Potash, round two

Apparently, potash companies don't absolutely have to charge $700 or more per tonne of pink gold to make some money on their commodity.
Potash Corp. of Saskatchewan managed to have a record-breaking first quarter this year, earning $732 million US, or 84 cents per share -- up from $444 million or 49 cents per share in the comparable quarter of last year.
Indeed, Potash Corp. sold $1.1 billion in potash.
All of this was on the back of a potash price greatly reduced from before the recession. Average sales were $366 US per tonne, applied to 2.8 million tonnes of potash.
The company often made the point, while the price was soaring, that high potash prices were necessary to drive future potash production -- expanding mines, and possibly opening greenfield mines, although Potash has pooh-poohed greenfields when other companies have threatened to open them.
It seemed like a good point, until this year's Q1 results are examined.
I have noted in a previous blog that farmers were finally forced to vote with their feet when the price got too high -- grassroots reaction to global commodity conditions. That did mean, of course, that many fields across the world were pining for nutrients a year or two later. However, it did drive down the delivered potash price considerably, and made it affordable again -- affordable enough to buy and spread.
On one point, the potash companies are absolutely correct, and it's a simple one: if we are to grow enough food to feed the world, fertilizers are crucial. Absolutely true. But farmers must be able to buy their inputs without going broke for this food-growing cycle to actually work.
And it looks like the cycle is even working for the potash miners.