the beginning of a scientific understanding of the role of minerals in agriculture.

Fertilizer production has since grown into a colossal industry.

Today, the long term trends of increasing agricultural production, the decreasing availability of arable land per capita, improving diets, and development of marginal crop lands are all bullish for investment in agriculture in general, and potash in particular.

Just at the minute, the role of precious metals as a store of value in uncertain times is coming under heavy scrutiny. And, while gold and silver have, over the centuries, proved effective at persevering wealth against inflation and market calamities, it’s indisputable that the need for food is even more immutable than the human desire for gold.

Sprott’s Steve Yuzpe drove the point home at the World Resource Investment Conference in Vancouver this year. “During times of economic contraction and uncertainly, the demand for food has historically declined less than for other goods and services”, he said. “That gives us some built in downside protection when investing in agriculture.”

Over the long term, Steve is very bullish on investing in agriculture. He argues that the massive printing of currency by the United States, Europe, and Japan are “exporting food inflation”, as the nominal cost of all the inputs which go into producing and distributing food begin to rise.

Meanwhile, global weather patterns are putting massive strain on the agricultural industry. Grain production is extremely temperature sensitive and could be devastated by the effects of a temperature increase of even a few degrees.

Steve also points to water shortages around the world and to depleting aquifers in the US grain belt in particular, as cause for great concern.

The aquifers in question take on average 1,400 years to replenish, so Steve considers them a non-renewable resource which is rapidly running out. Citing research from the USDA on the primary aquifer of the High Plains, the Ogallala Aquifer, Steve stated: “All we can do now is try and engineer a soft landing. The Ogallala supply will run out and farming may not be possible in that region.”

That’s a pretty staggering prediction considering the Ogallala supplies water for agriculture, industry and domestic use across 174,000 square miles of the USA, mainly in Nebraska, Kansas, Oklahoma, and Texas, as well as parts of South Dakota, Wyoming, Colorado, and New Mexico.

The way potash fits into this scenario is pretty clear, although there have been sporadic fears of oversupply in recent years. Most recently, Green Markets, a fertilizer industry information provider, predicted that supply growth will outpace demand growth over the next five years.

However, that’s assuming that all the planned mines come into production. Which, as anyone who’s acquainted with the mining industry will know, they won’t.

And in terms of demand, it’s possible that that may have been understated. A recent report by the USDA shows sharp declines in year-over-year grain stocks, which could put upwards pressure on North American grain prices, in turn prompting farmers to bring additional land into intensive cultivation. Enter potash, in a big way.

In fact, the USDA reports that US farmers have gone above and beyond their predictions for planting acreage in 2013, overcoming a cold a wet spring to plant 97.4 million acres of corn. Wheat and soybean planting also was ahead of 2012 this year, which could be good news for fertilizer sales during the remainder of the season.

And, while North American potash demand has remained relatively steady with short term fluctuations in the recent past, consumption has doubled in Asia and Latin America over the past 20 years, closely matching food production trends.

This year, spot potash prices (FOB Vancouver) have been trading on the low end but rose slightly in May to US$417.50 per tonne from US$405 in April.

“While prices remain at a lower ebb, shipment volumes have picked up markedly”, writes Scotiabank’s Patricia Mohr, in the bank’s recent commodity price index, with Chinese imports up 19 per cent between January and April and Brazilian imports up 53 per cent year-over-year.

But where should the interested investor look, if potash seems appealing? The industry is currently dominated by a select few major companies operating in Canada, Russia, and Belarus.

Saskatchewan is home to the largest recoverable reserve of potash in the world, accounting for about 60 percent of global potash reserves. TSX-listed PotashCorp is a leader in the industry accounting for roughly 20 per cent of the global supply. It produced two million tonnes in the first quarter of 2013 alone.

But while the majors dominate as far as production is concerned, there are opportunities in the junior sphere as well. Among the companies with near term production opportunities is TSX-listed Karnalyte Resources.

