Fertilizer Markets and Finance

On this blog I publish posts & news about what's new in the fertilizer industry and how it's markets are affected by geopolitical developments, environmental changes and monetary policies. I also focus on how farmers are affected by government decisions, and economic fundamentals of the market place. I am passionate about agriculture in Trinidad and write about problems farmers face in the agriculture industry especially in rural areas. Thanks for viewing.

Jonathan Mohan


Some of my highlighted work -
The destruction of Trinidad and Tobagos’ local banana market.
http://tinyurl.com/pne2lwv

The geopolitics and economic stratagem of Uralkali’s bombshell will change the global potash oligopoly.
http://tinyurl.com/l57nco8
Recent Tweets @FertilizerMkts
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By: Jonathan Mohan

29th September 2014.

Disclosure: I have no stock positions in any of the companies below, and own no potash futures contracts. I have no plans to initiate any positions within the next 72 hours.

Nitrogen based fertilizer companies Yara of Norway and CF Industries out of Chicago are in negotiations dealing with the possibility of a merger between the two. With a total market cap of almost $28 billion at play, the merger can rival the world’s #1 fertilizer company by market cap Canadian run PotashCorp. The merger will allow Yara to tap into the US market of cheap shale gas (natural gas is the feedstock for ammonia production) to expand production and CF Industries will benefit from Yara’s global sales distribution network. Europe has a high cost of production and EU sanctions on Russian companies may affect their natural gas supply in the future. Nitrogen fertilizer producers face a tough market with strong exports of urea from China and lower fertilizer spending by farmers due to depressed crop prices which is affecting producers’ profit margin.

To foresee a successful merger is difficult at this juncture due to the many changes and issues surrounding both companies but Yara to a greater extent.  Back in 2010 both companies fought for Terra Industries with CF Industries emerging the winner. This year CF Industries also disposed of its struggling phosphate business to Mosaic for $1.4 billion. Norway’s government has a 36.2% stake in Yara and will demand the merged company be headquartered in Oslo. There are also Norwegian state-owned funds that have a stake in Yara who are looking at the situation closely. Yara’s new Chief Executive Officer Svein Richard Brandtzaeg was to start in February 2015 but quit a few days ago before he even started after news of the potential merger. Brandtzaeg will remain CEO of the Norwegian aluminum producer Norsk Hydro with Joergen Ole Haslestad remaining Yara’s CEO until a replacement is found.             

Earlier this year former Yara CEO Thorleif Enger and other executives were indicted on corruption charges after bribery allegations between Yara and senior government officials in India and Libya. Millions of dollars in bribes were related to negotiations on a joint venture between Yara and Libya’s National Oil Corporation and another joint venture with a company controlled by the India’s government. Charges also include bribery with two employees of the Russian fertilizer company PhosAgro who supplies Yara with raw materials. The trial to look into these bribery cases will start in January 2015 which will definitely affect Yara’s influence in over 100 countries where they operate.  

The outcome of this potential merger will be some new rules to the nitrogen fertilizer markets where other large fertilizer entities in Canada, Ukraine, Russia and China will have to bring new strategies to the chess board of profit margin. I can only advise that there should be some Norwegian government frontmen at the talks to ensure that Norway is getting a lot out of the merger if it takes place and sovereignty not placed at risk by intrusive US tax laws. Let’s wait and see what this mammoth transaction of nitrogen fertilizer negotiations will result in for the investors and farmers worldwide.

By: Jonathan Mohan

25th August 2014.

Disclosure: I have no stock positions in any of the companies below, and own no potash futures contracts. I have no plans to initiate any positions within the next 72 hours.

