Fertilizer buyers can absorb hikes - PotashCorp

24 April 2008 21:39  [Source: ICIS news]

HOUSTON (ICIS news)--Fertilizer buyers around the world would be able to accept further significant price increases because the improved crop yields justify the input costs, PotashCorp CEO Bill Doyle said on Thursday.

But buyers need to be given time to digest price hikes already underway, Doyle told analysts during a conference call.

"We would like them to drink out of the drinking fountain, not the fire hose," Doyle said.

On 16 April, the Canpotex joint venture, in which PotashCorp is the biggest shareholder, announced a 2008 supply contract with China's Sinofert at a $400/tonne (€252/tonne) increase.

Price details were not disclosed but the deal was believed to take muriate of potash (MOP) to around $575/tonne FOB (free on board) Vancouver.

The market would eventually reach $1,000/tonne but PotashCorp would not push its customers too fast, he said.

"We want to give them time to digest, time to plan," he said.

There were "pretty compelling economics" to keep farmers using fertilizer even at higher prices, Doyle said.

At the low end of the range, a corn farmer in the US would get $3 back for every $1 spent on fertilizers, while at the top end an Indonesian palm oil farmer would get $9 back, he said.

On that basis, "the affordability is certainly there", Doyle said.

Earlier on Thursday, PotashCorp said its first-quarter operating profit more than doubled from a year earlier on increased demand for its potash, phosphate and nitrogen-based fertilizer products.

($1 = €0.63)

For more on fertilizers visit ICIS chemical intelligence

 

By: Stephen Burns
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