Storage wars: New U.S. potash player K+S faces warehouse squeeze – by Rod Nickel (Reuters U.S. – May 1, 2017)

WINNIPEG, MANITOBA – May 1 Germany’s K+S AG will crack into the U.S. fertilizer market this spring when it opens the first new western Canadian potash mine in nearly five decades. But the fifth-largest global potash seller faces a stiff challenge before it makes a single delivery: where to store the pink granular nutrient until farmers need it.

The U.S. market for potash – a key type of fertilizer used to grow corn and wheat – is already dominated by Potash Corp of Saskatchewan, Agrium Inc and Mosaic. It’s also saturated: potash prices are near nine-year lows.

Not only do these market leaders have an ample supply of potash, they also boast a string of warehouses built strategically across the Midwest where they can quickly distribute their product to U.S. farmers, who have a narrow window every spring to fertilize.

K+S, which will open its Legacy mine on Tuesday in Saskatchewan, told Reuters it is still in “planning phase” of a warehouse network with Koch Industries Inc, which will sell K+S’ potash in the United States under a marketing agreement.

K+S spokesman Michael Wudonig added the company is confident it will find sufficient storage. Koch spokesman Rob Carlton declined to comment. Investors don’t have a clear understanding of K+S’ missing warehouse link as it opens Legacy, according to analyst Charles Neivert, who covers the fertilizer industry at Cowen.

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