Karnalyte has just completed a bankable feasibility study on a project which boasts proven and probable reserves of 789 million tonnes of mineralized material grading 19.6% KCl. Initial production is expected in early 2014 for a project with an estimated life of 68 years. Production will start at 625,000 tonnes per annum and ramp up to 2.125 million tonnes per annum.

Another interesting story in the junior markets is Venture listed Encanto Potash. Shares in Encanto, which we have covered extensively in the past on Minesite, have been on the rise of late, up 32 per cent so far this year.

Having discovered that few new land packages are available for new exploration companies in Saskatchewan, the Encanto team approached First Nations groups who hold large land holdings in the area which other companies have stayed clear of because of the complexity of developing them.

It’s an area where Encanto’s management have past experience and this has allowed the company to be highly successful in its exploration programs. So far, Encanto has defined recoverable KCI potash resources of 130.7 million tonnes in the measured and indicated categories as well as 234.7 million tonnes in the inferred category.

At an extraction rate of 2.5 million tonnes a year, the measured and indicated resources alone will support a solution mine life of 52 years, according to Encanto.

What’s more, having worked with the local First Nations groups as partners through the exploration process, the company will benefit from strong local support in the event of a development scenario.

Source >> www.minesite.com
*****
 
I believe we will see more competition in the potash market. Strong leader will survive in good and bad times. I also believe fertiliser prices will go down further. Share prices of companies that make nutrients also will go down.

My ideas are not a recommendation to either buy or sell any security, commodity or currency. Please do your own research prior to making any investment decisions
 
November 27, 2013

The Time For Reconciliation In The Potash Industry May Have Arrived But Uncertainty Remains
>>>>> By Ryan Jackson

This summer, Minesite began coverage on the conflict which arose within one of the world’s two major potash cartels; the BPC. The BPC was comprised of the Russian company Uralkali and Belarusian company Belaruskali which together controlled some 43 per cent of the world’s supply of potash. With the two companies joined together in a cartel to handle marketing and distribution, BPC was a formidable force in the industry.

Back in August, an ongoing spat between Uralkali and Belaruskali led Uralkali chief executive Vladislav Baumgertner to break the long-standing arrangement claiming that Belaruskali had breached the terms of their agreement by selling potash outside of the cartel making the entire arrangement a farce. “In this situation we have to redirect our export deliveries through our own trader”, he told the press.

Meanwhile, some pundits speculated that the move could be part of a new strategy for Uralkali which had been limiting production, despite excess capacity, in order to comply with their arrangement with Belaruskali. It was an arrangement which drew criticism from some Uralkali shareholders who believed that the cartel was hobbling the Russian company and propping up higher cost potash producers despite Uralkali’s industry-leading low cost status.

From there, the spat escalated further with Uralkali’s Baumgertner being arrested in Belarus following talks he attended at the invitation of Belarus Prime Minister Mikhail Myasnikovich over his Russian company’s withdrawal from the BPC.

At the time, many in the industry predicted that potash prices would fall dramatically as a result of the likely production growth in Russia and the end of the BPC’s influence. With the price now trading close to the US$300 per tonne, a level Baumgertner warned could be reached if the conflict was not resolved, the prediction has definitely come to pass.

The effect of the destabilization of the potash market and the subsequent price erosion has been felt around the world but perhaps few places have felt its sting as keenly as Saskatchewan. While BPC has dissolved, North America’s potash cartel Canpotex remains intact and is comprised of Potash Corp. of Saskatchewan, The Mosaic Company, and Agrium. Canpotex and the BPC together used to control around 76 per cent of the world supply and would collaborate to ensure the price remained at a stable and profitable level, an arrangement which has come to an end.

Together the North Americans control roughly 33 per cent of the world’s supply. Though Canpotex controls a significant market share, their power in the markets was insufficient to curb a price decline during the summer from around US$400 a tonne to near US$300 where it trades today. As a result of the lower price, we have seen many Canadian producers report depressed financials this fall.

While the damage to the commodity price has been done, there was cause for some optimism last week when Russian billionaire Mikhail Prokhorov agreed to buy fellow billionaire Suleiman Kerimov’s 21.75 per cent stake in Uralkali, a move which could ease tensions between Russia and Belarus. In addition to the change of ownership, Uralkali’s Baumgertner was returned to Russia this November which should serve to de-escalate the situation and pave the way for talks regarding a potential re-instatement of the cartel.

