July

Potash Corp: Dynamics of Supply and Demand Drive Earnings Growth

The impact of oil prices

In US, relatively a large portion of corn (about 25%) is dedicated to ethanol production. Yet if you look at the situation with a global perspective, since 82% of POT’s potash production is consumed by countries other than the US, the impact of demand of ethanol on corn prices might not be as significant as you thought.

Currently less than 6% of grains worldwide are used in biofuel production, with the rest goes to feeding (36%), seeding and food consumptions (58%). According to the International Energy Agency, land dedicated to grow feedstock crops for biofuel currently accounts only 1% of the world’s arable land, which is only 14 million hectares, and will reach 10 – 20% by 2050 when ethanol production reaches the level required by regulatory entities in various countries. Food farming in the foreseeable future still claims the absolute majority of farmland, where the fertilizers are applied. And food farming alone will sustain the demand for potash for the years to come.

MEMC Electronic Materials: Climbing the Wall of Worry

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