high food prcs continue to support fertilizers

"...executives told a group of stock analysts and investors to expect a wild-ride in crop and fertilizer prices over the coming years."

"Food prices will be supported by record low stockpiles of major crops such as corn, soybeans and wheat."

"...any news that could potentially increase demand or decrease supply will send prices reeling."

News: Potash Investing News, Wed, May 25, 2011
Source: Click here

Food prices have skyrocketed in recent months as bad weather threatened crops across the globe. Fertilizer prices have also rallied in recent months, and according to market experts, high food prices are likely to persist for the next few years.

High food prices are good news for potash prices, because as the price that farmers can sell their crops for rises, so does their cash flow to spend on fertilizer. In addition, as grain prices rise, farmers dealing with a finite amount of land have extra incentive to maximize crop yields, a feat that can be accomplished with increased applications of fertilizers.

At the BMO Capital Markets Farm to Market Conference in New York, executives told a group of stock analysts and investors to expect a wild-ride in crop and fertilizer prices over the coming years.

While food prices will be volatile, they will continue to move in one direction, and that is up. "We're seeing strength in the commodity sector across the board," said David Honeyfield, president and chief financial officer of Intrepid Potash Inc. The higher grain prices mean farmers will be able to pay for more expensive inputs like potash or other fertilizers, Honeyfield said. And prices aren't likely to fall anytime soon. Food prices will be supported by record low stockpiles of major crops such as corn, soybeans and wheat. These low stockpiles are the main reason why the market will experience so much volatility over the coming months. With no surplus to buffer any disruptions to supply, any news that could potentially increase demand or decrease supply will send prices reeling.

With supplies so low, it may take years to rebuild the stockpiles. "It takes two or three really good growing seasons to make a dent," said Honeyfield.