             We are in a geopolitical volatile situation were the potash war has become miniscule in comparison to the political one. We have political instability in the Middle East, North Africa and Ukraine affecting both global markets and people there. Uralkali’s CEO Dmitry Osipov has been somewhat silent about their strategy to boost prices, since his appointment in December last year. Meanwhile in the west, PotashCorp’s former CEO Bill Doyle had been giving reassuring speeches such as “we see steady improvements taking hold in the potash industry,” and “these are encouraging trends and supportive of our long-term view for the business,” to investors. I could only conclude he breached the space-time continuum thinking we are in early 2008 when the potash cartel had control, taking advantage of farmers. He was replaced by Jochen Tilk, former CEO of Inmet Mining Corp in July.      

            Western potash companies’ heads like Bill Doyle psychologically led investors to believe that this is the time to buy potash stocks because matters such as the sanctions on Russia over the Ukraine conflict will decrease the market share controlled by Uralkali. This should in turn; result in giving western companies a chance to grab contracts in China with higher prices. In reality though this is not happening so far and is also unlikely to occur. In a desperate situation, Uralkali will be able to negotiate even lower prices with China than the present $305 per tonne on a cost-and-freight basis, while still making a profit simply because the cost of production is lower than its North American counterparts. The gains made by western potash companies’ stock price where short lived on the announcement and implementation of sanctions on Russia due to stockpiling of potash in anticipation of escalation in the conflict.

            Ukraine is the world’s sixth-largest exporter of wheat and fourth-biggest exporter of corn. The conflict has affected farmers and disrupted the normal operations of farming there, the effects of which can be felt on the commodities market later on. When that time comes farmers around the world will be buying potash for increasing yields to keep up with demand. Later this year, the possibility of seeing higher potash prices during contract negotiations is very possible as a result. 

            Russia was not invited to the G8 meeting at Belgium in June over its actions in Crimea, a G7 message to isolate Russia. The meeting resulted in nothing new for the markets or the problems in Ukraine. While in August the BRICS nations (Brazil, Russia, India, China, and South Africa) announced the creation of a multilateral development bank operated by those nations. This is just another step of the growing relationship between Russia, China and India which of course will create an environment for more favourable potash contract negotiations with each other and adverse results to Canpotex. 

            In conclusion there are many political factors in this potash business and investors should not allow single individuals representing potash companies to wave one issue in favour of buying stocks, dismissing the other factors. There is a paradigm shift of power to the east in the form of a sleeping giant, and I can only shudder to think what will happen to the potash market when he awakens.     

The Way Forward - Cooperation between Farmers and Agri-business.

 By Jonathan Mohan

            Yesterday I attended a meeting with a few local hot pepper farmers at a hot pepper farm in southern Trinidad. The meeting was set up by the Trinidad and Tobago Agri-Business Association (TTABA) and Caribbean Chemicals. TTABA supplies technical services for the development of selected agricultural commodity/industry value-chains and provides high quality agro-processing services. Caribbean Chemicals provide experienced advice and offer environmentally safe, technologically advanced inputs to the agricultural/ industrial markets. The topics on the agenda were appropriate hot pepper farming practices and crop management.

In my interview with the farmer and owner of the field, he showed that the farming operation is set up using guidance from a hot pepper programme developed by the Caribbean Agricultural Research and Development Institute (CARDI). He was a sugarcane farmer until the sugar industry was shutdown in Trinidad; thereafter he ventured into short crop cultivating and has spent over 25 years in agriculture. He practices crop rotation and grew tomatoes prior to the present hot pepper crop. At present he is preparing to install watering lines throughout the field as the rainy season in Trinidad has ended and the dry season has begun.

 He mentioned that he was blessed with desirable weather over the past 3 months since transplanting because many parts of the country had low precipitation. The main reason he chose to grow hot peppers was the existing market for the crop. The field at present consists of 2 acres with over 8000 plants. Each plant is planted 12-18 inches apart with the rows 4-5 feet apart. This is high density planting as hot peppers are traditionally planted 18-24 inches apart. Thus far after the third picking a total of approximately 1000 lbs has been harvested which is about expected at this stage.

