Jeez, Potash Growth Is Ridiculously Strong


You already knew that the agriculture industry was red hot, but still, a quick look at Potash’s earnings are eye opening, and it’s not hard to see why BHP Billiton tried to snag the company last year.

Seriously, in what other industries do you see commentary like this:

Robust global demand lifted offshore sales volumes to 1.6 million tonnes, a fourth-quarter record and more than double the same period last year. Offshore volumes accelerated over the course of the quarter as sales by Canpotex Limited (Canpotex), the offshore marketing agency for Saskatchewan potash producers, reached record levels in December. The strength in demand was widespread, with Latin America (27 per cent of Canpotex shipments) and other Asian countries (38 per cent) the largest buyers in the quarter while China and India represented 20 per cent and 12 per cent, respectively. For the year, our offshore sales volumes grew to 5.3 million tonnes, nearly triple 2009 levels.

In North America, fourth-quarter sales volumes of 0.8 million tonnes rose 63 per cent above the total for the same period last year — the third consecutive quarter of improved volumes into this market. Full-year volumes rose to 3.4 million tonnes, more than triple 2009 levels and only slightly less than the 2007 record of 3.5 million tonnes.

63% growth in North America? Incredible.

And the outlook:

North American demand is expected to remain strong — our first-quarter volumes are already fully committed — as farmers are moving quickly to capitalise on favourable crop economics. We anticipate demand in this market will be near historical highs, and reach approximately 10.0 million tonnes in 2011.

Farmers in Latin America are responding to strong grower economics, leading to robust demand for all fertiliser products. We believe fertiliser shipments to this market will reach record levels with potash demand of approximately 10.0 million tonnes, including Brazilian imports of 7.0 million tonnes.

India, coming off a year of record potash demand, is expected to move quickly to secure new supply contracts and ensure product is available to meet its growing needs. Given the country’s rising food requirements and government support programs, we believe its potash demand this year could reach record levels of approximately 6.5 million tonnes. Other Asian countries (not including China and India) are expected to import around 6.5 million tonnes in 2011.

China’s consumption of food and potash is driven by the powerful multiplier of hundreds of millions of people gaining access to higher incomes and the ability to purchase more nutritious food. Although its demand recovery was slower than most markets in 2010, we believe China is committed to improving the fertility of its soils and increasing crop yields. Early in first-quarter 2011, it signed a six-month contract at higher prices with Canpotex for shipment of 600,000 tonnes — a contract that allows Canpotex to remain agile in a tightening potash environment. We believe China could make larger volume commitments in the latter half of the year, and anticipate that its consumption could approach 11.0 million tonnes in 2011, including imports of 7.0-7.5 million tonnes.

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