Potash purchases rebounding; transportation hampered
The potash fertilizer industry has struggled to be profitable after last summer’s breakup of the Belarusian Potash Company and in the past few weeks, several manufacturers have seen slow sales and lower profits.
Mosaic Company dropped a bombshell on the industry when it announced this week that its Q4 profit had plunged 79 percent as phosphate and potash prices fell. The company blamed the Belarusian Potash Co. breakup with Uralkali as the main reason. But it was not the only fertilizer manufacturer that felt the squeeze. PotashCorp announced in late January that it had its smallest quarterly profit in four years.
However, where the two companies differ is in their projections for 2014 sales. PotashCorp expects a weak year ahead and that its forecasts were significantly below Wall Street expectations. PotashCorp expects the market has a long way to go to recover from the plunge it’s taken after the fallout of the BPC and Uralkali.
Mosaic, on the other hand, is reportedly expecting record global shipments of potash this year.
“Customers believe a bottom in potash prices has been reached and are now exhibiting improved confidence in their buying decisions,” Jim Prokopanko, Mosaic CEO, said in the company’s fourth-quarter earnings statement.
Earlier, Prokopanko had said fertilizer buyers were delaying purchases out of anticipation of further price declines.
Despite Mosaic’s rosy expectations, it’s having trouble transporting the crop nutrient due to the very cold winter North America is having this year. Prokopanko announced Feb. 11 that the company was facing unprecedented transportation backlogs in North America.
Frigid temperatures and heavy snow have hampered railway movement of commodities, he said on a conference call discussing quarterly results.
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