do not be too overexposed, page-95

kalmsg,

Sorry if the post sounded like an assertion of anything. I appreciate focusing the discussion in terms of long run (ie secular) demand. Because that drives supply, as is evidenced by its influence on whether an individual DAP plant is open in any given month.

Diet in developing nations is the primary driver of secular demand, and biofuels have a lesser (but I think still significant) effect despite their relative greater press coverage in the west.

The main thrust of my argument that China's effect on the demand for fertilisers of all types, is based on:

1) China has had recent experience during the Cultural Revolution of mass starvation among its people due to ill-advised agricultural policy

2) China has recently started a process of liberalisation of its agricultural base, which allows small holders to sell their land. The likely consequence of this is that conglomerates will take control of large areas of land and use it increasingly for broadacre farming which is more reliant on chemical fertilisers.

3) China is well placed financially to fund development in essential areas such as food supply.

You mention the increasing unemployment rate in China. These people will still eat, but maybe less. Nevertheless the amount of food they consume will shrink less than the amount of other goods and services they consume - food has a very inflexible demand curve.

For me economics is about where money will flow from and to. There are plenty of businesses that are not necessary, and plenty that are. Logic dictates that funds will flow to the most resilient sectors.