By James Wellstead — Exclusive to Potash Investing News
Strong crop numbers expected in the US have provided significant support for the phosphate market in recent months despite a less than spectacular global economic reality. However, it is still too early to judge whether a redeeming US harvest can carry the phosphate market to higher ground.
Led by weak data out of China and the US, fears have been compounded in recent days as Spain's borrowing edged to levels near those that have forced countries like Greece and Italy to seek bailouts. “Investors are hoping for fresh monetary easing in the near future,” Yang Yining, an analyst at Shanghai-based Capital-Edge Investment & Management Company, told the Associated Press this week. “[B]ut with the lingering inflationary pressure, the market will likely remain unstable.” Yet despite the unstable global marketplace, agricultural markets continue to adjust to poor weather and record low stocks for a number of key coarse grains. Tuesday's USDA monthly World Agricultural Supply and Demand Estimates (WASDE) report provided a bit of a check to bearish market sentiment as US corn data continues to show a rebuilding of corn capacity and stock within the country after stockpiles have been driven down in recent years. Further, the WASDE numbers showed that US soybean production has begun to make up for declines coming out of South America on the back of weather-induced production reductions. Phosphate prices have continued to remain steady on the month, but falling prices have been the trend for 2012 thus far. Hitting just below US $500/tonne at the beginning of March, diammonium phosphate (DAP) prices are the lowest they have been in more than a year and a half.