Investors should also note that coal use for electricity is also expected to fall as China relies on cleaner energy source to produce electricity
Despite current weakness in sales and prices, Potash Corp. (POT) sees a more optimistic future for potash, which is positive for other potash producers.
While Potash Corp. (POT) primarily focuses on potash fertilizers, it was also negatively affected by weaker pricing in nitrogen- and phosphate-based fertilizers.
Potash Corp. is one of the largest fertilizer producers in the world. It produces all three fertilizer types—nitrogen, phosphate, and potash.
Crop prices show a negative relationship to the US dollar. So as long as the US central bank continues with its quantitative easing program, crop prices will rise.
Inventory levels reflect current industry supply and demand balance and safety stock. When inventory levels rise, they’re often a negative sign.
On October 25, phosphate and potash fertilizers traded at $589 and $533 per metric tonne. The two fertilizers saw large declines in September.
When coal prices fall, they make Chinese nitrogenous fertilizer producers much more competitive, which could negatively impact global prices.
While most of the world uses natural gas as an input, 80% of China’s plants use coal to produce nitrogen-based fertilizers like urea and ammonia.
In a competitive industry like the nitrogenous fertilizer industry, the marginal producer’s cost sets the industry floor.
Last week’s data was positive, as it supports the idea that the fertilizer market may be stabilizing, which is good news.
For farmers, the relative price of fertilizers to crop price is an important factor that influences buying decisions because it affects profits.
Low corn prices could have a negative impact on next year’s fertilizer demand and prices, which bodes poorly for some companies.
Higher corn condition is positive for consumers and restaurants, but it could have a negative impact on fertilizer stocks.
The Essential Fertilizers Weekly series comprises key factors that have a potential impact on the bottom line—depending on revenue and expenses.
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Fertilizer stocks plummeted on the heels of the announcement that Russia’s Uralkali was quitting the Belarusian Potash Company cartel. The market overreacted.