WINNIPEG, Manitoba (Reuters) - A lengthy strike at three potash mines owned by the world's largest fertilizer producer, Potash Corp of Saskatchewan, could mean shortages and spiking prices in a market that is already too tight for comfort, analysts said on Friday.
About 500 workers at the Canadian mines walked off the job on Thursday night after mediated contract talks between Potash Corp and the United Steelworkers failed. Wages have been the major issue.
"There is virtually no slack in the international potash market," said Barrie Bain, director of prominent fertilizer consultancy Fertecon Ltd, in an e-mail interview.
The three mines represent 18 percent of Canadian capacity and 6 percent of world capacity, he said. As the autumn fertilizer application season approaches, supply problems could develop if the dispute is not resolved, he added.
Prices for potash, one of three nutrients farmers apply to their soil to boost plant yields, shot to a record $1,000 a metric ton last month. Miners are essentially sold out of the mineral at a time when world food shortages have pushed grain prices to new highs.
As of Friday, prices for potash had not yet been directly affected by the strike, but suppliers may be cautious about making forward sales because of the uncertainty, Bain said.
When a Russian competitor's shipments were threatened by a sinkhole last year, producers including Potash Corp stopped selling and prices shot up, even though supplies were not ultimately disrupted, noted Morningstar analyst Ben Johnson.
"So, if we do have some sort of even short-term disruption to the supply side, I wouldn't be surprised to see people opportunistically pushing spot prices higher," he said.
The strike comes as farmers in the United States -- the world's top exporter of corn, soybeans and wheat -- have begun locking in fertilizer supplies and prices for next spring.
Grain traders at the Chicago Board of Trade said the strike could support corn prices if it dragged on for a long time.
A lengthy work stoppage could affect export shipments from Canpotex, which sells potash from Potash Corp, Mosaic Co and Agrium Inc to Brazil, China, India, and other Asian markets, Fertecon's Bain said.
But a spokesman for Potash Corp said it was too soon to tell whether Canpotex exports would be affected.
Potash stock was down C$7.12, or 3.8 percent, at C$181.87 late Friday afternoon on the Toronto Stock Exchange.
Each week of the strike could hurt company earnings by up to 6 cents a share, but that could be offset by higher potash prices, RBC Capital Markets analyst Fai Lee wrote to clients.
Steelworkers officials said the strike would effectively shut down production, as well as keep other trade unions away from work on expansion projects on the sites.
"We were told by the company to expect a long strike, so our members are prepared for a long strike," said Roger Falconer, a union spokesman.
No contract talks are scheduled.
Potash Corp was assessing its contingency plans, and spokesman Bill Johnson said he could not comment on how production would be curtailed.
The largest of the three mines had been shut for scheduled maintenance, but had been slated to resume on August 10, he said. The smallest mine does not produce during the summer.
"We'll assess what our supply looks like, but it would be my hope that this (strike) would not have an impact on our current (sales) commitments," he said.
Work on expansion projects may see "short-term disruptions" but likely will continue during the strike, he said.
Additional reporting by Euan Rocha in New York, Sam Nelson and K.T. Arasu in Chicago; editing by Rob Wilson