An article on potash marketDoesn't mention Allana, but shows where the commodity may be heading.
https://www.potashinvestingnews.com/790-for-the-new-year-optimism-permeates-potash-market.htmlBy Leia Michele Toovey- Exclusive to Potash Investing News
Potashproducers are confident that the bottom has been hit; and 2010 will bea year of gradual improvement. Potash prices more than halved in 2009as the effects of the recession rippled through the agricultureindustry. Grain and food prices collapsed, and farmers in developingcountries had difficulties finding banks able to lend money to securesupplies of the much needed fertilizer. The result-many farmers skippedfertilizer applications altogether, and others relied on stockpiles.Very few buyers came to the table, and those who did were looking forbargain basement prices. In Q1 2009 potash was going for $750 pertonne. Last week, Potash was quoted at around $390 per tonne, freighton board (FOB).
Despite the dismal price, there is an air of optimism from producersand analysts. Yes, it is possible for farmers to use of stockpiles, andeven skip applications altogether- but both those options are onlytemporary solutions. Skipping more than two seasons’ applications in arow will result in declining crop yields; and with the amount of arableland in the world in tight supply- analysts and producers project thatmany farmers will have to step up to the plate this planting season.With spring planting just around the corner, potash’s rebound could bejust on the horizon.
North American potash producers are resisting Chinese demandsdespite the fact that European producer Belarusian Potash Company hasinked a contract to sell the nutrient to China for about US$350 atonne, about half the previous price. Canadian companies Potash Corp and Agrium have joined U.S. producer Mosaicin holding out for higher prices. Belarusian Potash Company, on theother hand, has agreed to sell 1-1.2 million metric tonnes of potash toChina at the rock bottom price, a price far lower than any analystsprojected. On the other hand, analysts are claiming that thatparticular contract will likely mark the floor of the market, and nowprices will start their gradual rebound.
Commenting on the precedent set by Belarusian Potash Company,Mosaic’s CEO proclaimed that he would not match the low price, and inhis mind with recovery just around the corner Mosiac is quite happy tofind better-paying customers if Chinese buyers won’t agree to itsterms. Mosaic Co expects shipments of potash to increase in 2010.Thecompany is projecting global potash shipments of 47 million tonnes to50 million tonnes in 2010, compared with global sales of about 32million tonnes in 2009 Meanwhile, Canpotex, the export arm of NorthAmerican producers Potash Corp, Mosaic and Agrium Inc has yet tofinalize a contract with Chinese importers.
Analysts are echoing sentiment that the potash marketis poised for a rebound. Bank of America Merrill Lynch’sEurope-Mideast-Africa analysts upgraded German fertilizer producerK&S to buy from underperform, calling 2010 “a recovery year for allagricultural-input providers.” In a report on Tuesday, Credit Suisseupgraded Potash Corp. of Saskatchewan to outperform and Intrepid Potashto neutral. The brokerage has turned bullish on the potash industry.“We expect improved pricing visibility, favorable farmer economics andthe now-attractive price of potash relative to corn should drive soliddemand recovery,” Credit Suisse said.