Potash-Supplier Group Will Only Sign China Contracts for 2016

Potash Corp Rocanville underground
Canpotex Ltd., the Canadian joint venture that represents potash export sales from Potash Corp., Mosaic Co. and Agrium Inc., will only sign contracts to supply China and India with the crop nutrient for the remainder of 2016 as it expects prices to rise next year.

Canpotex is taking a cautious approach, Potash Corp. Chief Executive Officer Jochen Tilk said on an earnings conference call on Thursday. Stronger demand in 2017 is expected to lift spot prices and “that’s what we think contract negotiations should be based on,” Tilk said.

India and China typically sign accords at the start of each agriculture year to buy the nutrient used on farmers’ fields. Delayed contracts with China and India weighed on shipments in Potash Corp.’s second quarter, the company said in a statement.

“They’re ongoing as we speak and we’ll see what comes out of it,” Tilk said. “The approach is really to commit only through the end of 2016.”

Belarusian Potash Co. agreed to supply potash to India at the cheapest price in almost a decade. That still topped estimates and indicated renewed demand for the crop nutrient. The contract may prompt further deals for other suppliers, RBC Capital Markets analyst Andrew Wong said in a report July 12.

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