Apr 19, 2014
Home| Contact Us| Sign UpLogin

What's This Got to do With The Price of K in China?

December 13, 2012
By: Davis Michaelsen, Pro Farmer Inputs Monitor Editor

Fertilizer prices are just as subject to world events as any other commodity and China's potash imports are a fine example. As you may know, China has historically imported a few million tonnes of potash from Canada's Canpotex in August or September. This year, China had hoped to book that nutrient at $470/tonne and passed when the quote was refused. Rumors have since circulated that China would entertain a spring purchase at $400/tonne.

This could force PotashCorp to move inventory at a less than desirable price to China, passing on the difference to other markets such as Latin America and the U.S., raising the delivered price there.

China uses more potash than any other nation worldwide garnering 30% of PotashCorp's output annually. That gives China some real pricing leverage and reports out of PotashCorp are that the company has lowered the price as of December 12 to $425/tonne for standard K. The news comes as Chinese industrial output moves 10.1% higher and retail sales increase by 14.9%, signaling China's economy is strengthening after falling off the first three quarters of this year.

But Chinese trade surplus narrowed in the month of November showing only modest gains in exports while imports remained largely flat suggesting the Chinese economy is not quite out of the woods yet.

Meanwhile, with PotashCorp bulging with excess inventory, the price declines come as no surprise on weaker international demand. But if China's economy is stronger than expected they may be willing to increase their previous bid from $400/tonne. That looks good for pricing for other markets like Latin America and the U.S. as China's price paid will fall more closely in line with prices for everyone else -- that is, if they can make a deal.

The fall application season is over, but growers will start to look toward booking NPK for the spring soon. With low downstream inventories and retailers in the U.S. looking for the right time to resupply, the price of K in China could actually prove to work in our favor by moderating margins between prices paid and the cost of production in Saskatchewan. As long as China does not 'lowball' PotashCorp, we could all share in the savings.

See Comments


Log In or Sign Up to comment


No comments have been posted



Information to help you               make great decisions

Land management

Track your local input prices.

Risk management strategies