MOP (muriate of potash) is the key potash fertilizer (MXI) used globally. Similar to the fertilizer prices that we covered so far in this series, MOP prices fell significantly over the years. PotashCorp (POT) and Agrium (AGU) announced a merger earlier this year. PotashCorp is the largest potash producer, while Agrium has the largest retail distribution network in the US.
The falling price 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 December 16, the potash price movement was broadly mixed at the above locations. In the US Corn Belt region, average weekly granular potash prices fell by 40 basis points at $223 per metric ton.
Last week, average weekly prices in Brazil also rose by 42 basis points at $237 per metric ton. Standard MOP prices in Southeast Asia remained flat at $243 per metric ton from the previous week.
Positive moves in potash prices can explain the 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 16% compared to the same week last year.
Next, we’ll discuss how fertilizer affordability moved last week.