MOP (muriate of potash) is the key potash fertilizer (SOIL) used globally. Similar to fertilizer prices that we covered in this series, MOP prices have fallen significantly over the years. PotashCorp (POT), the largest player in potash fertilizers by capacity, 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 January 6, 2016, the potash price movement was largely flat to negative at the locations in the above graph. In the US Corn Belt, average weekly granular potash prices were flat at $224 per metric ton.
Last week, average weekly prices in Brazil were also flat at $237 per metric ton. On the other hand, standard MOP prices in Southeast Asia fell by 41 basis points to $243 per metric ton from the previous week.
Positive moves in potash prices can explain the price movement in potash producers’ stocks such as Intrepid Potash (IPI) and Israel Chemicals (ICL). These stocks faced severe weaknesses in the market last year. The recent 3Q16 earnings suggest a positive outlook for fertilizer prices in 2017. On average, potash prices at the above locations fell 15.0% compared to the same week last year.
Next, let’s see how fertilizer affordability moved last week.