Significant potash price rec awaits 2011Reduced 'Investor Risk Appetite' Pushes Down Scotiabank Commodity Price Index Again in June
- World potash shipments normalize after last year's slump, but
significant price recovery awaits 2011.
TORONTO, July 21 /CNW/ - After tumbling in May, Scotiabank's Commodity Price Index, which measures price trends in 32 of Canada's major exports, lost further ground in June, declining 1.9 per cent month-over-month (m/m), but remained 21.4 per cent above the April 2009 cyclical low.
"Prices retreated alongside the spectre of slowing growth in China - of critical importance to raw material demand - ongoing concern over the 'sovereign debt crisis' in Europe, reignited on June 7th by financial difficulties in Hungary, and little financial market confidence in the 'sustainability' of the U.S. industrial recovery, once restocking and fiscal stimulus fades," said Patricia Mohr, Vice-President, Economics and Commodity Market Specialist at Scotiabank.
******
Potash prices (FOB Vancouver) for overseas sales have been largely treading water in the first half of 2010. Spot prices for KCL were unchanged in June at US$347.50 per tonne, after bottoming in February at US$342.50. However, global shipments of K(2)O equivalent appear headed towards a solid recovery in 2010 to 30 million tonnes - with gains in Brazil, India and China - after an unprecedented slump to only 18.8 mt in 2009 (43.2 per cent of world mine capacity).
"Last year's weak demand reflected high prices for potash relative to other fertilizers, large carry-in stocks and uncertainty over grain prices, after hedge funds liquidated futures positions during the 'credit crisis' of late 2008," Ms. Mohr noted. "There may be an emerging consensus among suppliers that it is more important to get demand back on track than to boost prices.
"Potash prices should rebound moderately in 2011, as the global shipments-to-capacity ratio climbs back over 70 per cent," continued Ms. Mohr. "However, it is important to realize that the heady US$800 prices of second-half 2008 reflected a global potash shipments-to-capacity ratio averaging 83 per cent in 2007-08 - triggered by a surge in demand for crop-based biofuels in reaction to surging oil prices as well as strong international grain markets."
https://www.newswire.ca/en/releases/archive/July2010/21/c5611.html