Investing.com -- Shares of Nutrien (TSX:NTR) Ltd (NYSE:NTR) climbed 3.6% while Mosaic Co (NYSE:MOS) saw an increase of 4.8%, following news of a significant production cut by Belarusian potash supplier Belaruskali. BMO (TSX:BMO) analyst Joel Jackson noted that Belaruskali, a key player in the global potash market, is reducing its potash production by approximately 1 million tonnes in the first half of the year for reliability and efficiency improvements at one of its mines.
This reduction equates to about a 1.5% loss in the annual global potash production, which is particularly impactful considering that Belaruskali produced around 10.5 million tonnes last year in a market that totals approximately 71-73 million tonnes per year. The timing of the production cut suggests that the first half of the year could see a greater impact on the market.
Potash prices have been on the rise, with Brazilian spot prices increasing roughly $30 per tonne to about $310-320 per tonne CFR, up from the $280-285 per tonne floors seen in October and November. The reduction in supply from Belaruskali is expected to support the continuing positive price momentum for potash producers including Nutrien and Mosaic.
Joel Jackson's analysis further cements this outlook, stating, "This development should help the positive dynamic continue for NTR, MOS, K+S, ICL (TASE:ICL) etc.," indicating that the reduced supply from one of the world's largest potash producers could benefit other companies in the sector by sustaining or potentially increasing potash prices.
Investors in Nutrien and Mosaic appear to be reacting to the potential for these companies to benefit from tightening global supply, which could lead to better pricing power and improved financial performance. The stock movement today reflects this sentiment, as both companies' shares have experienced notable gains in the trading session.
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