Friday, September 25, 2009

Agrium, Mosaic, and China: The Potash Wars

Conflicting estimates.

Agriums's CEO said that potash demand should increase in recent months even though prices are still high and have held up better than other fertilizers. He says demand growth will continue at historical levels of 3% per year s food grain demand continues to grow.

Mosaic's CEO says his company would make a great acquisition "given its strengths and growth prospects". He is quick to add that the company has a 100-year reserves of potash. "Mosaic" is a very compelling investment".

If that is on, why would he seem to be advertising the company for sale?

Two days ago we reported that a ScotiaBank analyst says high potash prices are killing demand as farmers in China are really cutting down on Potash use. The analyst says producers are cutting production, which causes high prices, which in turn causes demand destruction. Price is too high compared to Nitrogen, so farmers are cutting down.

China's import of Potash have dropped for 2 years now, from 9.4 tons in 2007 to just 1.7 tons this year.

Somebody is wrong here.

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