MOP (muriate of potash) is the key potash fertilizer (XLB)(SPX) used globally. Similar to fertilizer prices that we’re covering in this series, MOP prices have fallen significantly over the years. Falling potash prices had a negative impact on PotashCorp (POT) in the fourth quarter.
The falling price trend for potash put pressure on existing companies to justify their expansion costs and maintain their margins. PotashCorp’s recent earnings just showed how painful the recovery appears. Read PotashCorp Reports 4Q16 Earnings: Stock Falls 3% to learn more.
Let’s see how potash prices performed last week.
For the week ending February 3, 2017, the potash price movement was largely positive at the locations in the above graph. Last week, standard MOP prices in Southeast Asia rose 1.2% to $246 per metric ton from the previous week. In the US Corn Belt, average weekly granular potash prices also moved upwards by 1.2% to $227 per metric ton. Similarly, average weekly prices in Brazil rose 83 basis points to $243 per metric ton last week.
Positive moves in potash prices are key to the price movement in potash producer stocks such as Intrepid Potash (IPI), Mosaic (MOS), and Israel Chemicals (ICL). These stocks faced severe weaknesses in the market last year. On average, potash prices at the above locations are similar to the levels they were at in the same week last year.
Next, let’s see how the Fertilizer Affordability Index moved last week.