* 56 mln-60 mln tonne demand seen 2013; 53 mln tonnes 2012
* Potash Corp unsure of Canpotex-China deal in September
* Not worried about Saskatchewan royalty review
By Rod Nickel
WINNIPEG, Manitoba, Sept 6 Global demand for the
soil nutrient potash, key for growing crops like corn, looks
likely to climb to between 56 million and 60 million tonnes in
2013, depending largely on a potential sales rebound to India,
the chief financial officer of Potash Corp of Saskatchewan
said on Thursday.
Global potash demand in 2012 looks likely to total around 53
million tonnes, CFO Wayne Brownlee said in an online
"The question is, how robust is the Indian response going to
be in 2013," he said. "That is going to be the key determinant,
but given where grain prices are, food prices are, given the
amazing incentive farmers have right now for making a profit in
the next 12 months, it looks pretty good."
India is the second-biggest potash buyer globally, but sales
slumped this year after its government lowered subsidies for
potash and phosphate, making those fertilizers more expensive
for Indian farmers.
Potash Corp's range for global potash demand is not
surprising but is perhaps too high, said analyst Robert Winslow
of National Bank Financial.
"I would be more inclined to see the number at the lower end
of the range" around 56 million tonnes, he said. "I expect
what's likely to drive that high demand, i.e. grain prices, is
likely to subside from the current high levels."
Shares of Saskatoon, Saskatchewan-based Potash Corp, the
world's biggest fertilizer maker, were up 2.2 percent in New
York and 1.5 percent in Toronto around midday.
DEMAND SEEN FROM US FARMERS DESPITE DROUGHT
Grain prices have shot up this year due mainly to severe
drought in the U.S. Midwest, offering farmers a chance to
maximize profits by boosting plant yields through fertilizer.
Some analysts have predicted farmers may apply smaller
amounts of nutrients for next year's crops, expecting that
lacklustre crop yields this year left some potash in the soil.
But Brownlee said U.S. farmers have little nutrient
"cushion" after the drought, based on flat potash application
rates for the past decade.
"You've got the income, the balance sheets for farmers and
high crop prices," he said. "Everything is pointing to a very
robust year in the United States."
Canpotex Ltd, the marketing agency that sells Saskatchewan
potash to offshore markets on behalf of Potash Corp, Mosaic Co
and Agrium Inc , will hold discussions
in the next week or two with Chinese buyers on a supply contract
for the second half of 2012, Brownlee said.
But Brownlee said he was not sure if they would agree on a
contract in September.
A new contract between Canpotex and Indian buyers is also
expected in the second half, but Brownlee said India's politics
make the situation difficult to predict.
Most of Potash Corp's production comes from the Western
Canadian province of Saskatchewan, which is home to an estimated
40 percent of global potash reserves.
The Saskatchewan government depends on potash for hundreds
of millions of dollars in royalties annually, and has said it
may change its royalty formula to lean more heavily on
production levels than it currently does.
"We're not overly worried about that," Brownlee said.
"There's not been an indication that there will be a revenue
grab coming at us at all, and if anything it would be more of a
finessing or fine-tuning ... to still get the investment but
also perhaps generate a bit more stability for the government."
Along with expansions by existing players, Germany's K+S AG
and BHP Billiton Ltd have started
work on new mines. Saskatchewan is concerned that too much new
production will pressure potash prices, which may reduce its
Potash Corp does not expect "meaningful capacity" from new
potash mines in the next five years, Brownlee said.