Potash price info
Scotiabank economist Patricia Mohr forecast commodity prices shouldcontinue to be higher due to ongoing strength in China's economy, somere-stocking of basic materials across the G-7, more active investorinterest in commodities as an asset class, and renewed weakness in theU.S.
dollar.
Whilethis year's gains in commodity prices have been centered inexchange-traded economies, Mohr advised, the spring of 2010 should seeincreases in negotiated prices under annual contracts for coking coal& iron ore and potash prices should start to rebound.
Of the32 commodities in the Scotiabank Commodity Price Index, copper postedthe second largest price increase this year at 126%, second only tolead. Mohr noted that copper prices remained strong in mid-December aszinc and aluminum prices remained at or close to their highs of thisyear, and nickel is lucrative.In her analysis, Mohr said therebalancing of a number of commodity indices mirrored in investmentportfolios will likely cut the weighting of copper, given itsoutperformance in 2009, but should only have a minor impact on copperprices going forward.
The net result, copper is likely to stay quite elevated throughout the first half of 2010, Mohr predicted.
While there is a risk that tighter U.S.
monetarypolicy in 2010:H2 and some easing in speculative demand in China couldderail copper prices later next year-limiting the annual average priceto US$2.95-copper will likely rebound strongly in 2011 and movesubstantially higher (to at least US$3.30 and possibly as high asUS$4.00).
Scotiabank's top pick for 2010 is coking coal with theprice expected to climb 32% to US$169 or possibly more in the Japanesefiscal year, beginning in April.In her analysis, Mohr noted thatsupplies of premium-grade hard coking coal are tightening.
Port and rail constraints continue to inhibit Australian shipment, which has likely increased the demand for B.C.
andAlberta coal.Mohr also forecasts that firming iron ore prices shouldbenefit Canadian iron ore miners.As major potash producers have cutback supplies with sharply lower demand and potash prices are expectedto soften in the coming weeks, nevertheless, Mohr see positive signsfor a significant pick-up in volumes in the first half of 2010 andespecially in the second half of the year (possibly to the 40-45 mtmark for 2010 as a whole).China continued to apply potash to fruit andvegetable crops this year, but under-applied potash to grain andoilseed crops, which likely contributed to a 7% decline in this year'scorn crop.
The soil in China is potassium deficient and increasedpurchases of pink potash are needed, she advised.Mohr also noted thatBrazilian potash demand is expected to be robust in 2010.
The netresult, potash prices (FOB Vancouver) will likely average about US$375in 2010 (assuming better prices in the second half of the year), sheforecast.
The year 2010 will be a transition year to much stronger market conditions in 2011.
commodity price index