The Great Potash Cartels!

Financial market watchdogs have long complained about the manipulation of various economic markets. Just within the past month, for instance, news about the manipulation of commodity metal values, energy prices, and interest rates have rocked the investment industry.

But are you ready for the possibility of manipulation in the potash market? Potash?

Potash is a natural resource that is mined and utilized to manufacture potassium, a compound that possesses a myriad of industrial and consumer uses. Salt, for instance, is produced from potassium chloride, and commercial fertilizer is produced from many varieties of potassium.

In other words, the food supply that humans, animals, and plants ingest is dependent on the continued existence of a stable and affordable global market of potash. Thus, by dominating the potash industry, organizations could gain control over food itself.

Until last week, the global potash market has been dominated by a pair of business cartels. One has been a venture between the Russian firm Uralkali and the Belorussian firm Belaruskali; the other, called Canpotex, has been a three way venture of the Canadian firms Potash Corporation, Mosaic, and Agrium.

But last week, Uralkali shook the industry by withdrawing from its cartel. And the global mining firm BHP Billiton is now considering a $14 billion Canadian resource opportunity that would bring a major new competitor to the potash market.

So what evidence exists of potential potash price manipulation? During the past six years, market prices have fluctuated from the low $300s per ton to the high $800s per ton. These fluctuations have been massive and abrupt in scope and direction, with no readily apparent explanation to account for them.

So, for now, the potash market remains under the control of a few giant firms. Nevertheless, the recent withdrawal of Uralkali and the potential entry of BHP may indeed portend a more competitive future.