Potash prices held steady for a fourth month in North
America as inventories held by producers dropped at their fastest rate in
nearly two years, amid signs of improvement in the region's rail logistics.
Potash prices for export remained at about $300 a tonne in
Vancouver - avoiding the reversal to hit urea prices, which are being
undermined by Chinese exports – as North American producers' inventories
dropped for a third successive month, this time to 2.71m tonnes.
This represented the lowest level of stocks since July, when
Russia's Uralkali stunned fertilizer markets by breaking up the Belarusian
Potash Company cartel, sending demand and prices for all nutrients, but in particular
potash, falling as buyers held-off, awaiting market stability.
The 9.2% decline in North American producers' Inventories - the great majority held in Canada - was
also the fastest month-on-month drop since July 2012, and took them back close
to their five-year average for the first time since 2011.
The extent of the drop reflected in part production curtailments,
led by the region's top producer, PotashCorp, which has continued to curtail
output to help balance the market, although Mosaic has attributed its own
output weakness to broader logistical "delays".
However, North America's demand remained strong, at 967,000 tonnes,
up 47% year on year, as buyers restocked after the late-2013 hold-out, while exports rose for a third month, a gain attributed by
some commentators to an improvement in rail transport, after cold winter
weather forced trains to run slower and at smaller lengths.
The rise in export suggests "improvement in logistic related
issues as compared to March", said Societe Generale analyst Rajesh Singla,
although noting that shipments remained 18.9% down year on year.
This decline was due to the hangover from the winter
logistical hiccups and the "delayed contract settlement with India as compared
to last year", Mr Singla said, India being usually the world's second-ranked
Export growth ahead?
He forecast a pick-up in exports ahead, given that Canpotex,
the North American potash consortium, shipped just 200,000 tonnes of the
nutrient in the first three months of 2014 to China, historically the top
China, which Societe Generale sees importing about 6.5m tonnes
of potash overall in 2014, has contracted to buy 700,000 tonnes from Canpotex during
the first half of the year.
Furthermore, India, expected to import about 4m tonnes in
2014, has now signed an import deal with Canpotex, while Brazil's buy-ins are "likely
to remain strong throughout the year.
"Brazilian potash imports are expected to be a record this
year," Mr Singla said.