02.18
Fertilizers – Potash Inventories Decline in January Even with Higher Production
The latest inventory data could result in a near-term positive market reaction for global potash producer valuations. The most recent data suggests that potash market conditions are improving. North American potash producers’ potash ending inventory continued to decline in January 2010. Specifically, producer inventories fell 18% (i.e., 552,000 tonnes) below December 2009 levels even though January 2010 production was 72% higher than in December 2009. As a result, potash producer inventories at the end of January 2010 were only 6% higher than the previous five-year average as shown in the chart. In comparison, December 2009 inventories were approximately 50% higher than the previous 5-year average. The potash inventory decline is consistent with RBC CM’s outlook for improving demand heading into spring. RBC CM believes improving demand and declining inventories could lead to higher spot potash prices over time.
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