The ‘pink gold’ rush for potash
By Peter Byrne
The Energy Report: Fadi, the International Fertilizer Industry Association is reporting that the fertilizer market is on the mend, with demand for potash rising 3.7% per year. Today, U.S. potash prices are at about $575 per metric ton (mt), compared with $380/mt last year. What caused the upswing?
Fadi Benjamin: Let’s look at what caused the potash crash: Back in 2008-2009, potash prices had risen to almost $1,000/tonne, driven by Chinese demand. Crop prices were relatively low at $3.50 corn, $10.25 soy and $4.44 wheat. Farmers around the world retaliated as they could not justify the economics of these high potash prices and low crop prices. Many farmers, particularly in North America, took a “potash holiday.” They stopped applying the mineral to cropland for a couple of years. The holiday was possible because crops do not consume all of the fertilizer immediately, and the remainder stays in the soil as a reserve. But now, all around the globe, the potash content in soils is too low. The demand for potash has returned, and crop prices have significantly increased. We are now in a world of $7.90 spot corn prices, $16.65 spot soy and $8.89 spot wheat. It may take two to three years of aggressive potash application for North American soils to reach 2008 soil levels.