Fertilizer Markets and Finance

The share price of Potash Corp. (POT) has risen by 14% over the past 30 days. At $43.72, the stock is trading near its 52-week high of $46.16 and offers a solid dividend yield at 3.2%. However, due to the recent rally, the stock valuation appears to have reverted back to the fair range, meaning a buy rating is likely not warranted. My view is based on the following five reasons:

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TORONTO, ONTARIO—(Marketwired - May 22, 2013) - Allana Potash Corp. (TSX:AAA)(OTCQX:ALLRF) (“Allana” or the “Company”) is pleased to announce that the Company has received approval of its Environmental, Social, and Health Impact Assessment (“ESHIA”) from the Ethiopian Environmental Protection Authority (“EPA”) and Ministry of Mines and Energy (the “Ministry”). The…

Read more at Market Wired

The federal government has decided to keep high tariffs on Ukrainian exports of ammonium nitrate even though the fertilizer is now cheaper to produce in the U.S.

The U.S. International Trade Commission has ruled that dropping the tariffs would likely cause “material injury within a reasonably foreseeable time” to domestic fertilizer manufacturers.

Imports of nitrogen can have an impact on the prices that U.S. farmers pay for the fertilizer. An influx of foreign nitrogen has been credited with price declines for nitrogen over the past year.

The government imposed antidumping duties of more than 150 percent on ammonium nitrate from Ukraine more than a decade ago, which has effectively stopped exports from that country.

Federal agencies can impose such tariffs if they find that a foreign supplier is “dumping” a product in the U.S. below the cost of production to the detriment of domestic competitors.

Since the duties were imposed in 2001, advances in the domestic extraction of natural gas — the major component of the fertilizer — have caused its price to plummet for U.S. manufacturers.

Read more at Capital Press

MINSK, 21 May (BelTA) – In the first quarter of 2013 Belarus’ exports of potash fertilizers increased by 38.8% over the same period a year ago. The country sold a total of 955,000 tonnes of potash fertilizers in Q1, BelTA from the National Statistics Committee.

The average price was $638 per tonne, a reduction of 15.5%.

Exports to the CIS countries went down by 6.6% to 20.900 tonnes (the average price was $632 per tonne, down by 11.6%). Deliveries to the countries outside the CIS went up by 40.3% to 934,100 tonnes (the average price was $638 per tonne, down 15.6%).

In January-March of 2013, Belarus’ exports of nitrogen fertilizers increased 3.5 times as against the same period last year to 63,047 tonnes. The average price here made up $854 per tonne, up 13.8%. Exports to the CIS countries increased by 89.2% (582 tonnes; the average price at $1517 per tonne, down by 33.7%), to non-CIS countries went up 3.5 times to 62,465 tonnes). The average price for nitrogen fertilizers grew by 17.3% to $847 per tonne.

Russian fertilizer producer EuroChem aims to start production at its two potash mines around 2017, its chief financial officer said on Wednesday, even as some other producers of the crop nutrient put expansion plans on hold. Privately-held EuroChem is expanding despite concerns about a future global glut of potash, which boosts yields of crops like corn.

It plans to reach full output capacity of 8.3 million tonnes of potash by 2022, diversifying from its current portfolio of nitrogen and phosphate fertilizers.

“We take a long-term view that demand for potash will resume,” EuroChem CFO Andrey Ilyin said on the sidelines of the BMO Farm to Market conference in New York, after giving a presentation. “We see that playing out, maybe not this year (or) next year, but we take a 10-, 20-year view.”

U.S. producer Mosaic Co said on Monday it would delay expanding Canadian potash output, and Vale SA said in March that it planned to pull out of a $6 billion potash project in Argentina

Read more at AG Professional

Texas law enforcement officials said on May 10 that they are beginning a criminal investigation into the fertilizer plant fire and explosion that occurred

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Monday, May 20, 2013 - Indianapolis—Indiana has cancelled subsidies for a planned $1.8 billion fertilizer plant in the state because of concerns that a Pakistani company involved in the project makes products used in improvised explosives that kill and injure US troops in Afghanistan.

