Canpotex signs export deal with China

Canpotex, the export consortium of Canadian potash producers, has signed a deal to sell around 350,000 tonnes of potash to ChinaÔÇÖs Sinofert.  Vancouver-based Canpotex said the sale was agreed at an undisclosed ÔÇ£competitiveÔÇØ price.  The deal will come as welcome news after a year where there was no annual sales agreement between Canpotex and ChinaÔÇöa key factor in the downturn that affected the Canadian potash industry.  In December, a consortium of European potash producers signed a year-long agreement with China to sell the fertilizer for US$350 a tonne.  Canpotex, whose owners are Potash Corp., Mosaic Co. and Agrium Inc., indicated that the crop nutrient would be shipped to China before the end of March.  In a statement, Canpotex said: ÔÇ£As a result of this latest spot sale, Canpotex is now fully committed on sales through the first quarter of 2010 and will announce plans with respect to second-quarter pricing early in March, after thoroughly reviewing the changing and much-improved overseas potash market conditions.ÔÇØ  Potash Corp. is the world's largest producer of potash and supplies Canpotex with almost 54 percent of the consortium's potash requirements. Mosaic and Agrium contribute about 37 percent and nine percent respectively.  Saskatchewan is the world's largest producer of the crop-strengthening mineral.  Potash experienced a surge in value several few years ago when high grain prices, tight supplies and strong demand drove prices above $1,000 a tonne, from below $150.  The credit crunch pushed prices down again to around $350 to $410 a tonne as demand for the nutrient fell; however, many analysts expect a rebound this year as farmers move to replenish soil nutrient levels.  It is hoped that the contract with Sinofert will encourage more buyers back into the market and set the stage for price increases later in the year.  With strong sales of the fertilizer into the US, Brazil and Asia, it is hoped that deals with China will drive a rebound in sales volumes over the coming year.  The Saskatchewan government expected potash revenues to account for one-fifth of its budget last spring, before the market collapsed. Its revenue projections plummeted from $1.9 billion in the 2009-10 budget released in the spring, to $109 million.