From the Wall Street Journal's Heard on the Street column:
Collapse of a Potash-Market Cartel Slams Producer Stocks—and Is Another Blow to Commodities Bulls
The commodities supercycle, wobbly already, just skidded into the dirt—literally.
Russia's Uralkali, URALL -12.32% the world's largest potash producer by output, has pulled out of its sales partnership with Belarus that, according to CIBC, controlled about a third of global capacity for the fertilizer ingredient. This is a big deal, as the potash market is defined by such cartels: A second one, North America's Canpotex, controls another third. Stocks of big producers including Uralkali itself and Potash Corp. of Saskatchewan POT.T -5.57% plunged Tuesday.
This looks like a classic case of high prices and a hot growth story prompting a wave of new supply just in time for key markets to slow down. Potash demand was meant to spiral upward along with appetites in developing markets; spot prices went north of $1,000 a metric ton in 2008.
Today, potash is priced closer to $400. Demand growth has slowed along with emerging-markets economies. For Brazil and India, two key markets, this is compounded by a slide in their currencies, raising the cost....MORE
Now, if only the International Parsley Cartel would back off their strong-arm tactics......Meanwhile, supply is rising. CIBC forecasts annual operating capacity to expand from about 62 million metric tons in 2012 to almost 71 million metric tons in 2015. Demand this year is put at just 54 million metric tons. Uralkali's proposal to run at 100% capacity in the second half of the year, against 70% in the first half, would add almost two million metric tons of extra supply alone....
The Sicilian Mafia and the International Lemon Cartel