Potash Prices Growth in 2011 as Agriculture Commodity Gains

Potash prices in 2011 growth as analysts at Potash Corp. of Saskatchewan Inc., the world?s largest producer of its namesake crop nutrient, in more than four months in New York amid speculation corn and soybean futures will extend price gains into 2011.

Potash Corp. climbed $7.40, or 5.1 percent, to $152.07 at 4:15 p.m. in New York Stock Exchange composite trading. The percentage gain was the biggest since Aug. 17. The Saskatoon, Saskatchewan-based company has risen 40 percent this year.

?Supply and demand balances in corn and soybeans are tight and are expected to remain tight,? Horst Hueniken, a Toronto- based analyst at Stifel Nicolaus Canada Inc., said today in a telephone interview. ?Crop prices are the only tangible explanation for higher Potash Corp. shares.?

Corn and soybeans, which both climbed to 28-month records this week in Chicago, are among the world?s most fertilizer- intensive crops, according to the Paris-based International Fertilizer Industry Association.

Mosaic Co., the world?s largest maker of phosphate-based fertilizers, advanced $3.36, or 4.7 percent, to $74.80 in New York. Agrium Inc., the largest retailer to U.S. farmers, increased $3.90, or 4.5 percent, to $90.16.

World supplies of grain are likely to be tight until well into 2011, according to Alberto Weisser, chief executive officer of Bunge Ltd., the Financial Times reported. Weisser predicted in an interview with the newspaper that grain prices will stay volatile in the next 12 months.

?Rising crop prices will lead farmers to plant more acreage and spend more on fertilizer and the best-available seeds to maximize crop yields,? Hueniken said.

Shares of crop-nutrient producers may also be rising because of expectations that Canpotex Ltd., the international potash marketing arm of Potash Corp., Mosaic and Agrium, may soon sign a supply agreement with China for the first six months of 2011, Hueniken said.

Potash Corp. CEO Bill Doyle told an investor conference earlier this month in New York that a deal with China was possible before the end of this year or early in 2011.

Corn futures for March delivery rose 0.75 cent, or 0.1 percent, to $6.24 a bushel on the Chicago Board of Trade. Earlier, corn advanced as high as $6.265, the highest since August 2008.

Soybean futures for March delivery fell 10 cents, or 0.7 percent, to $13.77 a bushel in Chicago. Yesterday, the price reached $13.9675, the highest for the most-active contract since August 2008.

In 2011, potash will benefit from a rapid ascent in the price of ?input intensive grains.? As the price of grains rises, so does the incentive for farmers to apply fertilizers to their fields. The three crops that use the most potash per hectare planted are corn, sugar cane and palm oil," said Mohr. All three of these crops have already enjoyed a rally.

According to the recent report by Scotiabank, an increased demand for potash as crop prices rise has potash poised to be a top commodity pick in 2011. ?The price of potash coming into the Port Metro Vancouver topped out in 2008, at about $1000 US per tonne in late 2008,? said Patricia Mohr, a commodities specialist at Scotiabank. However, after the recession hit, potash prices took a significant hit, added Mohr. Potash dropped down to around $350 per tonne

Russia's ban on exporting wheat and barley products rallied grain prices this spring, said Mohr. At the same time, corn prices have increased, as China demands more corn to feed livestock for a population looking for more meat. An increasing demand for ethanol is also driving corn prices, said Mohr. With fertilizer applications for these crops in the Northern Hemisphere around 3-1/2 months away, Mohr anticipates that potash values will rise in the first quarter

For Phosphate, the picture is not quite as rosy. Phosphate prices have dropped slightly in recent weeks, but are predicted to be flat for the winter. When spring planting season comes around, analyst's project prices will rise $100 to $200 per tonne.

Western Potash Corp. (CVE: WPX) is pleased to announce that it has closed its previously announced private placement bought deal offering. The company sold 18,182,000 units at a price of $1.10 per unit, for aggregate gross proceeds to the Company of $20,000,200. Each unit consists of one common share in the capital of the Company (and one-half of one common share purchase warrant). Each warrant shall entitle the holder to purchase one common share of the Company at an exercise price of $1.75 at any time up to and including the close of business on June 21, 2013, being the day which is 30 months from the closing of the offering. All securities issued under the offering are subject to a hold period ending April 22, 2011.The net proceeds received by the Company from the sale of the units will be used to advance the Company's Milestone Potash Development Project located in the Province of Saskatchewan, and for general working capital purposes.

CF Industries Holdings Inc. has signed an agreement with Shell Oil Company to use Shell's Thiogro process technology to produce a sulfur-enhanced phosphate product. The product manufactured with this technology will be a sulfur-enhanced monoammonium phosphate (MAPS) with a nutrient content of 11 percent nitrogen, 40 percent phosphorus, and 12 percent sulfur. This new technology incorporates sulfur with the fertilizer granule, which provides a highly utilizable form of nutrient that persists in the soil. According to CF Industries president and CEO Stephen R. Wilson, "There is a growing agronomic need for this kind of product. Alternative products, most made in Poland, China and Russia, have not been available to growers consistently in our target markets. CF Industries identified the need and is now positioning itself to meet it with a high-quality product that is easy to handle. The product's superior traits also present CF Industries with a higher margin opportunity over competitive MAP products."

Uralkali officially launched a $7.8 billion friendly takeover of domestic rival Silvinit on Monday. Pavel Grachev, Uralkali's chief executive, said in a statement that the merger is a ?critical step toward the creation of a leader in the global potash sector. The new company, with an estimated market capitalization of $23.9 billion will be the second-largest potash producer in the world, behind Potash Corp. of Saskatchewan (NYSE:POT). Completion of the deal is expected in May, pending shareholder and regulatory approvals. Shareholders will receive 133.4 Uralkali ordinary shares for each ordinary share in Silvinit and 51.8 Uralkali ordinary shares for each preferred Silvinit share. A 75 percent majority approval by shareholders is necessary for the deal to go through. Extraordinary shareholders meetings for both companies are scheduled for the first week of February; the deal has already received binding approval from 53 percent of Uralkali and 67 percent of Silvinit shareholders.