The Rural Voice, 1995-11, Page 13Robert Mercer
increase was not unexpected.
As Ontario switches to more winter
wheat the need for nitrogen fertilizer
will come early in the year. This will
be the key market to watch for price
direction as use of phosphate and
potash can be put on hold for a short
time if soil tests are in any way
supportive of a cutback in additional
applications. At the moment it is
phosphate that may be the ingredient
that moves highest as ownership of
the resources are in tight hands with
the Potash Corp of Saskatchewan a
major player with IMC.
Farmers however, play from a
strong hand as they can, in total,
reduce demand in the short term.
With Potash Corp shares now at $90
plus, as of mid October, up from $30
in early 1994, shareholders will be
demanding excellent quarterly results
and earnings. This will be difficult if
North American demand does not live
up to expectations that have been
forecast for spring 1996.
The wholesale price for diamonium
phosphate as listed on the CBT has
gone from $100 (U.S.) a tonne in
January 1993 to $210 a tonne this past
month and the price trend is still
positive.
For potash the big news has been
the purchase of up to one million
tonnes of product by China to be sup-
plied by Potash Corp of Saskatchewan
and AGrium Inc. (formally Cominco).
It now looks as if China could take as
much as 1.6 million tonnes of potash
in 1996. Rather than import grain that
vast country is shifting its focus to
importing fertilizer. This will keep
the rural economy alive even though
reports suggest that the soil organic
matter is all but depleted due to their
harvesting practices of taking
everything off the field including the
stubble and stalks.
Just like the switch to winter
wheat, this coming spring could see a
similar switch to even more soybeans
away from the high input costs of
corn. It will need an even better price
ratio than normal to get corn acres this
year, so soybeans could become the
dominant crop in Ontario, not com.0
Robert Mercer is the founding editor
of the Broadwater Market Letter for
which he continues to write market
and ag-political commentary.
KMM
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NOVEMBER 1995 9