First of all, what proof of a price decline is there? The downtrend is highlighted by a recent potash sale to India by Belarus (one of the very few potash producers) at the lowest prices seen in over a decade; about a third less than last year’s level as global supplies of the crop nutrient exceed demand.
About the deal - one of India’s biggest fertilizer importers, Indian Potash Ltd. (IPL), will buy 700,000 tonnes of potash at $227 (U.S.) per tonne on a cost and freight (CFR) basis.
Belarus’ contract price is likely to become the benchmark for other suppliers to India, such as Russia’s Uralkali and North American trading group Canpotex Ltd., owned by Potash Corp, Mosaic, and Agrium.
For background see this story.
The underlying thing from this is, China usually sets the floor or lowest global price for potash with their purchasing, so given the bigger annual’ish China deal is still outstanding, prices will likely decline even further.
India and China, the world’s biggest fertilizer consumers, usually sign contracts earlier in the year. This year, deals were delayed as high stocks held by farmers meant there was no rush to agree a deal.
India’s deal is a rare instance of the country signing a potash supply contract with a major producer before China. For more information, see this story.
But then, on the upside, Belarus and Uralkali (the Russians) are looking at working together again on potash marketing , thus ending the price war that has driven down the price of potash. These two and Canpotex (PotashCorp, Agrium, and Mosaic) basically dominate the world potash market.
And, the major trend to drive fertilizer prices in the long term is that the world is adding about 1-million people per week to its population. We need to feed this additional million per week from the same amount of farmland – so, fertilizer demand will grow.
Now, currently, crop prices are growing faster than fertilizer costs, so things do make sense to buy now.
To take advantage of the temporarily low fertilizer prices, a Meridian fertilizer bin is your best choice.
APAS said it's anyone’s guess whether it will reach the record-setting levels farmers experienced in 2013 (38.4 million tonnes, according to Statistics Canada), but either way, APAS president Norm Hall wants rail companies to be ready. “If you remember three years ago when we had the potential of a huge crop, and turned out to be the largest crop on record, the railroads used the excuse that oh, we didn’t know this was coming, we weren’t prepared for it,” explained Hall in an interview with News Talk Radio.
So, APAS is asking the railroads to be ready to handle the grain - but they are the end of the system - the system begins with farmers?
Are farmers ready to harvest the crop within the small window of opportunity presented by crop development and the weather.
Are the combine(s) fast enough? Are there enough trucks ready to move the grain to a bin or bagging area? Maybe the ground is wet, so is a grain cart ready to move the grain off the field towards a truck, bin, or bagging area? Is the bagger ready with enough bags? Are the transfers, augers or conveyors able to quickly unload the grain and move it, which allows for the combine to keep moving without having to wait for unloading?
And after moving the grain by rail, are the ports and ships ready?
APAS has put rail on notice, but what about the rest of the system?
Southern Saskatchewan 2011 harvest is under way! The combines are rolling through peas and lentils in most of the areas that I have seen. The crops are looking above average in most areas of the south, after a rainfall of 25 to 30 inches in the south last year it is not hard to compare the quality of this year’s crop. Pea acres seem to be down substantially this year compared to recent years, after seeing what the quality of the peas are this year, this may be a tough pill for some farmers to swallow especially if the price continues to rise. The lentil quality also looks very good this year, after the European’s declared no glyphosate on lentils I have seen a few more lentil acres being swathed this year. Canola is being swathed daily and more and more acres are down every day, the canola crop’s look very good in southern Saskatchewan this year, which is a different look this year due to the fact that you would not usually see so many canola acres in Southern Saskatchewan, But with last year’s chem.-fallow acres very high it set farmers up well for a large canola year. Wheat and durum are slowly behind in some spots I have seen; staging anywhere from seeing wheat being swathed to wheat that still needs 3-4 weeks frost free weather to avoid another feed wheat year. As long as we can keep that white combine away, I would say that the 2011 crop year will be a very successful year in most areas of the South that did not drown out in June....