Bloomberg News

Potash Group’s ‘Cupboard Is Bare’ for India, Mosaic Says

July 19, 2011

(Updates share prices in penultimate paragraph.)

July 19 (Bloomberg) -- Canpotex Ltd., the export arm of North America’s largest potash producers, has no spare supply to sell to India this quarter and won’t resume negotiations with Indian buyers until “late” in the period, said Mosaic Co. Chief Executive Officer Jim Prokopanko.

Canpotex’s “cupboard is bare,” Prokopanko said yesterday in a telephone interview from Mosaic headquarters in Plymouth, Minnesota. “There’s nothing to talk about until we have a better assessment of what’s going to be available.”

Talks between Canpotex and Indian importers ended in late June when Canpotex agreed to deliver 630,000 metric tons to China in the second half, Prokopanko said.

The Indian Farmers Fertiliser Cooperative Ltd., a group representing 55 million farmers, said in May it might halt purchases of the crop nutrient unless Canpotex and other suppliers agreed to a 10 percent discount from the spot price and other conditions. Canpotex is the marketing arm of North America’s three largest producers: Potash Corp. of Saskatchewan Inc., Mosaic and Agrium Inc.

“Both the Indians and the Chinese understood -- we were perfectly clear -- that there would likely be enough tons only to serve one or the other of their requirements,” Prokopanko said. “This isn’t a matter of price discussion. This is a matter of supply.”

‘Producer Strength’

Prokopanko’s statement that Canpotex’s negotiations with India won’t resume until later this year is inconsistent with prior indications from other producers that an agreement may be signed this month, Horst Hueniken, a Toronto-based analyst at Stifel Nicolaus, said in a note today.

“We interpret this shift in timing as a sign of producer strength,” Hueniken said.

The producers of the form of potassium had expected negotiations with Indian importers and distributors to be completed by June, according to comments in April from Potash Corp. CEO Bill Doyle.

India bought 6.4 million metric tons of potash in the year ended March 31, according to the Fertiliser Association of India.

Canpotex and Belarusian Potash Corp., a marketing organization controlled by Russia’s OAO Uralkali and Belarusian producer Belaruskali, account for 57 percent of global potash exports, according to figures from Uralkali in a December 2010 slide presentation.

Potash Supply

North American potash supply will remain tight because of steady demand and the effects of maintenance shutdowns and other supply disruptions as producers bring on line recent mine- capacity expansions, Prokopanko said in the interview.

Mosaic said yesterday in a statement its earnings in the three months through May rose to $1.45 a share from 89 cents a year earlier, topping the $1.39 average estimate of 18 analysts surveyed by Bloomberg. Fiscal fourth-quarter sales climbed 54 percent to $2.86 billion, beating the average estimate of $2.61 billion.

Mosaic advanced $2.03, or 3.1 percent, to $68.49 at 4:15 p.m. in New York Stock Exchange composite trading. The shares have dropped 10 percent this year. Potash Corp. rose 3 percent to $60.51 and Agrium climbed 2.6 percent to $90.33.

Potash helps plants to survive in dry conditions, strengthens their roots and curbs the growth of some crop diseases.

--Editors: Steven Frank, Simon Casey.

To contact the reporter on this story: Christopher Donville in Vancouver cjdonville@bloomberg.net.

To contact the editor responsible for this story: Simon Casey at scasey@bloomberg.net.


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