 This meeting is just a sign of relationships being developed between farmers and other local agricultural organizations which will take the country one step closer to food security and sustainability. There is a long voyage ahead, yet after today the quote by Lao-tzu a Chinese philosopher comes to mind, “a journey of a thousand miles begins with a single step”.

By Jonathan Mohan

        Shale gas is a game changer in the US ammonia markets as the country plans to reduce its dependence on imports of liquefied natural gas (LNG) from countries like Trinidad, Qatar and Canada. According to the US Department of Energy, in 2012 LNG imports were down 23% to 1.5tcf which is the lowest since 1990. Shale gas is natural gas that is trapped within shale (fine-grained sedimentary rocks) formations. The gas is recovered using horizontal drilling and the environmentally debated hydraulic fracturing (fracking) technology as far as 8,000 feet into the earth.

         New ammonia, urea and UAN (urea and ammonium nitrate) plants are popping up in the US as a result of the shale gas boom. CF Industries has new projects in Louisiana and Iowa. PCS Nitrogen restarted its Geismar plant in Louisiana after years of being idled. Egypt’s Orascom Construction Industries is investing into a nitrogen fertilizer facility in Iowa. Shale gas production in the US has contributed to lower natural gas prices locally and has made it more economical to produce ammonia because natural gas is a key ingredient in the ammonia production process.

         Cheaper natural gas in the US will increase local nitrogen fertilizer stock and therefore decrease imports from the Middle East, Eastern Europe and Trinidad. Naturally, this should drive nitrogen fertilizer prices lower for farmers but there are some potential offsetting factors. Growing global demand, overestimated shale reserves and necessary regulations in the US for green-field projects may counteract the tendency for a decrease in fertilizer prices. Shale gas production in other part of the world is still at initial stages with environmentalists’ opposition to it and is a much debated topic. This is a wait and see situation where it will largely affect the fertilizer supply demand fundamentals globally. Farmers have been showing much more interest in the energy sector due to the shale gas revolution to predict fertilizer prices and this trend will continue.  

By Jonathan Mohan

 The cacao plant (Theobroma Cacao) & its seeds are the source from which the cacao (also spelt as cocoa in English) bean industry and chocolate products exist. During the 16th century the Criollo type cocoa was first planted in Trinidad which is native to Mexico. In 1727 a majority of plantations were destroyed by a hurricane or blight and a few decades later the Forastero type was brought from Venezuela and planted. Over time the Forastero interbred with the remaining Criollo and formed a hybrid that is known as Trinitario. Trinitario is a flavourful and spicy cocoa bean produced in rural areas of Trinidad that is coveted by chocolate manufacturers around the world. During the 19th and early 20th century the cocoa trade was booming in Trinidad and Tobago but a series of factors lead to its decline.

             Data collected from the Food and Agriculture Organisation of the United Nations is plotted below and shows the decline in production from 7030 tonnes in 1961 to 400 tonnes in 2011. Prior to1961 local production was much higher but in the 1920’s world over-production resulted in lower prices, then followed an economic depression and thereafter the ‘witches broom’ disease affected production locally. The oil industry and increasing profitable sugar manufacturing began to grab labour force from the cocoa industry contributing to a domino effect of detrimental unintended consequences till this day.

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            Some of the challenges being faced by the local cocoa farmers are the high cost involved in acquiring new land and rehabilitating existing estate lands. This is due to increasing inflation in the country and an expanding land buying bubble. Acquiring arable land has become difficult as some arable land is needlessly utilised by the government’s housing construction program. Cocoa producers are aging as the average age of a farmer locally is 60 years and climbing. Not only the farmers but the trees are aging also and replanting is required. Estate owners are facing a labour shortage as there is a lack of youths enthusiastic about the cocoa industry & willing to work in agriculture.

            At present the government needs to put more focus on modifying and modernising the Cocoa Act of 1962. Farmers’ voices are not heard by the public due to lack of media coverage on issues that they face. Media attention is one avenue known to bend the political will of the government and should be used to get farmers predicaments across to all. Locally the Cocoa & Coffee Industry Board (CCIB) operates only as a marketing arm for cocoa, a crop they’re not directly involved in. Legal framework must be enhanced to get the CCIB to dive deeply into increasing production efficiency and using their public relations department to get entire communities on-board.

