Market and product

A long-term shortfall in potash application has depleted soil nutrient levels in key markets, and will boost future demand for the nutrient, PotashCorp said.

The Canadian potash giant forecast demand for the plant nutrient to grow by 2.5-3.0% a year over the medium-term.

And the longstanding application deficit in North America could lead to a doubling in potash demand, in the region.

Unsustainable deficit

Fertilizer consumption has remained stable in the region for the past two decades, but PotashCorp says a trend toward higher crop removal rates is depleting the soil of potash.

"We believe this application deficit is not sustainable and if not addressed could jeopardize the soil's long-term productivity," PotashCorp said.

Since 2010, the rate of potash depletion in the US has exceeded application by more than 7m short tonnes a year, PotashCorp estimates.

"Closing this gap would require farmers to nearly double application rates compared to current levels," the company said.

Removals rise

Crop removals in North America are increasing thanks to the planting of higher yield varieties.

Increasing the volume of crops taken from an area of land means that more crop nutrients are removed from the soil. Replacing these nutrients is essential to maintain productivity.

PotashCorp said large potash application deficits were found in most major crop-producing regions of the US.

The company expects an increase in potash application to begin in the Midwest, Southeast and Delta regions of the US, which will see the greatest benefits from additional potash.

PotashCorp notes that North American potash producers are already increasing capacity to meet this uptick in demand.

Asian imbalance

And potash has been under applied in key Asian markets, PotashCorp said, leading to a nutrient imbalance between potash and other nutrients.

"In China and India, average potash application rates on key crops such as rice, corn and wheat have lagged scientifically recommended levels," said PotashCorp.

"This nutrient imbalance, which limits yield potential, provides a significant opportunity for growth in potash consumption."

'Historically high levels'

China, the world's largest consumer of potash fertilizer, continues to rely heavily on overseas imports, boosting global demand.

Although China has been boosting domestic production, capacity growth is limited by the volumes and quality of available reserves.

"2015 shipments to the Chinese market are expected to remain at historically high levels," said PotashCorp.

"In the medium term, we believe annual consumption growth will continue to be strong and align with the long-term trend line."

Indian markets recover

Indian markets will see "challenges" for the rest of the year, as the weak currency and the slow pace of the monsoon threatens demand.

But the market is finding its feet, after a shake-up of the sector, including an end to price control and changes to the fertilizer subsidy, disrupted sales.

"Since deregulation, farmers are getting more accustomed to the changes in phosphate and potash pricing and demand is recovering," PotashCorp said.

PotashCorp was also bullish on Brazilian demand, despite the effects of a weak local currency and scare farm credit.

While 2015 is not likely to be a growth year in Brazil, shipments remain historically strong and we anticipate that Brazil's potash usage will continue to grow at rates higher than the global average over the next five years," PotashCorp said.