PRINTABLE VERSION   EMAIL TO A FRIEND   RSS FEEDS 20:41 UK, 11th Feb 2014, by Agrimoney.com
Canada rail snarl-ups 'may lift potash prices too'

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 stuck'

"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 available in-country."

'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 Brazil.

"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 dynamics."

Rail porridge

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.

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