              Existing tax-payer funded unemployment programs should be implemented in a manner to add labour force to the cocoa industry. Training and workshops can be done to educate farmers on surpassing international standards for export of cocoa and means of maintaining a stable supply because only a reliable supply can preserve a market. Adhering to regulations and certification requirements is the only way to ensure high quality cocoa is being exported. In the long term, a domestic standard can be introduced which would boost consumer confidence and enhance export readiness of producers. Action into Trinidad and Tobago’s cocoa market is needed immediately before it’s lost in the pages of history.

By Jonathan Mohan

 Launched in 2003, the Youth Apprenticeship Programme in Agriculture (YAPA) is a Trinidad and Tobago government sponsored programme, overseen by the Ministry of Food Production for youth ages 17-25 years. Its objective to expose and educate youths in the agricultural industry is done by teaching and placing interns in agricultural enterprises both private and public. The programme consists of two phases and is aimed to develop and increase farming skills of youths and foster appreciation for the agricultural industry.

             Youths who complete training are prepared to enter the agricultural sector in areas of vegetable production, root crop production, livestock rearing, herbs and spices, and food processing. The programme is tied to general policy for food security, youth employment and rural development. The total graduates since the launch of the programme are over 250 youths with over 7000 youths participating at some point in time. At the last graduation in October 2013, the Permanent Secretary of the Ministry of Food Production noted that the average age of a farmer in Trinidad and Tobago is over 60 years and there is a shortage of persons to work in the food industry.

             The lack of motivation between youth to pursue agriculture careers has much to do with the cultural stigma associated with farming. Farmers in Trinidad and Tobago are regarded from the misguided perspective that they are low financial earners and part of the lower manual labour class. When the mention of the word ‘farmer’ is said amongst the youths in Trinidad’s society, the picture that comes to mind is an old man with a straw hat covered in mud who is unaware of technology. The challenge here is to educate the general public on the importance and profitable career of a farmer. A farmer’s job is not a low class job and the stigma of not working in an air conditioned office wearing a three piece suit should never be a comparison for having such an ideology.

             It is this ideology that has discouraged youth from participating in agriculture and from pursuing careers in the sector over the past few decades. Another contributing factor that may have been a hindrance to greater achievements of YAPA is the governments’ over extensive focus on the oil and gas sector which is publicised by the local media having the negative effect of changing public opinion away from farming. More focus and resources must be invested into programmes such as YAPA to save this country from its fading agricultural sector. There are youths who are passionate about agriculture and simply need the guidance and initial preparation to enter the industry. This is where programmes such as YAPA make the difference.   

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Innovation 4Agriculture, a youth group in the field plans the landscape for their upcoming farming project – Trinidad and Tobago

Photo Courtesy: technology4agri

 

 By Jonathan Mohan

 I visited a 28 year old farmer planting hot peppers in a rural area south of Trinidad. His fertilizer program included the use of poultry manure (sawdust, wood shavings, and poultry fecal matter) and NPK granules application. Manures contain the nitrogen (N), phosphorus (P) and potassium (K) that make up fertilizer.

 Chemical water based fertilizers, releases ammonium (NH4+) ions and nitrates quickly into the soil and a problem being faced with this is that nutrients leach out of the soil. This does not maintain the long term health of the soil.  Manure will slowly to release nitrogen, which contributes to healthy plant growth, phosphorus which helps to develop healthy roots and potassium contributing to the formation of chlorophyll. 

