North American potash inventories at the producer level tightened further in January ahead of the spring planting season in the region, according to data issued by PotashCorp late Tuesday.
The announcement lifted shares of PotashCorp and other North American fertilizer makers. Analysts said tighter inventories would help producers push through price increases in overseas markets.
Shares of PotashCorp rose 1.5 per cent in New York, while shares of Mosaic and Agrium rose more than one per cent.
PotashCorp, the world’s largest producer of the crop nutrient, said the latest industry data in North America indicates inventories fell nearly 85,000 tonnes in January.
Inventories of the nutrient, which helps improve a plant’s disease resistance and crop quality and increases yields, are now 24 per cent below the prior five-year average.
The data from the Saskatoon-based company also indicated the average price of potash, while trending upward, continues to hover just below the $400 per tonne mark.
Analysts noted that current market fundamentals indicate India — one of the world’s largest potash importers — is unlikely to be able to settle on a new potash contract this year at a price below $400 a tonne.
Chinese potash buyers recently agreed on a six-month contract to import potash at $400 a tonne from Russian and Canadian exporters. The Chinese and Indian contracts are closely watched as spot market prices are typically pegged at a level slightly above these contract prices.
India is expected to import over five million tonnes of the nutrient this year and new import contracts are likely to be signed in March, or April.
The data also indicates that di-ammonium phosphate stocks in the region rose by 107,000 tonnes in January, but inventories of the phosphate-based nutrient continue to lag the prior five-year average by 25 per cent.