Potash is a group of minerals and chemicals that contain potassium, a vital nutrient for plants and animals. The term refers to compounds including potassium sulfate, potassium-magnesium sulfate, potassium nitrate, potassium carbonate, potassium oxide, and potassium chloride. Among these, potassium chloride (KCl), also known as muriate of potash (MOP), is the most commonly produced and used form of potash.

Potash is primarily used to produce fertilizers, which are essential for plant growth and development. Fertilizers containing potash help to support plant growth, increase crop yield, and enhance disease resistance. Additionally, potash helps to improve water preservation, making it an indispensable supplement to the natural nutrient content of soils. Soils often lack these essential nutrients, or growing crops have depleted them, making potash a necessary addition to maintain soil fertility. With approximately 95% of potash being used in fertilizers, its role in agriculture cannot be emphasized enough. The remaining 5% is used in the production of potassium-bearing chemicals, such as detergents, ceramics, pharmaceuticals, water conditioners, and alternatives to de-icing salt.

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Potash is mined from underground deposits, either through conventional underground ore mining or by injecting water into the underground ore body and extracting the resulting brine.  According to a report by the Canadian Government, potash production was estimated at 67.5 million tonnes globally in 2023, with Canada contributing 32.4% of the global supply. Canada, Russia, and Belarus dominate global potash production and accounted for 65.9% of the total in 2023. Canada is the world’s largest producer and exporter of potash, with 11 active mines in Saskatchewan, producing 21.9 million tonnes and exporting 22.8 million tonnes in 2023, which accounts for over 41% of global exports.

Potash prices have fluctuated over the years, declining from 2013 to 2016 and remaining relatively low until 2020. However, in 2021, prices rose sharply due to strong demand, and the surge continued into 2022, peaking at $1,202 per tonne in April, driven by geopolitical tensions and the Russian invasion of Ukraine. By June 2023, prices had fallen to $328 per tonne as global supply concerns subsided.

Potash is a vital nutrient for plants and animals, and its importance in fertilizers cannot be overstated. As the world’s population continues to grow, the demand for potash is likely to increase. With that in context, let’s take a look at the 11 best potash stocks to buy according to hedge funds.

Our Methodology

To compile our list of the 11 best potash stocks to buy according to hedge funds, we sifted through financial media reports and potash-related ETFs to find companies that are involved in the production and processing of potash. We then used Insider Monkey’s hedge fund database to rank 11 stocks with the largest number of hedge fund holders, as of Q3 2024. The list is sorted in ascending order of hedge fund sentiment.

Why do we care about what hedge funds do? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).

11 Best Potash Stocks to Buy According to Hedge Funds

11. Brazil Potash Corp. (NYSEAMERICAN:GRO)

Number of Hedge Fund Holders: N/A

Brazil Potash Corp. (NYSEAMERICAN:GRO) is a mining and exploration company focused on developing the Autazes potash mining project in the state of Amazonas, Brazil. The company was recently listed on NYSE American under the symbol “GRO” and commenced trading on November 27, 2024.

Brazil Potash Corp. (NYSEAMERICAN:GRO) is focusing on securing all required environmental licenses for the Autazes Project. The company has already made significant progress in this regard, with the majority of the Mura indigenous villages agreeing to support the project’s advancement. However, the company still faces legal challenges from the Ministerio Publico Federal (MPF) in Brazil, which has questioned the validity of its preliminary environmental license. Despite these challenges, Brazil Potash Corp. (NYSEAMERICAN:GRO) remains committed to obtaining the necessary licenses and permits to commence mining operations.

Brazil Potash Corp. (NYSEAMERICAN:GRO) is also working on engineering, procurement, and construction for critical path items. The company has allocated a significant portion of the net proceeds from its IPO towards these activities, which will enable it to advance the Autazes Project and ultimately commence mining operations. Furthermore, Brazil Potash Corp. (NYSEAMERICAN:GRO) is also focused on maintaining its mineral rights and purchasing the remaining land required for the project. These efforts are aimed at ensuring the long-term viability and success of the Autazes Project.

10. Intrepid Potash, Inc. (NYSE:IPI)

Number of Hedge Fund Holders: 6

Intrepid Potash, Inc. (NYSE:IPI) is a leading producer of potash and other essential minerals, including langbeinite, a potassium and magnesium sulfate fertilizer marketed as Trio. The company caters primarily to agricultural clients, supplying essential nutrients to farmers in the U.S.  Intrepid Potash, Inc.’s (NYSE:IPI) mining operations are located in Utah and New Mexico.

Intrepid Potash, Inc. (NYSE:IPI) has been focused on executing key projects aimed at improving production rates. The company has successfully commissioned Phase 2 of the new HB injection pipeline, which is expected to increase potash production in the upcoming seasons. Additionally, the company has seen positive results from its asset revitalization process, with two consecutive quarters of higher potash production compared to the same periods in the prior year. These efforts have led to improved unit economics and margins, with the company’s potash segment cost of goods sold per ton decreasing by 14% in Q3 compared to the prior year.

Intrepid Potash, Inc.’s (NYSE:IPI) focus on potash production is also reflected in its guidance for the fourth quarter, with expected potash sales volumes of 45,000 to 55,000 tons at an average net realized sales price of $340 to $350 per ton. The company is also working to optimize its production costs, with a goal of reducing its cost of goods sold per ton by 20-30% compared to 2023 levels.