A Flourishing Opportunity for Investors: The Potash Market
- Population Surge: The world is on the brink of a significant population explosion. Estimates predict that by 2050, there will be a nearly 30% upsurge in global inhabitants.
- Skyrocketing Potash Demand: Along with the burgeoning population, the craving for potash is set to escalate. Forecasts indicate that the annual global demand for potash will surge by close to 3%.
- Shrinking Arable Land: A pressing concern for the agriculture sector is the dwindling amount of arable land available per person. Shockingly, global figures have plummeted from 4,500m^2 per individual in 1960 to a mere 1,800m2 projected for 2050.
- Potash: The Sought-After Solution: With diminishing arable land, the urgency for enhancing soil fertility intensifies. This scenario underscores potash’s pivotal role as a key ingredient to boost agricultural productivity.
Unraveling the Potash Legacy: From Pots to Fields
The moniker ‘potash’ carries with it a hint of history, echoing back to a primitive yet ingenious extraction method. The genesis of its name lies in an age-old practice where potassium was harvested from plant and wood ash by steeping it in water within expansive pots. Once the water dissipated and evaporated, the residue, dubbed ‘pot ash’, became the centerpiece.
Originally, this byproduct found its utility in the making of soap and glass, modest applications for what was to become a linchpin in the agricultural world. It didn’t take long before astute observers realized the transformative effects it bestowed upon plants. The revelation of potassium’s profound agricultural advantages soon followed.
While the methodologies of production have undergone evolution and refinement over the centuries, the nomenclature ‘potash’ has endured. Today, it stands as a testament to potassium-rich minerals predominantly harnessed as fertilizers, powering agriculture across the globe.
Understanding Potassium: The Unsung Hero of Agriculture
As soil quality around the world declines and the global demand for produce increases, potash will play a vital role in the expansion of the world’s food supply.
The potash market.
The potash market has experienced rapid growth in the last decade, primarily due to an increased demand for food, fibre and feed in developing countries. This upward trend can be directly linked to a number of fundamental factors including global population growth, increasing incomes in emerging markets such as Brazil, Southeast Asia, China and India (which creates demand for improved diets) and the decreasing availability of arable land.
In the years to come, population growth and dietary changes in the developing world are expected to be the key drivers of the increasing global food demand, which is precisely what drives the potash market. South Harz Potash expects the global demand for high-grade Muriate of Potash (MOP) to increase to 88Mt by 2033.
Another key driver of the potash market is that it is a finite resource, with no known substitutes in agriculture. The vast majority of the world’s supply comes from only a few countries with Canada being the world’s biggest supplier and exporter, producing over one third of the word’s global output in 2018 (over 68Mt). This is followed by Russia, Belarus, Israel, Germany and the rest of the world.
Although the COVID-19 pandemic led to a dip in prices, a confluence of demand and supply factors continue to result in a tight market. Global demand is expected to increase by 2.9% in 2021 with this demand primarily driven by China and Brazil. In addition, a dramatic crop price increase is forecast for 2021, with the soya index surging by 76% and corn index by 72%. The long term price for MOP is predicted to be $260-$320/t.