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A potash mine. Reuters
A potash mine. Reuters

Arab Potash heading for giddy heights

What's Up: Jordan-based Arab Potash may benefit from higher price forecasts for the commodity on world food demand.

Jordan's Arab Potash headed for its highest level in a month yesterday after Goldman Sachs raised its potash price forecasts by 6 per cent to 9 per cent for the next year.

Potash is a type of mineral used to make fertiliser.

There is so much demand from farmers that potash producers are raising their prices almost constantly.

Arab Potash rose 1.8 per cent to 42.44 dinars a share in Amman, its highest since June 1, after the Goldman analyst Vasily Nikolaev said potash had "strong" fundamentals.

Jordan is among five countries that control 90 per cent of the world's phosphate and potash reserves.

Arab Potash, which has the capacity to produce 2.45 million tonnes per year, has secured contracts with India and China to deliver 1.8 million tonnes to each country over the next three years.

Arab Potash collects the commodity from the Dead Sea and benefits from low production costs.

The spot price for potash has risen by about 25 per cent this year to more than US$500 per tonne, and is likely to reach $600 by the end of the year, according to analysts. Continued strong demand for fertiliser products is expected worldwide as populations increase and agricultural land diminishes.

Food prices are likely to rise for the next decade, according to forecasts by the UN Food and Agriculture Organization and the Organisation for Economic Co-operation and Development.

The agencies predicted that cereal prices, adjusted for inflation, would be up to 20 per cent higher on average over the next 10 years, while meat prices would be up to 30 per cent higher.

Arab Potash doubled its profits in the first quarter of this year, reporting a net income of 54.3 million dinars, up from 23.7m dinars in the same period last year.


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