Global potash surplus projected

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New data suggest that a potential surplus of 7.9 million tonnes of potash could hit the global market over the next four years, according to new data from the International Fertilizer Association. This extra potash would come at a time when developing countries such as those in Asia and India are increasing their demand for the crop nutrient to feed a growing middle class hungry for more protein.

The surplus is projected due to 30 potash-related projects worldwide being planned for completion between 2011 and 2015. As these plants come online, potash production will jump, increasing global potash supplies. If the plants are completed on schedule, a surplus of as much as 15 million tonnes of potash could be seen by 2015.

IFA forecasts that global potash may increase from 43.8 million tonnes in 2011 to 54.7 million tonnes in 2014. The bulk of the new potash capacity will be in the form of muriate of potash (MOP). However, it is unknown if the projects will finish on time. If they do not or there is a slower-than-expected ramp up in output, the surplus may not materialize to the degree projected. This is likely since potash sales have slumped in 2012 as buyers deferred purchase decisions during the global economic slowdown. Potash suppliers may instead opt to bring plants online at a much slower pace, which will be their attempt at constraining supply to protect prices, which have tumbled. 

The increase in potash producing capacity shows the need for more crops in developing countries. However, North America will become the world’s largest potash supplier in 2015 with a 39 percent share of potential world supply, followed by East Europe and Central Asia (29 percent), West Asia (8 percent) and Latin America (5 percent).

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