* Potash spot market pricing slips in July
* North American potash inventories down 129,000 tonnes
* Potash Corp shares rise 0.3 percent in early trade
(Adds analyst comment, share price move, by-line; all figures
in U.S. dollars)
By Euan Rocha
TORONTO, Aug 18 Potash Corp of Saskatchewan
(POT.TO) said North American potash pricing declined in July,
but the world's largest producer of the key crop nutrient also
noted that manufacturers' inventories in North America fell for
the first time this year.
Potash Corp said on Tuesday that North American potash
inventories in July fell by 129,000 tonnes to just under 3.5
million tonnes, down from prior-month levels but still more
than double the previous five-year average.
Nevertheless, this is the first indication that sales of
potash have begun to move again, after a consistent inventory
build through the first half of 2009.
Potash Corp shares rose 0.3 percent to $91.42 in early
trade on the New York Stock Exchange, while those of its peers
Mosaic Co (MOS.N) and Agrium Inc (AGU.N) (AGU.TO) rose 0.7
percent and 1.0 percent, respectively.
Potash inventories had risen steadily through the course of
2009, despite major production cuts, as farmers concerned by
exorbitant pricing and hurt by the credit crunch had deferred
application of the crop nutrient.
Potash buyers were also staying out of the market in
anticipation of big annual import contracts signed by India and
China, which typically set the tone for spot market pricing.
Last month, India signed contracts to import the bulk of
its annual potash requirements at $460 a tonne, well below last
year's contract price of more than $600 and the spot market
price of $700 at the time.
The new Indian contract has led to a decline in potash spot
market prices and brought other international buyers back into
"The decline in July (inventories) is clearly a surprise as
most market observers did not expect any positive momentum
given that producers did not begin to ship to India until an
agreement was reached in late July," said Broadpoint AmTech
analyst Edlain Rodriguez, in a note to clients.
In a group of graphs posted to its website, Potash Corp
also indicated that potash spot market pricing fell to $600 per
tonne in July from $700 in the prior month.
"We continue to believe that near-term potash conditions
are approaching a bottom, setting the stage for a strong
rebound in 2010 that will lead to higher earnings and multiple
expansion," said Rodriguez.
($1= $1.10 Canadian)
(Reporting by Euan Rocha; Editing by Lisa Von Ahn and Gerald