January 20, 2012

The weakness in potash markets has manifested in the sales of Intrepid Potash after it had fallen by at least 14%, exhausted by a "sense of economic unease" among farmers.

The group, the biggest potash producer in the US, said that its sales of the nutrient had reached 175,000-185,000 tonnes in the October-to-December period, below the 216,000 tonnes recorded in the same quarter a year before.

The rate of increase in potash prices too had slowed, with Intrepid selling the fertiliser at an average of US$490-500 per short ton, up more than US$100 a tonne on-year, but only marginally from the US$489 a tonne recorded in the July-to-September quarter.

The performance was "reflective of the decreased farmer demand for fertiliser experienced in the latter half of the fourth quarter of 2011", Intrepid said, blaming the slide in the broader economic woes.

"This pause in demand was the direct result of farmers feeling a sense of economic unease over the general global market uncertainty resulting from the European debt crisis, political gridlock in Washington and the slow pace of economic recovery."

Against this backdrop, "farmers chose to focus on seed and equipment purchases and to defer purchase of their fertiliser inputs".

The comments follow warnings from peers such as Germany's K+S, Russia-based Uralkali and North American rivals Mosaic and PotashCorp of softer potash markets, with Mosaic warning two weeks ago that "macroeconomic uncertainty has caused distributors around the world to become cautious".

PotashCorp, the world's top producer group by capacity, has unveiled temporary shutdowns at three Canadian mines in a bid to better match output with demand.

Intrepid said its own output reached 190,000-200,000 tonnes during the latest quarter, beating sales and tallying with data showing a rise in potash inventories in North America, which is, with Russia/Belorussia, one of the two main areas for mining the nutrient.

PotashCorp on Friday said that these inventories jumped by more than 400,000 tonnes to 2.5 million tonnes last month, their highest for nearly two years.