Produce Price Spike Boosts Potash

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"Market conditions almost match potash's record year of 2008, when prices touched $1,000 a ton."

Over the past year, potash producers have incrementally increased the price charged for potash, as top crop prices have given farmers extra incentive to boost yields. Over the past year, corn prices have climbed 77%, wheat 43%, and soybeans 40%. All three of these crops are "fertilizer-intensive" which means they need a great deal of fertilizer in order to reach their maximum yields.

The latest price increase for potash was announced this week by Belarusian Potash Co., the trading arm of fertilizer giant Uralkali. Belarusian hiked the price of the fertilizer by about 11% for buyers in Brazil, citing "unprecedented demand, tight supplies, and higher crop prices." According to the trader who announced the price hike, Belarusian also stated that it "believes the same fundamental factors will continue supporting very strong international demand through all of 2011."

With this price hike, Belarusian will charge buyers as much as $535 per metric ton for small purchases, and $520 per metric ton for larger purchases during the month of May. Previously, Belarusian was charging around $475 per ton.

On February 25th, a researcher from FMB Group claimed that Belarusian Potash Co. may boost spot prices for Brazil by 18% to as much as $530. In addition, they estimated a 22% year on year price hike for consumers in India, to $450 a ton in April.

Belarusian Potash co. is part owned by Uralkali. Last week, Uralkali's CEO Vladislav Baumgertner told reporters that he expects prices of the fertilizer to surge as market conditions almost match the record year of 2008."From what we see on the spot markets, the price is approaching $500 a metric ton and we believe that this level will be overcome this year," said Baumgertner. "The business and economic environment is very similar to that of 2008." Some potash prices touched $1,000 a ton that year. Uralkali expects world potash output to reach a record 57 million to 60 million tons this year, compared with 52 million tons last year.

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