greencapitalist

The Global Agricultural Boom: No Bubbles Here

mark:
i think you might be off target here.

>>>>>&g... the growth potential of the demand is pretty limited and may probably peaked already. There is less arable land where fertilizer is needed. The demand growth is largely due to farmers apply more fertilizer in the hope of producing more food per acre of land. But you can only push per acre production so much. As fertilizer price goes up, farmers tend to use less. Because if they use more fertilizer it increases their cost, and they don't know whether the crop price may collapse by the time of the harvest season, and they may not be able to recope their fertilizer cost. That is a risk they are not willing to take.
there is one more vital reason why fertilizer, esp potash is in demand. countries like china, india, kenya,vietnam, mexico are fast trying to increase their wheat and paddy production. although arable land might be coming down, it is expanding on crops that need more fertilizer. so the fact that arable land coming down (that too not at any alarming levels) is not a factor at all.

>>>>>&g... the suppy side, the earth has plenty of potash element. There is tremendous amount of resources to allow supply growth. And the annual production has been going up quickly. The ocean of the earth is a giant reservoir of potash, at certain point of price it may become economical to produce from the ocean.
i think you may be wrong. on supply side, supply is indeed tight. only 12 places in the world has proven potash capacity and that's the reason why potash is in such demand. look at intrepid potash ipi and you can see why they are hot too.
i have never heard of ocean potash. even producing potash from ground is a complex process + limited supply.
some analysts, esp the analyst from canada is predicting 1000 figures per ton for potash. if china, india and vietnam wants to secure potash then there is another legup for prices.

one thing that can supress demand is organic farming. if organic farming catches up big time in china and india, then these fertilizer companies are in trouble. but with china and india governments almost becoming corportaist organic farming will be killed as it grows.