* To supply 350,000 tonnes of potash to Sinofert
* Says supply deal is at a competitive price (Adds background. In U.S. dollars, unless noted)
TORONTO, Feb 8 (Reuters) - Canpotex, the export arm of Canadian potash producers, said on Monday it has signed a deal to sell about 350,000 tonnes of potash to China’s Sinofert 0297.HK at competitive prices.
Canpotex’s biggest rival, Belarussian Potash Co, or BPC, struck a deal in December to supply Chinese buyers with potash at a delivered price of $350 a tonne, and other exporters like Israel Chemicals ICL.TA followed suit.
But Canpotex, which typically concludes its annual contract with Chinese buyers at the same price as BPC, balked at $350 a tonne, and extended negotiations between the two sides have continued.
Canpotex, whose owners are Potash Corp POT.TO, Mosaic Co MOS.N and Agrium Inc AGU.TO, did not announce the exact price it has settled on, but indicated that the potash, a crop nutrient, would be shipped to China before the end of March.
Potash emerged from obscurity a few years ago when high grain prices, tight supplies and strong demand drove prices above $1,000 a tonne from below $150.
Potash prices have since retreated to about $350 to $410 a tonne as farmers, hit by the credit crisis and falling grain prices, reined in their use of the nutrient. But many analysts expect demand to bounce back this year as farmers scramble to replenish soil nutrient levels.
Analysts believe that Sinofert is likely to have secured a price at the lower end of the $350 to $410 a tonne range, given that Canpotex did not disclose the exact sale price.
But analysts are hopeful that the settlement of this contract will bring more buyers back into the market and set the stage for price increases later in the year.
Last week, BPC already announced an increase in its spot price for standard material to $410 per tonne from $385, reflecting growing world demand for the soil nutrient. [ID:nLDE6120XC]
Canpotex said it was now fully committed on sales through this quarter and would announce second-quarter pricing plans in early March.
Shares of Potash Corp, Mosaic and Agrium were all trading slightly higher on the New York Stock Exchange at midday.
Potash Corp, the world’s largest producer of the crop nutrient, supplies Canpotex with almost 54 percent of the consortium’s potash requirements, with Mosaic and Agrium contributing about 37 percent and 9 percent, respectively. (Reporting by Euan Rocha; Editing by Peter Galloway)