A top executive at Saskatchewan PotashCorp says potash producers will not be able to meet the 2011 world supply capability of 61 million tonnes.
David Delaney, PotashCorp executive vice-president and chief operating officer, said in a conference call Tuesday that "hitting the target would have required "perfect production, very little downtime. When you're pulling all these operations around the world that hard, it's really difficult to do."
The Star Phoenix quotes Delaney saying that various delays have occurred around the world, but also at PotashCorp's Saskatchewan mines.
"We've had ramp-up issues at Cory. We had a few minor issues at Allan. We had geology issues at Lanigan. So hitting every day, perfect production to fit this demand is really quite difficult," Delaney said.
With the supply ceiling expected to grow to 63-64 million tonnes in 2012, Delaney predicted it will be "difficult to hit that number," reported the Star Phoenix, but he expected PotashCorp would push supply to match demand, which is anticipated to grow three percent:
"With these record grain prices, record demand, low inventories … I think all the major markets, including North America, are going to be extremely strong and push the industry to supply it," he said.
Bloomberg reported last week that prices in the $150 billion fertilizer market are lagging behind gains in food costs, providing farmers another incentive to boost production and leaving a gap for potash producers to further increase prices which have already surged 29% this year.
Potash is 36% cheaper than in June 2008 when corn rose to a record, according to data from ICIS, a commodity-pricing company. In contrast food prices gained 4.3% over the same period, an index of the United Nations shows.