Although the potash and phosphate fertilizer markets closed out 2011 on a down note, prices may rebound in 2012, but slowly. Fertilizer prices closed 2011 on 52-week lows, according to Potash Investing News. Long-term fundamentals in the fertilizer market are expected to have a positive influence on prices, but the global economic slowdown is putting pressure on fertilizer markets.
“As a result, the weak global economic picture, coupled with emerging economies who are proving to be more elastic and responsive to rising food prices than predicted, has created conditions in which growing supplies of fertilizer stocks, in particular phosphate, are unwanted,” according to Potash Investing News.
The drop in fertilizer production was noted by companies such as Mosaic, Phosagro and PotashCorp, who recently announced cutbacks.
Sufficient supplies of phosphate are expected in 2012 since Brazil and Europe have surpluses, which will put pressure on those prices. Although potash prices appear to have stronger support than phosphates, weakening global demand may pressure the potash market.
Despite these pressures and the weak market at the start of 2012, Mosaic announced Wednesday that market conditions that led to the cutbacks were beginning to abate.
Mosaic Chief Economist Mike Rahm told Dow Jones Newswires, “The company maintains a bullish outlook for 2012 crop prices as supplies stay relatively tight. Drought is stressing the South America corn and soybean crop … and a lack of snow is concerning for U.S. producers. Much of the Midwest has seen very little snow, which could mean insufficient soil moisture heading into planting.”
Read more from Potash Investing News here.
Read more from Dow Jones here.