American Potash Sales will Hit New Record

- April 22nd, 2010

The rapid rebound in American demand has boosted potash. The US was late to jump on board to the recovery, but when it did, it came with impressive speed.

By Leia Michele Toovey- Exclusive to Potash Investing News

PotashAnalysts predict that potash sales will hit 45 million metric tonnes this year.  Last year, global potash sales plummeted more than 40 percent to an estimated 32 million metric tons in 2009, the biggest decline on record.  The recovery, which started at the end of 2009, has been slow to gather steam; however, all signs indicated that the recovery is gaining momentum, and on the producer and retailer side 2010 will close with extremely thin inventory levels.

The rapid rebound in American demand has boosted potash. The US was late to jump on board to the recovery, but when it did, it came with impressive speed. The American potash market swiftly recovered in the first quarter of 2010, after six quarters of depressed volume. Potash Corporation of Saskatchewan, the world’s largest potash producer, has reported that it will record its highest ever American sales volume during the first quarter of 2010.  The previous record was in the second quarter of 2004.

In India, last year’s biggest importer of potash, demand will hit 4.55 million metric tonnes in the current year, ending next March. India imported 5.09 million tonnes last year, while Brazil bought 3.57 million tonnes and China 1.59 million tonnes.

In Saskatchewan, the world’s largest supplier of the crop nutrient, potash sales are expected to top government expectations.  The province predicted in its March 24 budget that potash sales will raise to 8.1 million tonnes, from 3.7 million tonnes last year, the lowest sales volume since 1971. The government’s estimate was conservative, following a costly mix up last year.  The government pre-charges potash miners for tax royalties, and last year a collapsing market left the government owing the potash companies for overpaid taxes.  Not wanting to repeat the same mistake twice, this year, analysts claim that the government has been extremely conservative in its estimates.

Over in Europe, demand has been steadily improving.  The region’s largest potash producer, K+S, is ready to raise output as soon as possible in order to meet the increase in demand. With farmers returning to the market,  a decision on whether to increase the current 6 million tonne goal may be announced on May 11 when K+S is scheduled to report first-quarter numbers.  However, the company will only increase output if supplies of the crop nutrient are necessary for field applications.  The company has no intentions of lifting output solely for the purpose of distributor restocking.

Company News

The world’s largest potash producer, Potash Corporation of Saskatchewan, (NYSE:POT), will report its Q1 2010 results after the market closes on April 28, 2010. The management’s earnings per share expectation for Q1 2010 has increased from $0.70-1.00 to $1.30-1.50.  Analysts’ estimates for Q1 2010 range from a low of $0.81 to a high of $1.50.  In the previous quarter, Potash Corp. reported earnings of $0.80 per share1 ($243.6 million), which compared to $2.56 per share ($788.0 million) in the same period last year. Full-year 2009 earnings of $3.25 per share ($987.8 million) were the third highest in company history, but below the record $11.01 per share ($3.5 billion) earned in 2008.

The Australian Mineral Explorer, Red Metal (ASX: RDM) has applied for 21 potash prospecting permits covering a total of 166 square kilometers of the potash-rich Paradox Basin of Colorado, USA.  The decision to secure the property came after the company received the results of a study completed by international potash consultants, Agapito Associates Inc.  The study identified multiple potash-rich horizons within the application area and concluded that there was high potential for defining economically significant potash resources. The study predicts that the geology in this region will enable mining via the economical solution mining method. The study results indicate that the property has a potential output of  between 200,000 and 2 million tonnes of potash per year. The grant of the applications is dependent upon the Bureau of Land Management’s assessment of Red Metal’s proposed exploration plan and a decision is expected within about six months.

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