By Leia Michele Toovey- Exclusive toPotash Investing NewsPotash inventories, which have recently been well below the previous five year average, eased off last month rising by 396,000 tonnes to just below 2.5 million tonnes. Inventories are now 11 percent above the previous five year average. This is not necessarily a signal of decreasing demand. In fact, according to many producers demand is picking up. Strong demand from farmers is the reason behind K+S Ag's recent increase in potash prices to $400 per tonne, the second increase in potash prices over the last several months. Behind the increase, K+S Ag cites climbing demand from China, India, and surprisingly, Europe. European farmers are still coming to the market, despite the fact that the Euro has been really weak over the past few months. Potash is priced in US dollars, so a weak Euro means more expensive potash for European purchasers. K+S' last price increase was in March. Potash prices have been slow to rebound, and according to chemicals and agriculture analyst David Begleiter, changes in market fundamentals are necessary before the price of potash can come even close to competing with its previous highs. Mr. Begleiter claims that an additional 5-7 million tonnes of global potash demand is necessary before the price for the crop nutrient will increase. “Globally we are going to be in the 48 million to 50 million-tonne range for potash consumption in 2010. Until we get another 5 million to 7 million tonnes of demand, we will not have a tight market and potash prices will likely not appreciate. This doesn't even take into account additional potash capacity, which could total more than 10 million tons over the five years, or 20%-plus of current capacity,” the analyst commented.