Interested in potash investing, but not sure where to start? Here’s what you need to know about potash, from supply and demand to stocks.
The world’s population is increasing rapidly, and is expected to reach over 9.7 billion by 2050.
A larger population will have many consequences, one of which is that much higher amounts of food will be needed. But with more people will come further urbanization and less farmland to work with, which means farmers will have to increase crop yields.
That’s where fertilizers like potash come in. Potash fertilizer not only provides essential nutrients to food, but also improves water retention in plants and strengthens their roots and stems. Put simply, potash fertilizer allows for higher crop yields and increased food production.
Unsurprisingly, many investors are wondering what potash is, and how they can gain exposure to the potash market. Read on to find out more about this commodity.
This article continues below the Agriculture Investing Table of Contents.
Agriculture Investing Table of Contents
The articles listed below provide an overview of investing in agriculture from Agriculture Investing News.
Start Investing in Agriculture
- How to Invest in Agriculture
- Food Security is Key to Agriculture Investing — Here’s Why
- Fertilizers: The Difference Between Potash and Phosphate
- Ways to Invest in Potash
- Potash Fertilizers: What’s the Difference Between SOP and MOP?
- 10 Top Countries for Potash Production
- Ways to Invest in Phosphate
- Top Phosphate-mining Production by Country
Potash investing: What is potash?
First, it’s important to understand what potash is: an alkaline potassium compound that is most commonly used in fertilizers. All in all, 95 percent of the world’s potash supply is used to grow food.
The term “potash” refers to potassium compounds and potassium-bearing materials. It includes potassium chloride, which is a salt-like mineral that is naturally white or colorless, but sometimes takes on a pink or red color due to impurities such as clay.
Most potash comes from salt left over from ancient evaporated seas, which lie underground. There are two different types of potash: sulfate of potash (SOP) and muriate of potash (MOP).
SOP is used on high-value crops, such as fruits, vegetables, nuts, tea, coffee and tobacco, and is considered premium quality. MOP is more common, and is typically used on vegetables such as sugar beets, celery and Swiss chard.
Potash investing: Supply and demand
According to the US Geological Survey‘s latest data on potash, global output came in at 41 million MT in 2019. Consumption for 2018, the most recent year for which information is available, was 43 million MT.
Last year, the top potash-producing country was Canada, whose output came in at 13.3 million MT. Saskatchewan potash production accounts for 90 percent of that amount, and makes up about 50 percent of global potash production.
Belarus was the second largest producer in 2019 with potash output of 7 million MT. Russia came in third, with potash production totaling 6.8 million MT.
The potash sector has suffered from oversupply in recent years, and that has created lower prices and put pressure on potash producers. That said, the potash outlook is fairly promising, and, as noted, population growth is expected to spur even more demand for potash in the long term.
Potash investing: Companies to watch
Given the solid outlook for the potash industry, many investors are interested in entering the space. One popular way to do so is by investing in potash stocks.
This is an updated version of an article first published by the Investing News Network in 2016.
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Securities Disclosure: I, Melissa Pistilli, hold no direct investment interest in any company mentioned in this article.