What is not surprising is that there is a wide range in their forecast as the industry is in the middle of an unclear and volatile pricing environment.
What is surprising is that they are as conservative as they are on pricing despite the fact that there has been some rational behavior by producers, notably the Russians and Belarussians that recently put a floor into spot prices.
Potash is basically telling us that lower prices for potash has not led to any increase in demand. In fact, they have indicated a downshift in the global shipments forecast. This announcement is the most perplexing and has more to do with the price move in the stock today.
It is very difficult to explain such a falloff in demand when buyers had been delaying purchases through the summer based on the price wars that would benefit them for waiting.
The company said on their statement "we believe conditions are supportive for record potash demand", but they also said this depends on the buyers following through with more consistent behavior.
As we say in fertilizer land, "you can delay, but you can’t deny" the crop nutrients required. Farmers will have to step up and buy.
Demand will return to the table. The stock has dropped to a key level of support around $30.25. This appears a decent level to, at a minimum, trade the range to $33.00 or re-engage with a longer term investment.
The latter makes a lot of sense to me, but I also think today’s move is overdone. The industry has endured significant volatility and price discovery in the last few months.
The worst of the news is in the price.