Potash is the key ingredient in fertiliser. It would very difficult to grow food without it.
Like oil, there is a finite supply of potash, which contains potassium.
And like oil, the a major portion of the potash market has been controlled by a cartel of Russian, Eastern European and Canadian firms.
Until this week.
Uralkali, the world’s biggest potash supplier, announced it was leaving Belarus Potash Co, the European side of the potash cartel.
The move sent shares in potash suppliers tumbling.
The Toronto Globe and Mail’s Michael Babad says there’s an outside chance Urakali is bluffing to force fellow cartel member Belaruskali to get in line.
But if it proves to be true, the price of potash is going to collapse — which would be brutal for the industry, but great for consumers.
Babad quotes Joel Jackson of BMO Nesbitt Burns’ price estimate:
Our analysis is preliminary, but our initial bear case is that global price estimates could fall by $US100/tonne (down closer to marginal European costs), which will impact all producers, though companies such as [Potash Corp. and Uralkali] have the most spare capacity to partially offset lower prices and might relatively fare the least worse.
Besides shareholders of potash firms, the other big loser would be the province of Saskatchewan, where Potash comprises 18% of all exports, Babad says.