Midwest Fertilizer Corp, which has sought to build the plant in southern Indiana, is 48 per cent owned by Fatima Group, which produces a calcium ammonium nitrate fertilizer in Pakistan known to have been used in improvised explosives in Afghanistan.

Read more at Pakistan Observer

Mining Weekly reported that the Canadian Competition Bureau’s review of Agrium’s proposed purchase of Viterra assets has shown that it is within the necessary time frame, but they cannot assume at this point what the ruling will be.

As quoted in the Mining Weekly report:

The Bureau’s review is ongoing, and is proceeding in accordance with the statutory timelines set out in the Competition Act,” the company said in a statement on Wednesday. “At this stage, it is premature to assess the likely outcome of the bureau’s review.

To view the whole Mining Weekly report, click here.

Mosaic confirmed this week that it has deferred plans to spend $2 billion to expand its potash production capacity by two million tonnes a year at its Belle Plaine mine near Regina and Colonsay mine near Saskatoon.

http://www.leaderpost.com/business/energy/Belle+Plaine+Colonsay+potash+expansions+deferred/8384298/story.html

Company to delay potash expansion by two years due to unfavourable market

http://www.indmin.com/Article/3206044/Mosaic-dismisses-potential-takeover-as-unlikely.html

Consul-General of the United States to Nigeria, Mr. Jeffry Hawkins has disclosed plans by the United States government to establish a $250 million fertilizer plant in Edo State.

Mr. Hawkins, who described Edo State Governor, Comrade Adams Oshiomhole as one of the most effective governors in Nigeria made the disclosure during a courtesy call and inspection of projects in the state, yesterday.

The Consul-General said the $250 million fertilizer plant is being planned by the Overseas Private Investment Corporation of the United State Government.

“We are here because we are proud that the Overseas Private Investment Corporation  of  the US  government  is involved with  the Green  Petrochemical Company  which is making a $250 million investment   and we are happy that this important fertilizer plant will have  the support of the United States Government.  It will create about one thousand five hundred jobs. That is something we are hoping to take a look at when we are here,” he noted.

Read more at National Daily

K+S says demand for the nutrient rose

K+S flagged a sharp increase in world potash demand, even as data showed North American producers of the fertilizer enjoying a record month for exports – counterbalancing signs of weather setbacks to domestic demand.

K+S, the European Union’s top potash group, said that the signing by China and India - the top two potash importers, whose deals set market benchmarks - of fresh orders with North American and Russian producers had sparked the release of pent-up buying pressure.

“Demand for fertilizers rose significantly again in time for the start of the spring season in Europe and North America as well as in South America and South East Asia,” the German-based group said, adding that “prices stabilised”.

Read more at Agrimoney

Mosaic has decided to delay by one or two years expansion of its Saskatchewan potash mines, the company said on Monday. Lawrence Stranghoener, CFO said on a conference call with analysts that the company is deferring the final 2 million m.t./year potash expansion because of unfavorable market conditions and high labor costs. The project was expected to cost “upward of $2 billion.”   “By waiting a year or two, we may see improved labor conditions in Saskatchewan that might help bring down the cost of this project,” Stranghoener said

Read more at Chemical Week

Israel Chemicals (ICL) posted a six percent rise in first quarter net profit, exceeding expectations on strong demand for fertilisers in China.

ICL, the world’s sixth-largest producer of potash, said on Monday its net profit in the quarter rose to $305 million from $289 million a year earlier. Revenue grew nine percent to $1.64 billion. ICL was forecast to earn $286 million on revenue of $1.61 billion, according to a Reuters poll.

Both potash and phosphate fertiliser businesses showed strong growth, with increasing volumes compensating for lower prices, ICL said. About half of its revenue for the quarter derived from products manufactured outside of Israel.

Last month Canada’s Potash Corp , one of the world’s largest potash producers, said it was abandoning efforts to take over ICL because of strong opposition in Israel.

Read more at Reuters