older story but good update on the potash market. Potash consumption catch up and shipments may play important roles By Xun Yao Chen - Disclosure • May 13, 2014 9:00 am EDT Potash consumption catch up Over the past ten years, potash demand only grew at an annual rate of 1.5%. But the long-term trend line growth, dating back to 1960, is closer to 3.0% per year, according to PotashCorp’s earnings call. So assuming that nothing has fundamentally changed about potash over the long-term, growth rate would have to accelerate in the future to catch up with the trend. Capacity IncreaseEnlarge Graph Of course, India’s unfavorable subsidy for potash is currently pulling growth down, which is one possible catalyst source going forward. Elsewhere, in China for example, potash prices are at record affordable levels, based solely on price ratio of potash and corn. These fundamentals suggest an eventual higher consumption. New capacities Generally, higher demand will support potash prices, but as higher potash prices over the last through years have encouraged more investments from companies such as PotashCorp (POT), Mosaic Company (MOS), Intrepid Potash, Inc. (IPI), and Sociedad Quimica y Mienra de Chile (SQM), which are expected to come online over the next few years, potash prices may not increase much. PotashCorp PotashCorp’s (POT) nameplate capacity is expected to increase slightly from completion of Picadilly expansion by the end of 2014, which is expected to add ~1.2 million metric tonnes of capacity, and 3 million metric tonnes of incremental capacity addition to Rocanville, to be completed in 2015. PotashCorp’s operational capability, which is dependent on the nameplate capacity and labor force, will be gradually raised over time, subject to market conditions. This would put PotashCorp in a sweet spot, as it may increase its production. At the same time, it could deter new companies from entering the market by making prospective investment returns less attractive, or at least slow their development plans. While prices will likely still dominate, higher consumption and shipments may play more important roles. Higher consumption would still benefit potash stocks with excess nameplate capacity, and the Market Vectors Agribusiness ETF (MOO).