Saturday, January 7, 2012

Fertilizer squeeze plays

Giant fertilizer companies are cutting back production in an apparent effort to out-wait farmers before spring planting.

Potash Corporation of Saskatchewan Inc. announced that is will close its Allan mine, near Saskatoon, for a month.

Mosaic Company announced its is cutting phosphorous production by 250,000 tonnes over the next three months.

Mosaic also happens to be part of the Saskatchewan potash cartel known as Canpotex. It was controlled by Cargill Inc. until a year ago when the company put its 64 per cent stake, valued at more than $24 billion, up for sale, apparently to settle claims by heirs of the estate of Margaret Cargill.

The companies appear to be intent on breaking the recent seasonal pattern which has seen fertilizer prices decline from peaks in the fall to lows just before spring planting. This year it seems to be a waiting game to determine whether suppliers or farmers have the greater degree of patience.