Still, some analysts predict that things may not be so simple and that the bridges which were burned may take time to mend. JPMorgan analysts wrote a note on the incident arguing that, “reconciliation [if any is to occur at all] will take time, and would likely not take on the form of the old ‘BPC’ in Minsk.”

But JPMorgan’s analyst Jeffrey Zekauskas argues that the potash industry’s capacity utilization may not be as low as previously predicted and that the supply and demand picture may not be as bleak as some in the industry present it.

While utilization rate has been estimated at 72 per cent, 2013 volumes were likely depressed by 3 million tons as a result of sharp pricing volatility following Uralkali’s withdrawal from its trading joint venture. With demand anticipated at 56 million tons in 2014, and assuming Canpotex prioritizes price over production as it has in the past, Zekauskas estimates industry capacity is roughly 63 million tons which presents a more reasonable 89 per cent utilization rate.

That’s especially good news for heavyweight miner BHP Billiton which has tabled plans to make a colossal investment in Canadian potash to make the commodity the fifth pillar of their global resource empire. BHP chief executive Andrew Mackenzie has estimated that demand for the fertilizer should rise 2 to 3 per cent per year until 2030 as rising population and affluence in developing nations leads to changing patterns of food consumption which will require more intensive farming on arable lands.

With the potash price still hovering near the US$300 a tonne mark, it’s clear that potash producers are not out of the woods yet but there have been some green shoots emerging this fall. It’s an industry which has been rocked with great volatility this year and it’s certainly one to watch as we move towards 2014.

Source >> www.minesite.com
*****
 
>>>>> 21 Nov 2013

BHP, potash and China’s great eat forward
>>>>> By Stephen Bartholomeusz

...

While Mackenzie has shut down much of BHP’s pipeline of prospective new big projects, there is one exception that has made some of the group’s institutional shareholders unhappy. He has committed to spending $US800 million a year on the Jansen potash project in Canada.

BHP is sensitive to the criticism of its continued interest in developing Jansen – a project in the double-digit billions if it gets the final go-ahead.

Its determination to invest in the Jansen option, however, is an indication of the potential Mackenzie and his board see to make potash BHP’s ‘fifth pillar’ alongside its core iron ore, petroleum, copper and coal units, as well as the confidence in the economic development path of China.

Mackenzie told the meeting that BHP expected demand for potash would growth at 2 or 3 per cent a year out to 2030 on the back of a rising population and greater prosperity in developing economies, particularly China. That would necessitate higher yields from increasingly constrained areas of arable land.

The continuing pursuit of the potash option, despite some shareholder reservations, is also effectively a recommitment to BHP’s strategy of maintaining a diversified resources portfolio. Nasser described this as a core strength and the driver for BHP’s outperformance against its peers over the past decade.

If potash was added to the portfolio, the combination of commodities would meet Nasser’s description of a portfolio able to meet every phase of the economic development cycle – from investment to consumption-led economies.

The low correlations between the prices of some of the commodities would also give BHP less volatile cash flows and less vulnerability than peers with exposure to narrower ranges of commodities.

This greater resilience allows the group the luxury of taking long-term positions (and accepting the risk) on potentially big new plays like Jansen, while the rest of the sector is focused inwardly on limiting the damage to returns on their existing capital.

Source >>>>> Business Spectator
 
>>> Potash Politicking Continues, As Uralkali Agrees To Sell To India At The Lowest Price Seen In Seven Years

>>> 2 Apr 2014

The global potash market was put into a state of great uncertainly last summer when major Russian producer Uralkali pulled out of a cartel with Belorussian potash producer Belaruskali.

The cartel had controlled some 43 per cent of the world’s supply.

The Russians claimed that Belaruskali had violated the terms of the agreement, by selling potash outside of the cartel.

But other industry watchers argued that the main reason for Uralkali’s eagerness to dissolve the cartel was the potential for financial gain.

