Morgan Stanley: Phosphate And Potassium Supply Threats Are Greater Than Investors realise

A note out from Morgan Stanley’s Vincent Andrews dismisses some bearish signs for potash. These signs were:

  • China signed a 2011 potash contract for only $400/t
  • India wants to negotiate a contract for less than $400

Andrews says contract negotiations will fizzle out due to new supply data: “Potash inventory is now 24% the five-year average and 26% the one-year average. This is consistent with the Bull Case we laid out in our January 6, 2011 note “Potash Supply/Demand Tighter Than Discounted.”

Potash Corp CEO Bill Doyle has predicted $500/t prices by year-end.

Here are charts from Morgan Stanley:


Same story for phosphate:


Don’t miss: 15 Facts You Absolutely Need To Know About Phosphorus

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