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Potash price decline close to an end, says Intrepid Potash

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An easing in potash prices, spurred by higher-than-thought US inventories, is close to an end, Intrepid Potash said, viewing the drier Midwest weather boosting crop hopes as a fillip to demand for the nutrient too.

"We feel like we are getting very close to a floor or at a floor in the market on these prices," said Kelvin Feist, senior vice-president of sales and marketing at the US potash producer, adding that "there are lots of people asking for various things".

"We believe the farmer is going to step up here at some point.

"We know that they've removed a lot of nutrient over the last few years and that should drive them to put on the appropriate rates here this fall," Mr Feist told investors, saying that Intrepid Potash was "comfortable with the demand side".

Falling prices, sales

The comments followed an April-to-June quarter in which Intrepid Potash sold potash at $358 per short ton, up from the $329 per short ton achieved a year before, but $4 below the price achieved in the first three months of the year.

Market prices have continued to ease since, said Bob Jornayvaz, the group's chairman and chief executive.

Sales volumes, at 377,000 short tons for the first half of 2015, were down 21% year on year, and below the range of 400,000-415,000 short tons forecast in April by the group, which highlighted a double whammy from weather and bigger than expected stocks.

"Agricultural sales were impacted by wet spring weather and light summer field purchases as inventory levels of many customers were higher than expected as they exited the spring," said Brian Frantz, the group's chief accounting officer.

'Very, very wet spring'

On weather, the group underlined the dent to demand from heavy rains in key markets in the southern Plains and western Corn Belt.

In Texas, "a great market for us… where we had been experiencing drought, we experienced flooding in the months of May and June", a factor which "delayed consumption", Mr Jornayvaz said.

"When we came from drought to significant amounts of rain, it happened right in the middle of the spring [fertilizer application] season

"If you look at eastern New Mexico, the entire state of Texas, Oklahoma, Missouri, we saw a very, very wet spring."

'Pent-up customer demand'

With drier weather returning, prospects for potash buying had improved.

"I think there's a lot of pent-up customer demand there from what we're seeing in talking to customers," Mr Jornayvaz said.

Nonetheless, Intrepid Potash lowered to 415,000-445,000 short tons, from 425,000-445,000 short tons, its forecast for its sales in the second half of 2015, citing a need "to allow for the timing of fall application purchases".

"It's a competitive market right now," Mr Jornayvaz said.

Shares tumble

The comments followed the group's release of results for the April-to-June quarter showing a loss of $4.94m, compared with earnings of $5.56m a year before.

The loss equated to 8 cents per share, below the market forecast for a 1-cent-per-share profit.

Revenues dropped by 34% to $73.65m, undershooting the $79.0m that Wall Street had expected.

Intrepid Potash shares closed down 5.7% at $8.11, earlier hitting a record low of $7.91.

By Agrimoney.com

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