In general, Russian potash is produced at a lower cost than potash from Belarus. As a result significant excess capacity in Russia was underutilized.

So, although Belorussian producers would stand to lose in a less regulated market where prices were likely to fall, the Russians could take more market share and see overall profits rise, albeit at thinner margins.

Uralkali’s stated cash costs come in at around US$65 a tonne, some way below the North American low cost producers who average US$100 a tonne. It’s also a long way lower than the US$240 per tonne costs incurred by the European producers.

When the cartel collapsed last summer, industry insiders speculated that prices could fall to US$300 a tonne. At that level there would be little meat on the bone for the higher cost producers.

Those predictions now appear to be coming true as Uralkali, still the world’s largest potash producer, has entered an agreement with Indian Potash Limited, one of India’s leading potash importers, to supply 800,000 metric tons of potash at the lowest 12 month contract price Indian importers have negotiated in seven years.

So far, potash prices have plummeted some 25 per cent since last July when the going rate per tonne was US$400.

Uralkali’s latest contract with Indian Potash Limited is price at US$322 per tonne which will likely form a benchmark for pricing in the country. If that’s the case, it may limit Belaruskali’s ability to court buyers in India due to its higher production costs.

Last year, Indian importers agreed to pay US$427 per tonne for potash but were later able to negotiate a price cut to US$375 a tonne as the Indian rupee lost ground and the global spot potash prices plummeted.

Demand for potash has been declining in India over the past few years due to lower government subsidies and a faltering currency, but even so the subcontinent has accounted for about a tenth of global shipments over the past five years.

It’s not just Belaruskali which is felling the impacts of a declining potash price, though. The era of US$500 a tonne potash brought a number of new players to the table, but the dramatic price decline seen since last summer puts major pressure on those smaller companies.

With that dynamic in mind, there is speculation that Uralkali’s move could be, in a sense, a pre-emptive strike to crush the opposition.

Increasing attention is now being focussed on North American trading group Canpotex, which consists of Potash Corp of Saskatchewan, Mosaic, and Agrium. Cantopex controls roughly 33 per cent of the world’s supply. The three constituent companies are low cost producers, though not as low cost as the Russians.

With the Russians firming up contracts in China and India, many in the industry expect Canpotex to follow suit.

Source >>> www.minesite.com
 
Thought I might dust this old Thread off. I bought a few KP2 (Kore Potash) a while back. At face value that looked a pretty ordinary purchase, but I like to get in early :nailbiting:

It seems in the US at least there has been a bit of a lack of Supply and prices apparently are improving so perhaps my little battler KP2 might have a pulse yet.

ASX listed Potash Stocks below according to Google. Not sure if all those Stocks are currently into Potash but worth a look for comparison.

1612829524814.png

1612830077326.png
 
I've tried to get excited, but local companies are marginal.
Canada is the world's largest potash producer, accounting for 31.6% of the world's total in 2019. Four countries (Canada, Russia, Belarus and China) accounted for 80% of the world's potash production in 2019.
Click to expand...
BHP has Jensen in Canada likely to be the next big operation but even they are having delays.
www.mining.com

BHP defers decision on Jansen potash mine

The world’s largest miner will decide whether to go ahead with the $17bn potash project in Canada by mid-2021.
www.mining.com www.mining.com

Belarus and Russia have been known to sell to hold market share, and I'd suspect the Chinese do it their way.
 
Dona Ferentes said:
I've tried to get excited, but local companies are marginal.
Click to expand...

I'm hearing you DF. It's not exactly a "sexy" commodity that's for sure.

I'm mainly interested off the back of "Kore Potash" having a tiny market cap, but also a couple of potentially world class Projects.

If they ever get either of them off the ground (Lot of Finance required), there current share price will look pretty silly.

Of course, they could also go bust lol That's Spec-land though ?
 
I came across APC late last year. It has funded project and has signed up off take agreements for all the projected output.

It's latest report was a very effective upgrade of the value of its proposed development in terms of market value. I made a small investment based on it's progress to date

This may not be a "sexy" topic but fertiliser is a critical/essential requirement for keeping us fed.:)
 
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