Recently, global oligopoly potash supplier Nutrien, a Canadian fertilizer company, said the company cut production at its Cory potash mine, which has a potash production capacity of 1.9 million tons per year, due to an ongoing strike at more than 30 international terminal ports in Canada, including the port of Vancouver, which has resulted in the loss of the company's ability to export potash.
The strike has caused about CAD 5.5 billion (about USD 4.2 billion) in losses and about CAD 500 million in trade disruptions per day, according to calculations by industry body Canadian Manufacturers & Exporters.
Nutrien's president added, "If it continues, it will also affect production at our other potash mines in Saskatchewan." Canada is the world's largest producer and exporter of potash, accounting for about 32% of annual global production and 39% of global exports, with most of its potash exported through the Port of Vancouver.
Industry insiders said in response that Nutrien used the strike as an opportunity to cut production, possibly in an effort to boost global potash prices and boost its sales in the Brazilian market.
The supply of potash fertilizer is not only blocked in Canada, due to geopolitical conflicts, Russia and Belarus are still in the state of sanctioned, there are still obstacles to maritime transportation, payment and settlement and logistics supply chain transportation problems, most of the potash fertilizer products can only be transported through the northeastern border ports and the CHINA RAILWAY Express, which is subject to the port change capacity and CRexpress return empty containers and other issues, the transportation cost is higher and affects the efficiency of the export and sale of potash fertilizer products. The efficiency of export sales of potash fertilizer products is affected.
At present, the supply of white potash and Russian potash is still not optimistic, according to the latest official data of Russia, from January to May 2023, the production of Russian potash decreased by 12.1% compared with the same period of the previous year. The supply chain of Russian and Belarusian potash exports is still constrained, and the supply situation in the potash market is still not substantially restored.
Nutrien's share of sales in South America, with Brazil as its core sales region, was 34%.
From the downstream point of view, the demand for potash fertilizer in Brazil is gradually being released. on June 27, the Brazilian government launched the 2023-2024 Brazilian Agricultural Crop Plan, which is the largest agricultural crop plan in the history of Brazil. Data show that in 2023/2024, Brazil's top three crops soybean, corn, wheat planting area is expected to be: 4,520 hectares, 2,160 hectares, 330 hectares, year-on-year growth of 3.9%, 2.8%, 5.1%, respectively.
As a global agricultural country, Brazil began at the end of July to enter a new round of planting season, August-October will carry out the planting of corn, September-October Brazilian farmers will start planting soybeans, wheat and other crops. With the gradual planting of crops, the application of potash fertilizer significantly increased, Superimposed on the strong support of Brazil's agricultural crop program, the Brazilian market demand for potash fertilizer will further increase.
To sum up, the potassium production reduction plan is more likely to involve the release of signals to further stabilize global potash prices, to protect its core sales region of the Brazilian market, and to achieve the stabilization of potash prices before the advent of the planting season.
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