UPDATE 1-Mosaic CEO says Uralkali potash plan fails 'economic sniff test'
By Rod Nickel
Sept 17 (Reuters) - Uralkali's revamped potash marketing plan, focusing on maximizing sales volume rather than price, fails the "economic sniff test," Mosaic Co Jim Prokopanko said on Tuesday.
Prices of the crop nutrient have slipped since midsummer, when the biggest global producer, Russia's Uralkali OAO , quit its export partnership with Belaruskali and said it would seek to maximize sales volumes.
Prokopanko, responding to a question at the Credit Suisse Chemical and Ag Science investor conference in New York, would not predict whether he sees the partnership, called Belarusian Potash Company, re-forming.
But he said the new sales strategy may not last.
"I don't think a volume over price strategy passes the economic sniff test," Prokopanko said. "Giving it away, I don't understand whose benefit it serves. I just don't see that what we have today, one competitor's strategy of volume over price, is sustainable for very long at all."
The market has over-reacted to the break-up of BPC, one of two global trading partnerships whose members have long adjusted production to support price, Prokopanko said. Even so, it is one factor, along with the collapse of the Indian rupee and a seasonal slowdown in fertilizer demand, that has left buyers cautious, he said.
On Monday after markets closed, Mosaic cut its third-quarter sales and price outlooks for potash and phosphate. Continued...