uploads///Potash Prices

Why Potash Companies Like PotashCorp Are Celebrating

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Nov. 16 2016, Updated 10:04 a.m. ET

MOP prices

MOP (muriate of potash) is the key potash fertilizer (MOO) used globally. Similar to the fertilizer prices that we covered so far in this series, MOP prices have fallen significantly over the years. Recently, PotashCorp (POT) and Agrium (AGU) announced a merger on the heels of falling potash prices.

The trend put pressure on existing companies to justify their expansion costs and maintain their margins. However, the trend appears to have changed in recent weeks. Let’s see how potash prices performed last week.

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Potash prices

For the week ending November 11, the potash price movement was broadly positive to flat at the above locations. In the US Corn Belt region, average weekly granular potash prices were flat at $225 per metric ton.

Similarly, average weekly prices in Brazil remained flat at $235 per metric ton last week. The standard MOP prices in Southeast Asia fell 41 basis points to $243 per metric ton from the previous week.

Positive moves in potash prices may be why stocks of potash producers including Intrepid Potash (IPI) and Israel Chemicals (ICL) rose last week. These stocks have been facing severe weakness in the market this year. The recent 3Q16 earnings suggest a positive outlook for fertilizer prices in the next year. On average, potash prices at the above four locations fell 20% compared to the same week last year.

Next, we’ll discuss fertilizer affordability.

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