Fertilizer fight may help sink global food prices

Belarus, Russia and now China - are involved in a tussle for control of a valuable commodity that determines the cost of the food on your plate.

Potash, a mineral which has long been used as a soil fertilizer, is usually a reassuringly boring commodity. But the squabble between Russian company Uralkali, the world's biggest potash producer, and its Belarusian partner has ignited interest in the market and sent prices into freefall – which could ultimately mean cheaper food.

CIC, China's sovereign wealth fund, bought a 12.5 percent stake for an undisclosed sum in Uralkali Tuesday, giving them a seat on the board and an even closer interest in potash – China is already one of the world's biggest importers of the commodity. While the fund already had the option to take the stake, CIC's move was earlier than expected.

CIC is stepping into a fierce dispute between Uralkali and the government of Belarus that has already seen the company's CEO arrested and caused the price of potash to tumble.

The overall market for potash is worth around $20 billion annually and around 50 million tons are produced every year, most of it in Canada, Russia and Belarus.

While the cost of potash is only one of multiple factors affecting the cost of food, large swings can affect the price of commodities like corn and sugar. Uralkali controls around 20 percent of the market. Its production costs are lower than many of its competitors because of its location, so it should be in a better position to undercut the market. This is one of the reasons the share prices of the major North American potash producers, PotashCorp, Mosaic and Agrium have suffered since the summer.

There is currently a global surplus because many companies ramped up production while food prices were at their highest. Prices have been hovering around $400 a ton for much of 2013 – until the dispute in Belarus blew up.

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