Only 12 countries in the world produce potash. Of those, only 10 export the commodity.

“Brazil and China use all the potash they produce and also import significant amounts. The largest potash producers — Canada, Russia and Belarus — account for two-thirds of total world production. These same three countries account for 75 of world exports.”

The 10 potash-exporting countries supply potash to over 100 nations. The largest importers of potash are China, the United States, Brazil and India.

“The 31 percent increase in potash demand through 2007/2008, and the continuation of strong shipments through the summer of 2008, led to the lowest level of potash inventories on record. … Again, that placed upward pressure on prices.”

As for shipping costs, “China’s booming economy and appetite for resources drove ocean freight rates up 500 to 600 percent from January 2001 through May 2008,” said Vroomen. “Higher energy prices also drove up the costs of truck, barge and ocean freight rates. Railroads no longer want to haul ammonia for liability reasons and have raised rates significantly.”

Another inhibitor: the U.S. dollar fell significantly into the summer of 2008. “This also played a part in increasing fertilizer prices. … Since fertilizer materials are priced in U.S. dollars around the world, exchange rates matter.”

Other factors tightened the market further. “The issue of hoarding, or limiting exports, first showed itself in the form of curbed food exports in 2008. … These same types of export restrictions were (later) put on fertilizer…

“The most significant example of this is China’s export tariffs on urea and ammonium phosphate. China is the largest exporter of urea in the world, accounting for 16 percent of world exports in 2007. China is also the second-largest exporter of ammonium phosphates in the world, accounting for 24 percent of exports in 2007. So, when China raised export tariffs to well over 100 percent (actually, up to 185 percent) in the spring of 2008, world markets tightened further.”

What did the record 2008 fertilizer prices do to fertilizer demand?

Vroomen first touched on the U.S. market.

“The U.S. economy was in pretty rough shape. This impacts growers’ psychology, which impacts planting and input decisions...

“Corn prices received by farmers peaked in June 2008 and have dropped since. Fertilizer prices continued to rise and were slower to come down. … (The two) don’t move together one-for-one but generally move together. … In 2008/2009, there was a big divergence – we’d never seen a divergence like that in corn and fertilizer prices.”