The Canadian logistical problems which sent Chicago oat prices to a record high may spur a revival in potash values too, if
it prevent North American producers getting product to buyers, according to Mosaic, a major producer of the fertilizer.
Jim Prokopanko said that, thanks to the poor weather which
has exacerbated a rail squeeze in Canada – one of the two origins, with the
former Soviet Union, of potash supplies - 2014 was proving a "real test" of
groups' ability to get the nutrient to customers.
"I've been in this business over 30 years. We have never not
gotten our customers all the product they need.
"However, this year… with serious snows - really, really
serious snows - in Western Canada, we are facing transportation issues and
backlogs unlike we ever have before."
'Trains are getting
"Frigid, frigid" weather has prompted railway operators in
Canada, where Mosaic mines potash, to curtail train lengths.
"Instead of shipping 100-car, 120-car trains, they are
limited to 50-car trains," Mr Prokopanko said, adding that "trains are getting
stuck in the snow".
"Right now we are struggling to keep up on the logistics
side with the demand we've had."
The poor weather could present a challenge to getting
supplies to market, if it persists into the spring, Mr Prokopanko said, terming
the issue a "big question mark" for the market.
"If there's transportation problems, you can be sure that we
are going to see considerably more upside price pressure on the potash that is
'Prices seem to have
found a bottom'
The comments came as Mr Prokopanko told investors that
potash prices, having fallen $130 a tonne last year, appeared set for rises this year.
"In potash, prices seem to have found a bottom following
recent contracts with China and the beginnings of upward price momentum in
"Supply has been absorbed by strong demand, leaving
producers with limited phosphate inventories and lower potash inventories.
"We believe once again that economics will win, and that
prices will rise over time in response to more balanced supply and demand
Oat futures for March hit a record high for a spot
contract of $4.67 ¼ a bushel in Chicago on Friday, up 32% in 2014, in
a rally attributed to the difficulty of transporting oats from Canada, a major
exporter, to the US, a structural importer.
The US sources roughly half its oats from Canada.