(The following story by Dina O’Meara appeared on the Calgary Herald website on February 10, 2010.)
CALGARY — Increased demand for fertilizer in the global market harkens better days for Canadian potash producers and the railways transporting the product, according to the industry.
On Monday, Canpotex, the export arm of Canadian potash producers, said it had reached a deal for a spot sale of 350,000 tonnes of potash to China’s Sinofert. The agreement, reached after months of negotiations with China, has bolstered sales for Canpotex and brought some reassurance to transporter Canadian Pacific Railway.
“We are a key part of the potash supply chain,” said spokesman Mike LoVecchio. “And we do welcome the announcement today, and we absolutely look forward to the announcement of further sales contracts.”
The second-largest train shipper in Canada, which counts potash as a major revenue stream, noted during its fourth-quarter results that Canadian farmers had started buying fertilizer in increased numbers, but long-term export deals hinged on Canpotex securing a contract with China.
While the amount of the contract was not revealed other than as “competitive,” Canpotex said it was now fully committed on sales through the first quarter. The agency will announce plans on second-quarter pricing in March, after reviewing “the changing and much-improved overseas potash market conditions.”
Potash became a hot commodity in the mid-2000s when grain prices shot up, driving the crop nutrient to above $1,000 US per tonne from below $150. Falling grain prices and the global credit crunch resulted in potash prices dropping to about $350-$410 per tonne as cash-strapped farmers held back on sowing and using fertilizer.