Agriculture

An increased demand for potash as crop prices rise has potash poised to be a top commodity pick in 2011, according to the recent report by Scotiabank.

By Leia Michele Toovey- Exclusive to Potash Investing News

According to the recent report by Scotiabank, an increased demand for potash as crop prices rise has potash poised to be a top commodity pick in 2011. “The price of potash coming into the Port Metro Vancouver topped out in 2008, at about $1000 US per tonne in late 2008,” said Patricia Mohr, a commodities specialist at Scotiabank. However, after the recession hit, potash prices took a significant hit, added Mohr. Potash dropped down to around $350 per tonne. In 2011, potash will benefit from a rapid ascent in the price of “input intensive grains.” As the price of grains rises, so does the incentive for farmers to apply fertilizers to their fields. The three crops that use the most potash per hectare planted are corn, sugar cane and palm oil,” said Mohr. All three of these crops have already enjoyed a rally.

Russia’s ban on exporting wheat and barley products rallied grain prices this spring, said Mohr. At the same time, corn prices have increased, as China demands more corn to feed livestock for a population looking for more meat. An increasing demand for ethanol is also driving corn prices, said Mohr. With fertilizer applications for these crops in the Northern Hemisphere around 3-1/2 months away, Mohr anticipates that potash values will rise in the first quarter

For Phosphate, the picture is not quite as rosy. Phosphate prices have dropped slightly in recent weeks, but are predicted to be flat for the winter. When spring planting season comes around, analyst’s project prices will rise $100 to $200 per tonne.

Company News

Western Potash Corp.(CVE: WPX) is pleased to announce that it has closed its previously announced private placement bought deal offering. The company sold 18,182,000 units at a price of $1.10 per unit, for aggregate gross proceeds to the Company of $20,000,200. Each unit consists of one common share in the capital of the Company (and one-half of one common share purchase warrant). Each warrant shall entitle the holder to purchase one common share of the Company at an exercise price of $1.75 at any time up to and including the close of business on June 21, 2013, being the day which is 30 months from the closing of the offering. All securities issued under the offering are subject to a hold period ending April 22, 2011.The net proceeds received by the Company from the sale of the units will be used to advance the Company’s Milestone Potash Development Project located in the Province of Saskatchewan, and for general working capital purposes.

CF Industries Holdings Inc. has signed an agreement with Shell Oil Company to use Shell’s Thiogro process technology to produce a sulfur-enhanced phosphate product. The product manufactured with this technology will be a sulfur-enhanced monoammonium phosphate (MAPS) with a nutrient content of 11 percent nitrogen, 40 percent phosphorus, and 12 percent sulfur. This new technology incorporates sulfur with the fertilizer granule, which provides a highly utilizable form of nutrient that persists in the soil. According to CF Industries president and CEO Stephen R. Wilson, “There is a growing agronomic need for this kind of product. Alternative products, most made in Poland, China and Russia, have not been available to growers consistently in our target markets. CF Industries identified the need and is now positioning itself to meet it with a high-quality product that is easy to handle. The product’s superior traits also present CF Industries with a higher margin opportunity over competitive MAP products.”

Uralkali officially launched a $7.8 billion friendly takeover of domestic rival Silvinit on Monday. Pavel Grachev, Uralkali’s chief executive, said in a statement that the merger is a “critical step toward the creation of a leader in the global potash sector. The new company, with an estimated market capitalization of $23.9 billion will be the second-largest potash producer in the world, behind Potash Corp. of Saskatchewan (NYSE:POT).  Completion of the deal is expected in May, pending shareholder and regulatory approvals. Shareholders will receive 133.4 Uralkali ordinary shares for each ordinary share in Silvinit and 51.8 Uralkali ordinary shares for each preferred Silvinit share. A 75 percent majority approval by shareholders is necessary for the deal to go through. Extraordinary shareholders meetings for both companies are scheduled for the first week of February; the deal has already received binding approval from 53 percent of Uralkali and 67 percent of Silvinit shareholders.

MARKETS

Markets
TSX20179.81+187.93
TSXV680.49+7.47
DOW33761.05+424.38
S&P 5004280.15+72.88
NASD13047.19+267.27
ASX7032.50-38.50

COMMODITIES

Commodities
Gold1792.55-6.58
Silver20.59-0.19
Copper3.61-0.06
Palladium2214.00+1.00
Platinum954.50-6.50
Oil91.17-0.92
Heating Oil3.50-0.02
Natural Gas8.63-0.14

DOWNLOAD FREE REPORTS

×