Last week the Globe and Mail ran a similarly jargon festooned piece that foreshadowed today's 'news' titled 'Cartel collapse hits Potash Corp., prompting mining giant to cut outlook' Translation: After years of squeezing the supply by warehousing the commodity and thereby both raising the market price of potash and limiting production, a small producer, Belaruskali of Belarus, nearly bankrupt and desperate to pay it's bills and taxes, decided to go rogue and said it would seek to maximize sales volume instead of restrict its sales to the cartel proscribed limits.
Within days of the collapse of the cartel's monopoly controls the market price of potash gave up its supply restricted premium and dropped 23%. Of course the rogue sellers are selling more now, the big guys are selling less and the price of potash remains low consequently the big producers are trying to cut their overhead until...
So, after reading the last two days articles on commodity market and price manipulation, what do think will happen to potash prices in the near future? A: plummet. Why? A: The big guys will flood the market with warehoused potash. What will happen to the little producers? A: They'll either sell out to the big guys or go bankrupt [in which case the big guys buy up their stuff even cheaper]. Either way, the big guys will oversupply the market until the little guys capitulate. Then what will happen? A: Potash will be withheld again by the oligarchy/cartel, prices will rise again, the cartels will sell slowly re-ratcheting up the price as they had in the past, except on the coming iteration the cartel will have more commodity to control the market with.
Potash is indispensable to industrial agriculture, in the medium to long term [unless there's a asteroid or Gaia sized collapse] global demand for potash will continue to slowly rise, it's all part of the business cycle, part of the cycle that transfers your hard earned dollars into their manipulated windfalls.
