Potash: We See Prices Rising After 2024 and View Mosaic and Nutrien as Undervalued

Potash prices have fallen 75% since reaching an all-time high in April 2022. The price spike was driven by a supply shock from temporarily reduced exports, which, in turn, reduced near-term demand. With supply back to normal levels and demand still recovering, prices overcorrected. Potash now sells at roughly $305 per metric ton, based on World Bank data. This is below what we view as the long-term marginal cost of production. In the near term, prices should remain low. We see the India-Canpotex contract, which informs spot prices, being set at a multiyear low below $300 per metric ton in 2024.