Potash's value was hard hit by the economic downturn as investors abandoned agricultural commodities. The recovery for the crop nutrient has recently been underway; and with spring planting in the northern hemisphere just around the corner- things are bound to heat up.
By Leia Michele Toovey- Exclusive to Potash Investing NewsPotash's value was hard hit by the economic downturn as investors abandoned agricultural commodities. Demand plummeted as potash's long soil half life made cashed strapped farmers reluctant to apply the nutrient to their fields. The recovery for the crop nutrient has recently been underway; and with spring planting in the northern hemisphere just around the corner- things are bound to heat up. Analysts and producers are confident that the market hit bottom late in December 2009; and since then a slow recovery has been underway. A sign that the supply and demand balance has been turning around: stockpiles have been on a steady decline. Analysts, producers, and consumers are closely monitoring potash contracts, to predict what moves the market will make. Potash contracts are unique compared to other commodities in that buyers and sellers agree to longer-term, set price contracts, rather than using a spot market. The latest contract to be inked is between Israel Chemicals Ltd, and India. The contract is for one million tonnes of potash at $370 per tonne. The price of the contract is very typical in today's market, but it's the volume that's so impressive. Israel will supply India with enough potash through March 2011, a deal worth $370 million. Deliveries will begin in April. Although the price is well below the $460 per tonne bid in last year's potash contracts with India, it is $20 per tonne higher than in contracts signed earlier this year with China, and with the volume of the contract it's worth more cash than usual.