potash booming

Soaring Potash looks overseas

STEVE LADURANTAYE

July 25, 2008

Demand for fertilizer remains strong despite recent price hikes, Potash Corp. of Saskatchewan Inc. said yesterday as it reported record profits.

"Higher prices have not had an impact on demand, as farmers realize they still realize significant returns on their potash investments," chief executive officer Bill Doyle said. "The long-term fundamentals that underpin our success are very clear and show no signs of abating."

Saskatoon-based Potash Corp., Canada's largest company by market capitalization, said yesterday that profit more than tripled during its second quarter. The company also raised its full-year forecast to $13 per share, from its April estimate of $9.50.

"China, India and other developing countries continue to gain economic strength and their people increasingly want to buy more food and better food," Mr. Doyle said. "For farmers to increase grain production, they must optimize their use of fertilizer."

With North American potash inventories sitting 41 per cent lower than their five-year average, the company has been able to set prices at $722 per short tonne as of September, up from $387 in February. International contracts, which Potash Corp. negotiates as part of a consortium with other Saskatchewan producers, have neared $1,000.

The world's potash supply is estimated at 50 million tonnes a year, with Potash Corp. supplying 10 million. Supply falls far short of demand - Mr. Doyle said, China and Brazil alone would easily import 25 million tonnes more a year if it were available.