NEW YORK, Nov 6 (Reuters) - Canpotex, the export marketing consortium of Canadian potash miners, said on Thursday it has signed a new contract to supply potash to Japanese customers at a delivered price of just over $900 per tonne.
Potash Corp of Saskatchewan POT.TO POT.N, Mosaic Co (MOS.N) and Agrium Inc AGU.TO AGU.N jointly export potash under the Canpotex banner.
The new contract price, which is applicable for the first half of 2009, is about $200 to $220 per tonne higher than current contract prices, depending on potash grade.
“This contract settlement demonstrates that our customers understand that potash remains in tight supply and fundamentals are very strong, despite the recent volatility in markets,” said Canpotex Chief Executive Steve Dechka in a statement.
Although Japan is a smaller potash importer than China and India, analysts said the new contract pricing indicates continued strength in near-term potash pricing.
Prices of nitrogen and phosphate — the other two key crop nutrients — have fallen sharply in recent weeks, due to oversupply conditions and a drop in global grain prices.
“If you look at the bottom line, I don’t think you are going to see potash prices fall off the way you’ve seen nitrogen and phosphate prices fall off recently,” said Morningstar analyst Ben Johnson.
“Longer term, I fully expect potash prices will ease from these historically high levels. But, in the near term, dislocations within the market are fully supportive of prices much higher than historical levels,” he added.
Potash prices have stayed strong due to tight supply conditions, which have been exacerbated by a workers strike at three of Potash Corp’s mines in Canada.
Shares of the three companies in Canpotex soared in the first half of 2008 as a booming agricultural economy, high grain prices and tight fertilizer supplies drove their earnings to record levels.
However, shares of all three companies have fallen roughly 60 percent over the last three months, as grain prices have collapsed on mounting fears of a global economic slowdown.
Shares of Potash Corp, the world’s largest potash producer, were down 6.3 percent at $81.45 on the New York Stock Exchange, while those of Mosaic and Agrium fell 7.8 percent and 4.4 percent, respectively amid a sharp market fall. (Reporting by Euan Rocha, editing by Gerald E. McCormick)