RSS
Twitter
Linked In
News In
News
Linked In
RSS
https://twitter.com/Agrimoney
http://www.newsnow.co.uk/h/Industry+Sectors/Agriculture

You are viewing 1 of your 2 complimentary articles.

Register now to receive full access.

Already registered?

Login | Join us now

'Significant downside risk' for potash prices, says Credit Suisse

Twitter Linkedin

Potash prices face "significant downside risk", Credit Suisse said, cautioning over the prospect of further growth in inventories - after a record quarter for North American production of the nutrient.

The bank said that while potash consumption "has been healthy" so far this year, it appeared to have "little room for upside surprise" in terms of further growth.

Indeed, weakness in crop prices, in undermining farm profitability, presents a headwind to demand.

By contrast, on the production side, there was the prospect of "new supply availability" building in the second half of this year and into 2018.

Extra capacity coming online include the $4.1bn Bethune mine in Canada, owned by German-based K+S. and two projects developed by EuroChem, owned by Russian tycoon Andrei Melnichenko.

With inventories already "fully replenished", the bank flagged "significant downside risk" for potash prices, "particularly now", at a time when many investors have "elevated expectations" for values.

"We continue to see price risks for the second half of 2017 and for 2018, as demand wanes on weak farmer economics foreign exchange volatility and rebounding inventories."

Record output

The comments follow data from PotashCorp, the Canadian potash giant merging with rival Agrium, showing that potash inventories held by North American producers had hit 3.40m tonnes as of June, a one-year high, and up 29% so far for 2017.

North American potash production hit 1.95m tonnes in June, taking the total for the April-to-June period to 5.69m tonnes – the most for any quarter on data going back to 1999.

Output was up 25% on that in the April-to-June period of 2016.

Demand, meanwhile, for the quarter was up a more modest 7.2% year on year, with a surge in exports offset in part by weaker sales in North America itself.

Prices rise

Prices, however, have held despite the rising supplies, standing at $255 a tonne in the US Midwest, a gain of 2.0% week on week and 4.1% over the past month, according to Canada-based broker Raymond James.

It attributed the resilience in prices to "any price relief from the new Saskatchewan K+S plant will not be realised in time to affect fall offers".

Retailers had "returned to the market primarily for small purchases to avoid carryover".

However, the broker also flagged high potash inventories "throughout South East Asia", stocks which had "kept spot prices flat" at a little under $250 a tonne, where they have remained for the last year.

By Mike Verdin

Twitter Linkedin
Related Stories

AM markets: dollar surge divides ag investor talk

Exporters in countries outside the US show delight at the dollar’s recovery. But Chicago prices fell further pressure

Ovostar cracks European Union shell egg market

The Ukraine poultry group ships its first shell eggs to the EU market - which is key one

Nufarm pays $540m for 'critical element' to boost European fortunes

Nufarm becomes the latest second-tier sprays group to expand by buying assets sold as sector giants bow to demands of antitrust officials

US land prices fall as weak crop prices sap farm incomes

US farmland prices approach a fourth successive year of unbroken decline. But there are signs of improvement in the farm equipment market
Home | About | RSS | Commodities | Companies | Markets | Legal disclaimer | Privacy policy | Contact

© Agrimoney.com 2017

Agrimoney.com and Agrimoney are trademarks of Agrimoney Ltd
Agrimoney is part of the Briefing Media group
Agrimoney Ltd is registered in England & Wales. Registered number: 09239069