CORRECTED-UPDATE 2-Canpotex sells potash to India at discount

Thu Feb 7, 2013 2:41pm EST

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(Corrects to show that 13 percent discount in lead and headline
is wrong)
    * Sells 1.1 mln tonnes through 2013 at $427/tonne
    * Similar to India deal with BPC

    By Rod Nickel
    Feb 7 (Reuters) - Canpotex Ltd, the offshore selling agency
for leading North American potash miners, has signed a new
potash supply contract with Indian buyers at a smaller than
expected discount.
    The deal to supply India with the crop nutrient for the
remainder of 2013 ends a long standoff by Indian buyers that
dented profits for producers like Potash Corp of Saskatchewan
Inc, one of the miners represented by Canpotex. The
standoff caused North American supplies to pile higher than
normal.
    Canpotex also represents Mosaic Co and Agrium Inc
.
    Shares of Potash Corp, which supplies nearly half of
Canpotex's potash, were mixed in New York and Toronto around
midday. Mosaic and Agrium stock eased slightly.  
    Canpotex said on Thursday it will sell about 1.1 million
tonnes of the crop nutrient to Indian buyers up to January 2014
at a price of $427 per tonne, including costs and freight. The
deal is similar to one announced a day earlier by Canpotex rival
Belarussian Potash Co (BPC), which will sell 1 million tonnes of
potash to Indian buyers at the same time.
    The Canpotex-India deal comes at a price that is higher than
estimates that averaged $416 per tonne in a Jan. 17 Reuters poll
of North American analysts. It is however,
believed to be a discount of about 13 percent from the last
contract with India, signed in August 2011.
    "The closure of this contract and stabilized (demand) until
the end of the year is really important," said Rick McLellan,
senior vice-president of commercial sales for Mosaic, in an
interview. "The Brazil and North American markets are going to
be big markets for us, so it's one more piece of momentum for
the overall potash market."
    Mosaic makes up a little over 40 percent of Canpotex's
potash product.
    Canpotex did not identify the buyers, but key Indian potash
users include Indian Farmers Fertiliser Cooperative, Coromandel
International, Tata Chemicals and Zuari
Global.
    The deal is positive for potash markets, said analyst Steve
Hansen of Raymond James. It confirms that potash prices hit a
floor with the lower-priced Canpotex deal with China at the end
of December, and should help draw down producers' inventories,
he said.
    New supply contracts with China and India, top consumers of
the crop nutrient, were initially expected by late summer.
Canpotex announced a new six-month supply contract with China's
Sinofert Holdings Ltd on Dec. 31 to sell 1 million
tonnes of potash at an estimated $400 per tonne. 
    The deal with India gives Canpotex producers a slightly
better net return per potash shipment than the China contract,
McLellan said, after accounting for factors like higher
transportation costs to India.
    "The need to move the volume was there and this was a good
price," he said. "We've established a lower price and there's
probably upside from here in the spot markets."
    Potash contracts with China and India typically set a floor
for global prices, with spot buyers like Brazil paying a
premium.   

 (Reporting by Rod Nickel; Editing by Gerald E. McCormick,
Sofina Mirza-Reid and Andrew Hay)
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