As a result of drought and tough growing conditions last year, global wheat and coarse grain production are projected to fall by 4.5 percent in the 2012 to 2013 grain year. Global grain consumption is also forecast to fall by 2 percent in response to slower production; that will create a production shortage of 40 million tonnes, according to data from Potash Corporation of Saskatchewan (TSX:POT,NYSE:POT).

China-based Sinofert Holdings' (HKEX:0297) renewal of potash contracts with Canpotex — the offshore potash marketing arm of Mosaic, PotashCorp and Agrium (TSX:AGU,NYSE:AGU) — on December 31 shows strong agricultural demand from the world's second-biggest economy despite the fact that the contract was settled at a lower-than-expected price.

Phosphate producers will rely on significant plantings in North America, South America and Asia to react to the increasing cereal and food prices forecast by the Food and Agricultural Organization for the coming year.

Mosaic's CEO, Jim Prokopanko, forecast in the company's financial release that 2013 will be “another record year for phosphates with global shipments increasing another 2-3 percent to 63 to 65 million tonnes.”

High grain and oilseed prices, along with crop nutrients that have “never been more affordable,” are what Prokopanko holds as key drivers of this year's global shipment growth, but he added that international customers are likely to “continue to delay purchases to avoid price risk.”


Securities Disclosure: I, James Wellstead, hold no direct investment interest in any company mentioned in this article.

Mosaic's Profits Fall on Phosphate Prices, but CEO Forecasts Growth in 2013 from Potash Investing News