Potash in 2015: Watch Oil Price for Near-term Clues Potash in 2015: Watch Oil Price for Near-term Clues
“The big drop in grain prices was a bit of a shock — but luckily fertilizer pricing had come down sufficiently in advance so that the volume impact wasn’t material; the recent flooding of Uralkali’s mine was a curveball the market has yet to fully understand,” said Spencer Churchill, an analyst with Paradigm Capital.
What’s in store for 2015?
The fate of potash appears to be intrinsically linked to that of oil. That’s because potash is connected to corn, which in turn is tied to oil. Lower oil prices can negatively impact corn, harming the use and demand of potash.
“Low grain prices, negative farmer sentiment and lower oil prices (negative for corn) are the biggest issues near term,” said Churchill.
He envisions supply and demand staying relatively steady, with prices climbing slightly higher depending on how drastic the shutdowns at Uralkali are.
“The Chinese contract early in the year is a big catalyst, setting the tone for prices — a 10-percebt increase is expected; anything less would be considered a disappointment,” he said.