  The nitrogen content in the manure comes from uric acid, ammonium salts, and organic (fecal) matter. Uric acid, readily changes to ammonia (NH3), a gaseous form of nitrogen that can evaporate. To decrease this loss of nitrogen the farmer rotovated the manure after spreading into the soil during ground preparation. This will convert the ammonia to ammonium, which will attach itself to clay particles and organic matter. Poultry manure in particular is ‘hot’ which means putting it directly on the plant can burn the leaves and kill the plant. This is the reason why the farmer firstly spread the manure dispersing it across a large area of land so as to prevent any accumulation in one area. When the hot pepper plants were transplanted the plants did not ‘burn’ away.

 An economic analysis done by the farmer showed that the use of manure will decrease the costs incurred from buying large amounts of overpriced fertilizer while yet maintaining the maximum yields. In this particular case a poultry farm existed in the area of the hot pepper farmer so transportation and application costs were low for the manure. This is just one of the examples showing how rural farmers are using natural means of reducing farming costs.

See pictures attached of hot peppers being planted at this rural farm.

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By Jonathan Mohan

Reports have been surfacing that Russia’s Uralkali is going to restore its partnership with Belarus’s Belaruskali and market potash via the Belarusian Potash Company (BPC). The reason for this is, the Russian ambassador to Belarus Alexander Surikov, has told a news conference on Friday that Uralkali is ready to restore cooperation with Belaruskali.

After Uralkali’s bombshell that they are going ‘solo’ in July much has taken place in the potash market and a future partnership reforming may be bad news for farmers. In the past six months, North America’s potash marketing arm Canpotex has been very worried as some of its members saw a drop in share prices as much as 25%. Saskatchewan based PotashCorp has reduced its workforce by 18% and cut back mine production.

Let’s look into what took place on the other side of the world. Uralkali’s CEO Vladislav Baumgertner was arrested in Minsk and then extradited to Russia. Russian tycoon Suleiman Kerimov sold his 18% share in Uralkali to Russian billionaire Mikhail Prokhorov’s investment arm ONEXIM. Belarus’s President Alexander Lukashenko has sent negative signals to the Russian government and diplomacy beyond measure has been displayed from the Kremlin. Uralchem, the world’s second largest ammonium nitrate producer has become a shareholder.

 If Uralkali and Belaruskali reunite, the control of 40% of the world’s potash market will be in their hands and Canpotex in the west will have just below that resuming the global potash oligopoly. There will surely be a period of more volatility before prices rise but it depends on what prices contracts are agreed upon especially in China and India. Farmers would tend to buy fertilizer and stockpile before the rise begins. The manipulation of potash prices by such cartels is very probable in the future if the situation continues as present. The only light at the end of the tunnel for farmers are years’ ahead providing BHP Billiton quickly completes with the Jansen project and off-sets the price-over-volume paradigm.  

For a detailed analysis on the initial split of the BPC, please see my related article, click here.  

TO ALL HAVE A PROSPEROUS NEW YEAR 2014.

In 2013 - 4413 Unique visits & 8100 visits to Fertilizer Markets and Finance. Thanks to all for their support and helping this blog be a success. 

By Jonathan Mohan

Gone are the days when every fruit vendor in Trinidad and Tobago had a variety of bananas. Over the last few years ‘sikyè’, ‘silk’, ‘gros michel’, and ‘lacatan’ bananas are seldom seen in our market and local grocery. Why does T&T import thousands of tonnes of bananas annually when such a desired fruit can be grown locally?

In order to comprehend the fundamental modus operandi of the diminished local banana market we must journey a few decades back when the local banana market was sufficient and sustainable for the country. Data available from the Food and Agriculture Organisation of the United Nations show that between 1961 and 1983, the highest year of banana imports was 1978 importing 69 tonnes. Through the late 1980’s into the 90’s banana imports dramatically spiked upwards to as high as 4,791 tonnes in 1988. This was due to a slump in oil prices, labour problems, failing agricultural policies coupled with fiscal austerity and economic policies imposed by the International Monetary Fund via the National Alliance for Reconstruction administration. A decrease in banana imports to 446 tonnes subsequently occurred in 1996.        

