February 17, 2012

 

Intrepid Potash lifts potash recovery hopes

 

 

Following a sign from Intrepid Potash that the long-awaited arrival in potash demand may be arriving, supported by farmers' plans for raising sowings of nutrient-hungry corn, shares in the company jumped 9%.

 

The biggest miner of the nutrient in the US, which last month joined peers in warning of the "unease" which had depressed potash sales, said that there were signs of a revival in demand.

 

"We have seen increased interest as the spring application season approaches," Intrepid Potash said.

 

While many fertiliser groups have forecast a rebound in orders, signs of these predictions being realised had, until now, proved elusive.

 

Indeed, data earlier this week showed potash inventories held by North American producers swelling to their highest level since 2009, as buyers stayed away.

 

Sector giant Mosaic two weeks ago revealed it was joining peers PotashCorp and Uralkali in mothballing capacity to better match output with weakened demand.

 

Intrepid Potash highlighted the forecasts of rising US plantings of a corn, a crop which requires more fertiliser applications to reach potential than soy or wheat.

 

Separately, nitrogen fertiliser group CF Industries on Thursday forecast US corn sowings of 93.5 million acres this spring, in line with the largest area since World War II.

 

Deere on Wednesday estimated corn plantings at 93 million acres, with the USDA earlier this week pencilling in a 94-million-acre figure.

 

"Strong commodity prices are translating into higher estimates for corn acreage in 2012 compared to 2011, which in turn is expected to generate greater nutrient demand," Intrepid Potash said.

 

Bob Jornayvaz, the Intrepid Potash executive chairman, said: "We firmly believe that, as spring moves closer, the farmer will not be asking if he should apply potash, but how much to maximise his yield and take advantage of strong commodity prices."

 

The group forecast potash sales of 850,000-900,000 tonnes in 2012, a rise of up to 11% on the 2011 figure.

 

In the October-to-December quarter, sales came in at 183,000 tonnes, down 15.3% on-year, but at the upper end of the 175,000-185,000 tonne range Intrepid guided to last month.

 

Earnings for the quarter jumped 37% to US$24.9 million, equivalent to US$0.33 per share, on revenues up 8.8% at US$104.6 million.

 

Intrepid Potash shares jumped to US$26.39 in early deals in New York, their highest since November, before easing to US$25.82, up 6.3% on the day.