Potash is potassium-rich rock. Plants need potassium to grow but heavily farmed soil can be very low in potassium. Farmers apply potash to the land as a fertiliser to nourish crops and get more produce from each hectare. Without fertilisers like potash to boost potassium levels in the soil there wouldn’t be enough food to go around.
Why?
Two reasons. Supply and demand.
The global population increasing steadily (at a rate of about 11 million hungry mouths a month) meaning the demand for food is growing.
However the amount of viable farmland keeps shrinking (each year some is lost to urban development – and still more becomes desert). This puts a great deal of pressure on the farming sector to increase production. They do this by using fertilisers such as potash.
Potash Prices are Climbing
Potash prices are now rising fast. Since the start of last year they’ve increased over 30% to reach $476.30 per tonne last month. Yet they are still a long way from their peak which also makes me confident the price won’t collapse any time soon.
Potash Price
Potash is in demand wherever farmers are growing crops. The world’s biggest potash consumers are therefore China Brazil India and the United States.
The US is a big consumer. But surprisingly it imports 91% of the potash it uses.
Most US potash imports come from Canada. The US is keen to be more independent of its reliance on Canada.
One of the most important points to remember is that potash is less volatile than many other commodities. It moves mostly in line with good old-fashioned supply and demand. There are no futures markets ETFs or hedge funds playing around with the price.
Because of this potash stocks are a bit less unpredictable.
And even in a recession there are almost seven billion people who need to eat.
That’s why potash is what I’d call a recession-proof commodity. An indispensable commodity. And one well worth thinking about adding to your portfolio.