Potash inventories at the producer level in North America increased in December and reached their highest level since March, according to data posted on PotashCorp’s website.
Inventories have increased as North American potash producers have been waiting for China and India to sign their potash contracts. China relieved some of the pressure in December when it signed its contract Dec. 31, but at a reduced price.
India, on the other hand, has been holding out on signing a contract. PotashCorp and other members of Canpotex have stated they expected India to sign its contract by the end of March. However, India announced this week that it had enough potash in reserve to hold off on its potash purchases until well into the second quarter of 2013. India and China have kept potash producers waiting five months longer than they anticipated, which is also causing inventories to pile up despite some companies shutting down plants to ease inventory pile up.
This delay will put increasing pressure on potash supplies and prices in North America and abroad.
Potash producers maintain that they expect demand to increase in the United States and in other countries this spring as farmers aim to plant record amounts of crops to make up for the loss in yield in 2012 and to take advantage of higher crop prices. This increase in planting will require an increase in fertilizer, which potash manufacturers hope will equate to profits.
Other potash companies will be watching closely the contract India signs.