Rising crop prices are giving farmers worldwide the “means and motivation” to boost yields and soil fertility, and to boost Potash Corporation of Saskatchewan to its fourth record year in a row, the company announced Thursday.
Saskatoon-based PotashCorp reported record net income of $1.1 billion on $5.23 billion in sales during 2007 (all figures US$), up from $631.8 million on $3.77 billion in sales in 2006.
That total comes partly from a record fourth quarter ending Dec. 31, in which the company posted net income of $376.8 million on $1.43 billion in sales, up from $186 million on $1.02 billion in the year-earlier period.
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Strong demand worldwide has cut into the fertilizer industry’s year-end inventories of potash, nitrogen and phosphate, the company said in its year-end report. In North America, fertilizer producers’ 2007 year-end inventories were down 26 per cent for potash, 17 per cent for urea and 21 per cent for diammonium phosphate (DAP) compared to previous five-year averages.
“With this tight supply, the growth in demand led to price increase announcements, especially in potash, which continued to sell on an allocation basis,” PotashCorp wrote.
Phosphate prices also rose in response to the tight inventories, strong demand and rising costs of the inputs needed to make the product. Worldwide demand for urea “more than offset a significant increase in urea exports from China,” leaving U.S. urea prices high, PotashCorp said.
Growth in world economies and emerging demand for western-style protein-rich diets in places such as China, India, Southeast Asia, Brazil and Latin America will continue to drive the demand for ag products and fertilizers, PotashCorp projected.
“Rather than leveling off, this trend is gaining momentum,” the company wrote. “The world has been enjoying unsustainably low grain prices for many years by drawing down inventories. Grain consumption has exceeded production in seven of the past eight years so this decline in grain stocks began before biofuels became much of an additional draw on global crop production.”
