Did Mixed Potash Prices Cause PotashCorp to Alter Forecasts?
In the final part of this series, we’ll look at potash prices, which have been battered over the year. Potash companies such as PotashCorp (POT), Mosaic (MOS), Agrium (AGU), and Intrepid Potash (IPI) have all been negatively impacted by falling potash prices so far this year.
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Prices were mixed
For the week ended July 29, 2016, average MOP (muriate of potash) prices at Vancouver stood at $256 per metric ton, unchanged from the previous week. Similarly, prices for standard MOP in Southeast Asia moved sideways to $241 per metric ton in the previous week.
On the other hand, the price of granular MOP in Brazil rose to $224 per metric ton for the week ended July 29, 2016, compared to $222 per metric ton in the previous week.
MOP prices in the Corn Belt declined to $201 per metric ton ($224 per short ton) compared to $199 per metric ton ($222 per short ton) in the previous week.
MOP prices YoY
MOP prices in Vancouver fell by 17% YoY (year-over-year) compared to an average of $307 per metric ton last year. MOP in Brazil fell by 30% YoY from $321 per metric ton. In Southeast Asia, standard MOP prices fell by 24% from $319 per metric ton YoY. In the Corn Belt, MOP prices fell by 37% from $313 per metric ton YoY.
These downward price movements show that the market for potash producers such as PotashCorp, Mosaic, Intrepid Potash, and Agrium remains challenging. You can gain exposure to materials companies through the iShares Global Materials (MXI). MXI invests about 4.5% of its portfolio in agricultural chemical companies, including Dow Chemical (DOW) and DuPont (DD).
Notes from PotashCorp’s earnings
During PotashCorp’s (POT) earnings call, management stated that prices in Brazil had risen $5–$10 per ton. Management anticipates that prices will rise by $20 per ton for orders after August 5, 2016, in the United States. In India, POT expects lower retail prices for potash products.
To learn more about agricultural fertilizer companies, visit Market Realist’s Agricultural Fertilizers page.