Farm and Food: Potash market isn’t for sissies – by Alan Guebert (Journal – October 5, 2013) [Lincoln, Nebraska]

There are two reasons to keep up to speed on the fast pace of events in what would seem to be the very dull world of potash.

The first is that the key players in this once tightly controlled market continue to lose their grip on it. According to analysts, prices for this key fertilizer will continue to drop — to nearly $300 per ton, some say — through the end of 2013.

If they’re right, that’s more than $100 a ton less than a year ago and a gargantuan $600 to $700 per ton below the record price of five years ago.

In short, go long potash; it’s the best time in years to buy it and apply it. The second reason to pay attention to the potash market is that, in truth, you can’t take your eyes off of what quickly is turning into a Russian version of an American soap opera.

Nine weeks ago the Russian-Belarusian potash cartel, a rocky twosome composed of Russia’s Uralkali and Belarus’ Belaruskali, parted company when the Russians simply called their marriage off.

That was very bad news to Belarus. Together, the colluding neighbors mine and market about 40 percent of the world’s potash. Their two biggest clients are the world’s two biggest potash buyers: China and India.

Uralkali said it pulled out of the cartel because it believed it would sell more potash to the fast-growing, increasingly wealthy Asian twins at prices that delivered greater profit than the cartel could.

Belarus reacted badly — and for good reason.

Not only was it losing half of the big, two-fisted hand that disciplined a huge chunk of global potash production, now it was in competition with its bigger, tougher former partner.

That could mean just one thing to Belarus, where potash sales deliver an estimated 10 percent of its overall tax revenue: Potash prices were about to fall and that fall would clip the nation hard.

How hard?

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