The potash price has struggled this year, but lately it’s shown signs of strength and a potential recovery. With shareholders of PotashCorp (TSX:POT) Agrium (TSX:AGU) approving the merger of the two companies, it’s no surprise the price has gained back some momentum.
Most notably, The price was positive in a few locations: in the US Corn Belt region, the price rose to $225 per metric ton, while it rose to $216 per metric ton at the Port of Vancouver. Despite the increase in some areas, in Brazil it remained $235 per metric ton.
Still, the overall potash price increase has garnered optimism in the industry. As mentioned above, the merging of PotashCorp and Agrium was voted in favour of its shareholders, and an order issuing the final approval of the merger of equals was also approved. While the deal merging the two companies isn’t expected to close until mid-2017, it’s a positive step for the fertilizing industry.

Reuters noted that crop producers have struggled as a result of weak prices and profits, while supplies have been hard to come by.
“The expectation (is) the combined entity will have greater leverage and upside participation in a potash price recovery,” Brad Allen, director of Branav Shareholder Advisory Services told Reuters.
On that note, Allen did warn that the optimism of a price recovery will take some time, and that outlooks made in press releases aren’t always met.
However, that doesn’t mean a potash price recovery is out of the cards. While lower prices previously impacted producers, such as Intrepid Potash (NYSE:IPI) who announced that it would idle its West facility in May, its third quarter 2016 results noted a positive outlook on fertilizer prices in 2017.
In the press release, Bob Jornayvaz, chairman, president and CEO of Intrepid, said the company is starting to see positive selling environment for potash as the price has “firmed.”
“Moving into 2017, we anticipate seeing some benefit to our potash gross margin as our lower-cost solar facility production becomes a greater proportion of our potash sales,” he said.

Potash companies rising

With the potash price making a potential comeback, a number of potash companies have seen their share price move up as well.

• Potash Ridge (TSX:PRK): Potash Ridge is near-term producer with assets in Utah and Quebec. In October, the company announced it had partnered with Jones-Hamilton for a product offtake and investment in the Valleyfield project.  Shares of Potash Ridge have increased 518.18 percent year-to-date to $0.34.
• IC Potash (TSX:ICP): Year-to-date, shares of IC Potash have increased steadily by 108.33 percent to $0.125. The company is focused on its 100 percent-owned Ochoa polyhalite deposit in New Mexico.
• Encanto Potash (TSXV:EPO): Over the last for years, Encanto Potash has been working with its First Nations Partners to establish potash resources. On October 31, the company announced the closing of a $1.75 million private placement. Year-to-date, shares of Encanto have increased $0.075.

As positive steps are being made in the potash industry, investors will surely be keen to keep an eye out on how it progresses into 2017.
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Securities Disclosure: I, Jocelyn Aspa, hold no direct investment interest in any company mentioned in this article.