Market and product

World potash shipments will set a record in the first halfof 2014, but may struggle to match this feat in the second half, depending on themomentum of a restocking programme, PotashCorp said.

World potash volumes will likely come in at some 29m tonnes inthe first six months of 2014, boosted by a scramble among wholesalers torebuild inventories they ran down late last year, amid the market uncertaintycaused by the break-up of the Belarus-Russian cartel BPC.

"Significant market uncertainty during the second half of2013 impacted demand," PotashCorp said.

However, use of potash by farmers "was not affected byuncertain market conditions to the same degree" as purchases by wholesalers,meaning that "world consumption exceeded shipments for the second consecutiveyear" in 2013.

'Depleted wholesalestocks'

With "improved market engagement" this year, shipments hadpicked up markedly, notably in North America, where shipments were, at 4.8mtonnes, up 32% year on year in the first five months of 2014.

"This was due to a depleted wholesale and retail supplychannel at the start of the year, followed by a strong spring season," Canada-basedPotashCorp said.

In Brazil, imports of granular potash – the country'spreferred grade, in which the size of pellets is more uniform than for standardpotash – was up 850,000 tonnes "due to low beginning inventories and higherdomestic demand".

India uncertainties

However, it was as yet unclear as the extent to which themarket would be able to extend this impetus, the volumes likely to fall nearerto about 26m-27m tonnes in the July-to-December half.

In markets, such as Asia, favouring standard grade potash,which is often cheaper, demand "has been impacted by global market uncertainty",PotashCorp said, highlighting too "government policy changes in India", afterthe elections this year which led to Narendra Modi becoming prime minister.

In India, the second-ranked potash importing country, "whilereports indicate that India's new government could implement policies favourablefor agriculture sector growth and the fertilizer industry, it is too early todetermine if specific changes will be made to address the imbalance betweennitrogen and potassium use".

Although it is considered unlikely that India will be ableto lift subsidies for potash, or phosphate, fertilizers, it many commentatorsbelieve that some measure to boost their appeal compared with urea, on whichsubsidies have been focused, may be implemented.

PotashCorp restated a forecast of 55m-57m tonnes for worldpotash volumes this year.