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: