Brazil will prove the next market to rediscover a hunger for potash as food demand raises pressure for higher yields, PotashCorp has predicted, after signing off a long-awaited 850,000-tonne deal with India.

The statement helped send shares in fertilizer groups sharply higher, with shares in Agrium, Mosaic and PotashCorp jumping 7%. 

The Canadian fertilizer group, restating a forecast of a jump of up to one-third in potash demand next year, said that it expected "significant interest" from Brazil.

Customers had already begun refilling inventories ahead of the main planting season, and shown "renewed interest" in phosphates.

India deal

The comments followed the sealing of a supply deal by Canpotex, its joint export venture with Canada's Agrium and US-based Mosaic, to sell potash to India at $460 a tonne.

The price was in line with a Russo-India deal inked two weeks ago but below the $700 a tonne agreed with Japan, South Korea and Taiwan within the last month.

The group declined to comment on progress in talks with China, which is also in longstanding talks on potash supplies.

Back to the future?

PotashCorp added that 2009 had come to remind it of 2006, a year when a drop of some 3m tonnes in potash shipments was followed by a rebound more than twice as big the following year.

"The current circumstances are even more dramatic because of the extent and duration of the destocking that has occurred," the Canadian group said.

In North America, potash applications slumped by a record 40% in the 2008-09 fertilizer year, which ended last month.

 Shipments from producers fell even further as US dealers destocked.

'Noble calling'

However, global potash demand would recover to up to 60m tonnes next year as rising populations, growing meat and fruit consumption and pressures promoted greater food production, and increased fertilizer use.

"Unsustainable fertilizer practices cannot continue if the world's need for food is to be met," Potashcorp said.

Chief executive Bill Doyle added: "As farmers around the world respond to their noble calling of feeding the world, we expect this will trigger a multi-year process of nutrient replenishment, particularly potash."

PotashCorp shares stood Can$6.91 higher at Can$104.41 in afternoon trade in Toronto, with Agrium shares up Can$3.02 at Can$47.12.

In New York, Mosaic shares were $3.20 higher at $51.62.