By this time the international banana trade war was overheating between the United States and Europe because of the Lomè Convention. This trade agreement was between the EU at the time called the EEC (European Economic Community) and ACP (African, Caribbean, and Pacific) countries that were former colonies of Europe. ACP countries banana exports were given preferential privilege to enter the EEC. The US government, lobbied by US based multinational companies who dominate the Latin America banana market filed a complaint against the EEC with the World Trade Organisation, claiming the agreement broke free trade rules. In 1997 the US won their petition which began the decline of the banana market in the Caribbean hitting the economy of Jamaica, the Windward Islands and others.

In 1997 T&T imported 1,129 tonnes and exported 296 tonnes of banana. For the year 2010, T&T imported bananas amounted to a staggering 12,032 tonnes and 45 tonnes was exported. Local banana farmers have been undercut by cheap imported bananas into the country. This condition exists because the banana market is monopolised by a select few US based multinational companies who are accused of exploiting labour in Latin America and receiving preferential treatment from corrupt governments where they operate.

The banana market in this country will only produce adequate volumes to satisfy local demand when all parties involved make a conscientious decision for change. Additionally the consumer must regain their sense of economic patriotism to buy local and request local bananas when available. Also all political parties must stand up against unjustifiable trade policies forced on us from international institutions and organisations that do not have the best interest of the country at heart. Agricultural programs must be structured to support farming and ensure a strong banana market locally. Farmers and the agriculture community must not give up on the growing of bananas and should not be disheartened by minor reversal in prices. More emphasis must be spent in the education of youths in the field of agriculture to yield well-equipped farmers. Local bananas are part of the country’s food heritage and should not be made extinct by cheap mass produced bananas.  

The photo below shows my article above published in the Trinidad and Tobago Express Newspapers under the Letter’s Section, Click here to see hi-res photo.

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The photo below shows my article above published in the Trinidad and Tobago Guardian Newspapers under the Business Section, Click here to see hi-res photo.

fertilizermarkets: The highlight in the potash market of 2013. My article from earlier this year

By: Jonathan Mohan

Disclosure: I have no stock positions in any of the companies below, and own no potash futures contracts. I have no plans to initiate any positions within the next 72 hours.

The shift of the global potash market, price-over-volumes paradigm to volumes-over-price has begun. Thanks to Uralkali, no more withholding supplies to maintain high prices.  Last Tuesday Russia’s Uralkali announced it would no longer trade potash through the marketing arm known as the Belarusian Potash Company (BPC) which accounted for 43% of global potash exports. Russia’s Uralkali and Belarus’s Belaruskali were together in the joint venture. The Belarusian government recently cancelled Belaruskali’s right to export Belarusian potash. Belaruskali was selling potash outside BPC to boost revenues. Uralkali will now export their potash through Uralkali Trading. The news resulted in a sharp decline of potash companies share price worldwide.

The global potash industry oligopoly-type business model formed by Canpotex and BPC will become dysfunctional as Uralkali’s bombshell aftermath creates a competitive potash market. Uralkali stands to regain its stock value providing prices don’t fall below expected since it’s a low cost producer. Uralkali’s plan to maintain cash flow is to increase sales by 3.5 million tons in 2015. Investors speculate increased supplies by Uralkali will be followed by other potash producers and drive potash prices down. At present, it would take months to gauge where the potash price will settle. Uralkali recently began a US$1.3 billion dollar share repurchase program prior to last Tuesday’s bombshell. This reacquisition of stock is deemed by many analysts as a value destructive buyback. On the other hand was it a future anti-takeover strategic policy by preventing a huge sell off when it severed ties with BPC?

