Reuters / PotashCorp of Saskatchewan’s third-quarter earnings fell 22 per cent as a standoff over new contracts led to a sharp drop in shipments to China and India, the world’s two biggest consumers of the company’s namesake crop nutrient.
Overseas potash shipments by North American producers dropped by one-quarter to 1.9 million tonnes in the period. China accounted for just 12 per cent of sales and India five per cent.
“The weakness obviously is in China and India, but that shouldn’t be a surprise to anyone,” said analyst Spencer Churchill of Paradigm Capital.
PotashCorp, Agrium, and Mosaic conduct offshore potash sales from their mines in Western Canada through the marketing agency Canpotex. Analysts had expected it to renew supply contracts with China and India in late summer, but now they say it may take until late 2012 or early 2013.
China is seen as being well supplied with the crop nutrient, while a reduction in Indian subsidies and a weaker rupee have made potash more expensive for that nation’s farmers.
Shipments to China should resume before the end of 2012, but it’s difficult to predict when India might take steps to increase potash subsidies, said PotashCorp CEO Bill Doyle.