In aftermath of cartel break-up, potash prices slide – by Brent Jang (Globe and Mail – August 23, 2013)

The Globe and Mail is Canada’s national newspaper with the second largest broadsheet circulation in the country. It has enormous influence on Canada’s political and business elite.

VANCOUVER – Spot prices for Canada’s potash exports may have eased, an indication of a softer market following the breakup of a Russian-Belarusian industry oligopoly last month.

Prices for spot shipments of the crop nutrient from Port Metro Vancouver recently slipped $20 (U.S.) to less than $400 a tonne, while there are preliminary signs of market softness elsewhere, including slightly discounted potash prices on rail shipments to China, Patricia Mohr, vice-president and commodity market specialist at Bank of Nova Scotia, said in an interview Thursday.

Russia’s OAO Uralkali announced on July 30 it was abandoning Belarusian Potash Co., a joint venture with rival Belaruskali of Belarus and one of the two largest marketing groups for potash, a mineral used on farms to boost crop yields. Analysts have warned that increased competition following the breakup would lower potash prices by late 2013.

“We can’t be too precise about forecasts because there are a variety of different kinds of prices to different buyers, and some of them are spot and some of them are contract,” Ms. Mohr said. However, she added that the stage has been set for lower potash prices over the next six months, perhaps trading around $350 a tonne in early 2014.

Some analysts have said potash prices will decrease almost 20 per cent between now and next spring, perhaps falling roughly to a range of $325 to $350 a tonne, depending on the contract and region.

“There aren’t many pricing data points in the system, so we don’t know the magnitude of the fall yet, and we don’t know the competitive response yet,” BMO Nesbitt Burns Inc. analyst Joel Jackson said Thursday. “There is ambiguity. We have buyers around the world, waiting to see where potash prices will go.”

Ms. Mohr at Scotiabank said she doubts sales contracts to China and India will tumble below $300 a tonne because as prices soften toward $350, some buyers will be tempted to place orders.

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