IB Net Payout Yields Model

Potash Pricing Floor Doesn't Signal a Recovery

The recent potash deals with China provided the market some hope for a floor in pricing, but investors shouldn't confuse that with a recovery. The pricing for potash slumped during 2013 due to a disagreement between the Belarusian partners of Belaruskali and OAO Uralkali. The high margins afforded North American potash producers were smashed, sending shares of PotashCorp  (NYSE: POT  ) , Mosaic (NYSE: MOS  ) , and Intrepid Potash (NYSE: IPI  ) down to multi-year lows.

Last week, agreements from both Canpotex (the North American marketing partnership between Potash, Mosaic, and Agrium) and Uralkali were for 700,000 metric tons of potash in the first half of 2014 at market prices. Canpotex didn't disclose the price, while Uralkali accepted a settlement of $305 per metric ton. The pricing possibly provides for a global floor for potash prices, but it in no way indicates any recovery in pricing.

Read the full article here.

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