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Everyone Seems to Want Potash, But What Is It?

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Hey, here's a quick test: ask the person sitting next to you what potash is and why it's important. Not a lot of people know. I mean, they might be able to come up with "fertilizer" or something vague, but that doesn't really get to the core of the question, does it?

More than 90 percent of global potash production is used by the fertilizer industry - the main products being potassium chloride, potassium nitrate, potassium magnesium sulfate and potassium sulfateis. One reason fertilizer is so critical is because food demand has for a long time outstripped agricultural land availability, so anything that increases crop yields is crucial. As well, potash fertilizer helps boost resistance to drought and diseases.

Check out this map from the US Geological Survey, it shows the percent of land area used for crops.

Potash is produced in underground mines. That company everyone seems so hot to buy, Potash corporation of Saskatchewan, is the world's largest fertilizer company by capacity and is responsible for about 20 percent of global potash capacity.

Below is a video from the BBC where hedge fund manager Hugh Hendry and D. Linda Yueh discuss the importance of potash and why BHP Billiton is so interested in acquiring Potash.

POSITION:  No positions in stocks mentioned.