Potash Markets Firming? Potash prices in Brazil firmed again this week, up ~2% W/W to average
$305/t (up ~9% since prices bottomed in mid-February at ~$280/t) amid a
significant improvement in demand following a slow February 2024 import
period. Prices elsewhere were largely stable.
• We note that the recent idling of Mosaic’s Colonsay mine and Brazil’s
ongoing buying spree is helping balance global supply for granular
potash. In the near term, Brazil granular potash prices could see further
increases given improved demand and constrained availability from
suppliers until May. While there is less supply pressure on standard
potash markets, India may soon come into the picture and absorb larger
volumes if a new contract is settled there soon.
• K+S noted that Belarus and Russia will be reluctant to accept prices
below $300/t, and thus see this as a floor price (low end of K+S’s
guidance assumes a Brazil price of ~$290/t; high end assumes ~$350/t).
The company is optimistic that the balance between supply and demand
in the potash market can return this year (similar to NTR/MOS
expectations), with ~4Mt of incremental annual demand offset by ~4Mt of
supply.
• Given the El Nio is fading and the improved rainfall, the Panama Canal
Authority is increasing its shipping slots to 27 from 24 per day (though
still below pre-drought capacity of 38). This in turn should continue to
help further ease shipping challenges (i.e., positive for fertilizer/grain
trade between North America and Brazil).
Could El Nio To La Nia Shift Damage U.S Crops This Summer? As
per CPC’s March 14 forecast , there is an 83% probability for the current El
Nio to end by April-June 2024 and a 62% probability of La Nia developing
by June-August 2024. During the La Nina summers from 2020-2022,
dryness and drought were persistent problems in the U.S. USDA’s Ag.
Outlook Forum forecast for a record corn yield of 181 bu./acre this year could
prove to be optimistic.
Conab Lowers Brazil Crop Estimates (Much Lower Than USDA’s
Current Estimates): Conab lowered projections for Brazil soybean and corn
production by 2.6Mt and 0.9Mt, respectively, to 146.9Mt and 112.8Mt.
USDA’s estimates are currently far above Conab’s estimates. The odds
favour USDA raising its U.S. corn export forecast, especially if USDA cuts its
Brazil crop forecast.
Northeast Asian Caustic Prices Higher For Fifth Consecutive Week:
Northeast Asian caustic prices rose for the fifth consecutive week, up 4%
W/W to $395/dmt (note, CHE.UN’s 2024 guidance assumes an average
price of $375/dmt). This marks an ~11% gain over the past month and a
~21% gain since the January 26 near-term low.