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An employee checks an store of processed potassium salts at a Uralkali potash mine near the city of Berezniki in the Perm region of Russia.

SERGEI KARPUKHIN/REUTERS

Globe editors have posted this research report with permission of TD Economics. This should not be construed as an endorsement of the report's recommendations. For more on The Globe's disclaimers please read here. The following is excerpted from the report:

Global potash markets experienced a roller-coaster ride in 2013, due to a Russian-Belarussian potash joint venture (BPC) breaking up. This cartel supplies 42 per cent of all world potash exports. The split negatively reverberated through markets, sending potash prices to a four-year low.

Russian potash producer Uralkali's move to pursue a volume strategy – as opposed to a price strategy ought to translate into heightened competition within the industry. Additional potash supply will limit the upside potential for potash prices.

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Key potash buyers, including China, delayed their contract settlements in the hopes that potash prices would move lower. This game plan proved to be a good one, as China recently settled a contract with a potash price of $305 (U.S.) a tonne, cost and freight included (CFR). This agreement sets the tone for what to anticipate in 2014.

We expect international potash prices will hover close to the current level of $305-320 a tonne, on a CFR basis, over the next two years. This is in line with supply-demand fundamentals, including: the ongoing transition to more balanced diets, global urbanization and a need to increase crop yields in light of less arable land per person.

Read the full report here.

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