The Conversation (0)
Potash and phosphate producers have already been riding the wave of increased grain prices, and have been able to continuously boost prices charged for the crop nutrients. According to the USDA’s reports, this trend has no sign of stopping, at least in the near future.
By Leia Michele Toovey-Exclusive to Potash Investing News
Tight grain supplies are bad news for food prices; however, they are excellent news for the fertilizer market. With acreage under production in the United States at a max, fertilizer use is a necessity. And, internationally, as the price of grains rises so does the demand for fertilizer. Potash and phosphate producers have already been riding the wave of increased grain prices, and have been able to continuously boost prices charged for the crop nutrients. According to the USDA’s reports, this trend has no sign of stopping, at least not in the near future.
Potash prices are currently trading at just over $530 per tonne, on the spot market. While they have recovered since the recession, they are still well off their 2008 high of $1000 per tonne. Phosphate prices are also creeping up, just this week Phosphate Chemicals Export Association, Inc. (PhosChem) announced that it had priced an agreement to supply approximately one million tonnes of diammonium phosphate (DAP) to two large Indian customers for $612 per tonne. This current transaction is part of a three-year supply agreement for two million tonnes per year that was agreed to a year ago between the parties. DAP prices hit a low of $378 per tonne in November 2009. Prior to the recession, DAP peaked at $1,174 in 2008.
Company developments
Uralkali (LON:URKA) has satisfied the conditions set by Russia’s Antimonopoly Service, including setting consistent prices for different groups in Russia. As a result, the Antitrust has approved the acquisition of Silvinit (PINK:SLVNF) by Uralkali. Uralkali agreed to buy Silvinit in a cash and share offer in December and expects to complete the transaction by the end of the second quarter. The two produced a combined 10.3 million metric tonnes of potash in 2010. The tie-up will push Potash Corporation of Saskatchewan (NYSE:POT) into the second spot. Potash Corp produced 8.6 million tonnes last year. In third place, Mosaic Co.’s (NYSE:MOS) output was 7.2 million tonnes in the year ended November.
Company news
Universal Potash (PINK:UPCO) has begun staking on its assets in the Paradox Basin of Utah, and has hired Harrison Land Services to start the recon phase for two drill hole sites located in the recently purchased leases. This recon phase will set the basis for the baseline data accumulation of Universal Potash that is needed to perform the essential environmental surveys to execute the regulatory process. Universal Potash is expecting that permit approval will take four to six weeks.
Potash exploration company Karnalyte Resources (TSX:KRN) expects to report a large jump this fall in the size of its potash resource at Wynyard, Saskatchewan, according to Chief Executive Robin Phinney. Phinney expects to transfer about 60 percent to 70 percent of its 186 million tonne inferred resource of potash, into the firmer “indicated” category by this fall. “I’m expecting the project feasibility to be completed by the end of the year,” Phinney said. The company plans to build a C$410 million ($427 million) facility with a 500,000 tonnes per year output. Eventually, output will be expanded to 2 million tonnes per year. The mine’s operating costs will benefit from the fact that the deposit is amenable to more cost-effective solution mining. Operating costs are projected $150 a tonne, and according to Phinney, and may be lowered once the company completes its feasibility study.