Stocks In The Potash Sector Are The Hottest In North America. Here's Why.
You may be hearing all of the rage in the financial newspapers, on television and even around the water coolers about Potash fertilizer stocks. Many have tripled over the course of the past twelve months. So what is this Potash stuff exactly?
To be exact Potash is an impure form of potassium carbonate. It is found in few areas of the world but the head of Potash production and resources is found in the Canadian of Saskatchewan, which is within the free world country of Canada. Potash is found deep within the ground and has to be mined out of the ground. To be exact, run of min ore is crushed into a chemical named KCI (which is Potash salt) and is later scrubbed, dusted and thickened before turning into a final Potash product. But hey, let’s push the science aside and look at it from a purely stock market perspective.
Most recently Potash Corp of Saskatchewan (POT) raised by 300% the price of their Potash fertilizer for long term contracts to overseas customers. Now how many business’ have the power to not only double but add 200% to the price of their fertilizer? This is proof of the demand for this fertilizer.
The prior example is from the start of 2008. As of this current writing (June 2008) the CEO of this Potash Corp has publicly come out and said that this is just the tip of the iceberg. Remember, CEO’s are assuredly held accountable by the Security and Exchange Commission for forward looking comments.
CEO of Potash Corp, Bill Doyle
“We have a lot of pricing power. We’re nowhere near peak pricing”
“We clearly aren’t experiencing any demand destruction”
While Potash Corp is considered to be the trend setter in the sector there are many other high capacity large cap and mid cap potash stocks in the stock market. MOS (Mosaic and AGU (Agrium) have both been able to raise their prices just as Potash Corp has.
With countries such as China experiencing over 15% inflation in agricultural prices vs the last fiscal year, the growing demand for the fertilizer warrants these price increases. Simply stated, using Potash in your crops will yield a large quantity and a higher quality of food. This is why everyone are willing to pay large amounts to obtain potash, even to the point where a three time fold increase in cost still yields a more profitable transaction for the agricultural farmers.
Will the potash gains continue? Nothing is absolute but with the recent headlines by the WHO (World Health Organization) going over the high probability of wide spread agricultural shortages a product that helps to create larger and higher quality crops is set to continue to be in demand.
Interested in learning more about the Potash industry? Potash Stocks Canada has daily updates, reports and an ever growing community with the set goal to research and finding the latest and greatest Potash investing opportunities.
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