WINNIPEG, Manitoba, Dec 4 (Reuters) – A bounce in slumping potash markets is possible next year, assuming China steps back into the market and Russia and Belarus paper over differences that have disrupted the market, a senior official of Potash Corp of Saskatchewan said on Wednesday.
But if the one-time partners don’t reconcile, conditions in an already weak market could get worse, the chief financial officer of Potash Corp, Wayne Brownlee, told an investor conference.
Potash Corp, the world’s biggest fertilizer company, said on Tuesday it was cutting its workforce by 18 percent to lower costs in an oversupplied industry.
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As the harvest in southern Alberta presses on, a broker said that is one of the factors pulling feed prices lower in the region. Darcy Haley, vice-president of Ag Value Brokers in Lethbridge, added that lower cattle numbers in feedlots, plentiful amounts of grass for cattle to graze and a lacklustre export market also weighed on feed prices.
Potash prices have weakened in the past year, especially after a breakup of top exporter Belarusian Potash Company (BPC) in mid-summer prompted major buyers like China to move to the sidelines to await cheaper prices.
A supply contract in the first quarter of 2014 between China and Canpotex Ltd — the export arm of Potash Corp, Mosaic Co and Agrium Inc — would set a price floor, Brownlee said at the Citi Basic Materials conference in New York.
Indian buyers might then lock in prices with Canpotex, followed by deals in other markets.
“There’s a recipe here for a nice bounce in the first half of next year,” he said.
A rebound also hinges on whether the former partners in BPC – Russia’s Uralkali OAO and Belaruskali of Belarus – recreate their partnership. “If there’s no reconciliation between the Russians and Belarus, then the market still has the potential to dip,” Brownlee said.
Belarus-born billionaire Dmitry Mazepin and Russian tycoon Mikhail Prokhorov recently bought stakes of 20 percent and 21.75 percent stakes, respectively, in Uralkali, leading to speculation that Uralkali would seek a reunion with Belaruskali.
“The issue we see is not so much the demand side,” Mosaic’s chief operating officer, Joc O’Rourke, said at the same conference. “In potash, yes there’s probably a bit of an oversupply … but we do see that tailing off and demand catching up fairly quickly.”
Potash Corp shares rose 0.9 percent in Toronto and 0.4 percent in New York in early afternoon trading. Mosaic shares were up 2.8 percent in New York.
