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 fell significantly over the years. PotashCorp (POT) and Agrium (AGU) announced a merger earlier this year, 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 December 2, the potash price movement was broadly mixed at the above locations. In the US Corn Belt region, average weekly granular potash prices fell by 80 basis points to $224 per metric ton.
In contrast, average weekly prices in Brazil rose by 43 basis points to $236 per metric ton last week. Standard MOP prices in Southeast Asia 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.