Potash miners may find respite from U.S. farmers
Yet David Hintzsche, president of his family's farm retail business in north central Illinois, the heart of the U.S. corn belt, said he's "cautiously optimistic," farmers will be brisk potash buyers.
"I think demand will be pretty good in our area," he said. "(But) those decisions will be made a lot closer to the time of application, especially with potash prices falling. There's really no incentive for people to order potash before they need it."
Eight out of 11 U.S. farm retailers surveyed said farmer potash demand looks about normal, while two said it was weak and one described it as strong. Reuters received responses from dealer companies based in Illinois, Iowa, Tennessee, Ohio, California, Indiana, Nebraska and Minnesota.
Another reason farmers are keen to apply fertilizer is that some applied lighter amounts a year ago after a severe drought, said Bill Wolf, president of the plant nutrient group at The Andersons Inc.
The dealers also said they're backing up their optimism with their own orders.
Nine out of 11 retailers said they are buying about the same volume of potash as usual from their wholesale suppliers - such as Potash Corp and Mosaic - despite a bigger than normal build-up of supply at the mine level and falling prices.
In a normal autumn, farmers apply about one-third of the potash used for fertilizer annually in the United States, which has ranged in recent years from about 4.5 million to 5.4 million tons annually, according to data from The Fertilizer Institute and NPK Fertilizer Advisory Services.
Slow Harvest a Risk
To be sure potash producers, like farmers, are at the mercy of the weather. The U.S. harvest of corn and soybeans was moving at the slowest pace in four years, according to a U.S. Department of Agriculture report on Sept. 30, raising concerns that farmers may not have time before winter to spread as much potash as they would like.
"The thing that really scares me is we (could) have another 2012 - a terrible fall because of weather and nobody buys anything," Jayroe of Jimmy Sanders said. "That could be ugly."
Potash Corp, Mosaic and Agrium have all lowered their third-quarter guidance, with Potash Corp, the first to report quarterly earnings on Oct. 24. Potash Corp said its reduction reflected lower than forecast potash sales volumes, but those are understood to be mainly off-shore shipments.
Disappointing U.S. fall sales could force North American fertilizer producers into a dilemma between production cuts to underpin prices, or a new emphasis on volume over price heading into 2014 that would ramp up a global fight for market share.
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