August 31, 2010 / 8:54 PM / 7 years ago

BPC tests potash market by posting higher prices

* BPC revives move to raise potash prices -FMB

* Move coincides with industry consolidation drive

* Aims to raise prices on standard and granular grades

(All figures in U.S. dollars, unless noted)

By Euan Rocha

TORONTO, Aug 31 (Reuters) - BPC, the export arm of Uralkali and Belaruskali, is again pushing for higher prices, hoping a strong outlook for grain prices will persuade farmers to accept an increase this time.

The move, which follows a failed effort to establish higher prices earlier this year, coincides with M&A activity that could lead to a power shift within the industry.

Uralkali is setting up links with its Russian rival Silvinit that could eventually bring about a full merger. At the same time Potash Corp, the world’s biggest supplier, is the target of a hostile takeover bid by BHP Billiton, a global mining powerhouse.

“Given where grain prices are right now, there is probably more chance of this one being successful,” said Gleacher & Co analyst Edlain Rodriguez.

“Buying activity has picked up quite a bit -- Brazil is buying and farmers in the U.S. are also ready to buy for this fall. ... The market is much tighter now, than it was back then,” he added, referring to the February price drive.

BPC has posted new potash prices for exports to Asia and Brazil beginning in September, according to FMB, an industry publication.

BPC, or Belarussian Potash Co, mounted a similar drive in last February, but resistance from customers was too strong to sustain the price increase.

Potash Corp, along with Mosaic Co (MOS.N) and Agrium Inc (AGU.TO) export their output through a joint venture called Canpotex.

The two export consortiums, which account for more than 60 percent of global potash exports, usually mirror each other on pricing.

Potash Corp is currently fending-off a $38.6 billion hostile bid from Anglo-Australian mining giant BHP Billiton (BHP.AX) (BLT.L).

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For a summary of BHP/Potash stories: [ID:nN22340110]

BHP-Potash deal calculator: r.reuters.com/ruv65n

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NEW PRICES

BPC now plans to sell standard grade potash in Asia at $405 a tonne, with granular grades priced at $420. Recent potash sales in Southeast Asia range in price from $375 to $390.

China and India, which are among the world’s largest potash importers, typically buy through contracts signed with major exporters like BPC and Canpotex, rather than on the spot market.

BPC has also indicated that it plans to sell granular grades to big buyers in Brazil at $410 a tonne, while it aims to sell to smaller Brazilian buyers at $420. Sales in Brazil are currently in the $375 to $385 price range.

In February, BPC had attempted to increase the listed spot price for standard material to $410 a tonne from $385, while increasing the price for granular potash to $425 from $400.

Analysts believe potash producers are better positioned to win pricing gains now than they were earlier in 2010. ($1= $1.07 Canadian) (Reporting by Euan Rocha)

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