Some updates from Mosaic (MOS), and Agrium (AGU), which along with Potash (POT) are partners in the Canpotex 'cartel' - it appears Agrium has taken the same action as Potash in terms of suspending pricing until more details are free, and Mosaic would of done the same but they already are sold out for all of 2007 production.
- Fertilizer maker Mosaic Corp (MOS) said on Friday it is reviewing its position following news of a sinkhole problem that threatens to disrupt all potash shipments from Silvinit, a major Russian potash producer.
- The sinkhole from a flooded potash mine could halt shipments from Silvinit, which accounts for about 10 percent of world supply.
- "The potash situation was already very tight. We had stopped sales (two weeks ago) because we were already sold out through December," he added. "We had announced a price increase and we were trying to put together a program on new sales and it's all on hold right now while we examine the situation," said Hoadley.
- Potash Corp of Saskatchewan (POT), the world's largest producer of potash, announced on Thursday it had suspended new potash sales. Agrium Inc (AGU), the smallest North American producer of the nutrient, earlier Friday announced that it was taking the same action.
- Potash Corp, Mosaic and Agrium together own Canpotex, a marketing and distribution company which is also the world's largest exporter of potash. Most potash exports from the three companies' Canadian operations is sold through Canpotex.
- Belarussian Potash Co, the Russian equivalent of Canpotex, will also suspend new sales contracts, Russia's Uralkali said. Uralkali and Belaruskali each own a 50 percent stake in Belarussian Potash Co.
- Canpotex and Belarussian together control about two thirds of the world's potash exports.
- Disruptions to the rail line serving Silvinit could also impede exports from other Russian companies, said Downey, director of investor relations for Calgary, Alberta-based Agrium, the smallest North American potash producer. "If the rail line got interrupted over the next week or two, that would be pretty significant," Downey said. "You'd lose some of that export volume for a number of months."
Takeaway: Again, details are still vague but if this comes to fruition, this could have a significant near term price affect. We have 2 cartels that essentially control 2/3 of world supply and the 2nd largest cartel might have just lost a big portion of its supply for the near term. Still too early to tell, but this could make an already great investing situation that much better for the next few quarters. Keep in mind, Potash already had customers on allocation as supplies were so out of whack with supply. From an investors standpoint, you just have to love a situation like this - not so good for consumers of potash of course.
Long Mosaic, Potash in fund and in personal account
