The export arm of the three major fertilizer firms mining Saskatchewan’s potash belt has sealed a potash deal to China’s Sinofert at “competitive” prices.
Canpotex, operated by PotashCorp, Agrium and Mosaic Co., announced Monday it had agreed to ship about 350,000 tonnes of Canadian potash to China before the end of March, for an undisclosed sum.
The deal leaves Canpotex “fully committed” on first-quarter sales. The company said it would announce plans for second-quarter pricing early next month.
The company said that announcement would come after “thoroughly reviewing the changing and much-improved overseas potash market conditions.”
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Scotiabank Group, in a commodity market report Jan. 26, observed that spot potash prices “appear to have found a bottom” after dropping to about US$345 per tonne in early January.
Having run “well above” other fertilizer prices in 2009, potash now sits below DAP (diammonium phosphate), which recently rallied to US$450 (f.o.b. U.S. Gulf), Scotiabank noted.
PotashCorp chief financial officer Wayne Brownlee was quoted by the Canadian Press news agency on Wednesday as saying the undisclosed sale price for the Sinofert deal was “nothing to jump up and down about” but was “a compromise that helps turn the ship around.”
Brownlee was quoted as telling a Goldman Sachs ag conference in New York that Canpotex’s deal with Sinofert was “about turning that momentum into a seller’s market rather than a buyer’s market.”
While a seller’s market would not bode well for farmers needing potash, any increase in potash prices would be seen as good news for the Saskatchewan government, which in recent years has relied on strong resource revenues from the potash sector.
“We are especially pleased to see yesterday’s announced potash sale and wish to compliment all those involved in concluding that sale,” provincial Energy and Resources Minister Bill Boyd said Tuesday following a trade mission to China and Japan that included provincial officials meeting with representatives of Canpotex, Sinofert and other fertilizer firms.
“It is great to see Saskatchewan potash moving again, especially to the Chinese market,” Boyd said in a release.
Saskatoon-based PotashCorp supplies Canpotex with 53.61 per cent of its potash, followed by Minnesota-based Mosaic (37.11 per cent) and Calgary’s Agrium (9.28 per cent).
