The average weekly price of MOP (muriate of potash) at Vancouver has been flat since the beginning of March. Companies such as PotashCorp (POT), Intrepid Potash (IPI), and Mosaic (MOS) produce MOP and thus are impacted by its prices.
Prices move sideways
For the week ending March 11, MOP prices stood at $282 per metric ton, remaining unchanged from the week ending March 4. The prices of granular MOP at Brazil also remained flat for the week ending March 11 at $223 per metric ton. The price of standard MOP in Southeast Asia remained unchanged at $269 per metric ton.
MOP prices in the US Corn Belt fell to $224 metric ton (or $248 per short ton) from $225 per metric ton (or $249 per short ton) in the previous week.
MOP prices at Vancouver have continued to decline since the high of $307 per metric ton a year ago. At Brazil, MOP prices fell 36% year-over-year from $350 per metric ton. In Southeast Asia, they fell 18.5% from $330 per metric ton a year ago. In the US Corn Belt, the MOP prices fell the most by 37% from $363 per metric ton (or $401 per short ton).
The sideways price movement at the above price points shows how the market for potash producers such as PotashCorp (POT), Mosaic (MOS), Intrepid Potash (IPI), and Agrium (AGU) remains challenging. You can gain exposure to these companies via the SPDR S&P North American Natural Resources ETF (NANR).
Outlook for 2016
The outlook for potash prices is bleak for 2016. Mosaic forecasts the average price for MOP in 1Q16 will be in the range of $200–$230 per metric ton. In recent years, more capacity additions have weighed on potash fertilizer prices, and it looks like the trend is continuing. This dim outlook has been priced into the shares of the potash producers and may explain why they are still struggling.
To get more updates on fertilizer companies, you can visit our Agricultural Fertilizers page.