MOP (muriate of potash) is the key potash fertilizer (XLB) used globally. Similar to the fertilizer prices that we covered so far in this series, MOP prices have fallen significantly over the years. PotashCorp (POT) and Agrium (AGU) announced a merger, which is still pending, 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.
For the week ending November 25, potash price movement was broadly flat at the above locations. In the US Corn Belt region, average weekly granular potash prices moved sideways to $226 per metric ton.
The average weekly prices in Brazil were also flat at $235 per metric ton last week. The standard MOP prices in Southeast Asia also remained flat at $243 per metric ton from the previous week.
Positive moves in potash prices can explain price movement in potash producers’ stocks including Intrepid Potash (IPI) and Israel Chemicals (ICL). 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 19% compared to the same week last year.
Next, we’ll discuss how fertilizer affordability moved last week.