 The developments in the potash market have been very dynamic in recent years. Let’s take a look of these past highlights to achieve a perspective of the possibilities in the future. In 2010 Uralkali merged with home-based Silvinit. This is an example of Uralkali’s receptiveness to M&A. Australian BHP Billiton was unsuccessful in an attempted hostile takeover of Canada’s PotashCorp in 2010. The Canadian government blocked the takeover, claiming it was not in the best interest of the country’s people. What they didn’t say is Canpotex couldn’t allow PotashCorp to fall into the hands of BHP which would market production itself. In January this year, PotashCorp failed at a hostile takeover of Israel Chemicals Limited. Strong nationalistic objection to foreign ownership of state companies by the Israeli citizens and their government, proved PotashCorp’s efforts futile. This year major potash producers Uralkali, Belaruskali, PotashCorp, Agrium and three others settled US antitrust law violations, after being accused of potash price-fixing in 2008.

 One conspiracy theory circulating in the fertilizer blogosphere is that Uralkali’s separation from BPC was linked to Russian internal politics and business gone sour. The reasoning for this theory derives from information that Russian Oligarch Suleimar Kerimov holds 17.2% of Uralkali, who is suspected of being the front man for secret Kremlin investments. Russian MP Zelimkhan Mutsoev sold his 6.4% stake in June before Uralkali’s bombshell and only now looks like an insider trade but it’s not. There is a new law in Russia that prohibits MP’s from having direct control over business assets. This conspiracy stems from unsubstantiated analysis from those in the west who don’t quite comprehend post-soviet Russia. 

 The other conspiracy theory propagating is that Uralkali’s design plan by dropping the bombshell was to force mining companies to become reluctant on big-ticket potash project spending. The focal target is BHP Billiton’s proposed US$14 billion Jansen project in Saskatchewan. This theory is improbable, and if true Uralkali didn’t do their homework accurately. BHP Billiton’s business strategy is not shifted by daily moves or monthly cycles in the market; all projects are assessed and analyzed for long term profits most of the time measured in years.

 Belaruskali plans to expand potash exports to Brazil, nevertheless Verde Potash also has intentions for Brazil. It is not transparent as to who the major shareholders of Belaruskali are, however, it is possible that the state is in control and by proxy President Alexander Lukashenko who has been in power since 1994, utilizing some soviet era policies to govern the economy. Belarus’s economy is under pressure due to the Belarusian rouble constant devaluation. The possibility exists that this will lead to an unstable society, resulting in an uprising to remove President Lukashenko. In a chaotic state of affairs a likely hostile takeover of Belaruskali is conceivable.  

 The bi-lateral relationship between Russia and China has improved in the last decade and should not be ignored. China imports one fifth of global potash supplies. Uralkali already plans to increase potash shipments to China by rail. Close attention must be paid to future agreements between both countries. Many investors will tune in to PotashCorp’s President and CEO Bill Doyle who will be conducting a webcast on Wednesday August 07th. There is no way he can deny the negative effects on PotashCorp and Canpotex by Uralkali’s move. The future of the potash market is unpredictable and has become more volatile not only to underlying supply and demand fundamentals but geopolitical developments globally.

 In conclusion, Uralkali’s break away from BPC is not self-destructive as mainstream media is claiming. In the long term, their low cost of production will grant them favourable contracts from China, India and Southeast Asia. Canpotex, the remaining fragment of this oligopoly will definitely not have the negotiating power it once had and there are more cards to play in the hand of the so called BRIC nations (Brazil, Russia, India and China) in the quest for food sustainability.

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Potash store in Canada. Photograph: David Stobbe/REUTERS

For most of the year, fertilizer producers such as PotashCorp  (NYSE: POT  ), Mosaic(NYSE: MOS  ) , and Agrium (NYSE: AGU  ) floundered under the weight of broad industry troubles. The global fertilizer market has been in a state of upheaval for most of 2013 after one of the world’s largest fertilizer partnerships broke up. This caused potash prices to collapse, and ever since industry observers have eagerly awaited any signs of a floor in worldwide potash prices.

Read more at The Motley Fool

Read more at Digital Journal

The new owners of Russian potash producer Uralkali are to resume cooperation with Belaruskali of Belarus, which means the cartel that used to control about 40 percent of world potash exports will be back.

Read more at RT