Canuck Investor

Some Important Notes on Potash (And Ways to Profit)

Despite what Potash Corp says about demand for higher quality food driving higher fertilizer prices the real cause is the increase in biofuels production. The World Bank published a paper entitled: "A Note on Rising Food Prices." To quote: "It concludes that the most important factor was the large increase in biofuels production in the U.S. and the EU. Without these increases, global wheat and maize stocks would not have declined appreciably, oilseed prices would not have tripled, and price increases due
to other factors, such as droughts, would have been more moderate.

So, fertilizer prices are tied to oil prices and corn prices. At lower oil prices ethanol is not an attractive substitute.

I'm long Potash Corp myself.