Chinese potash buyers agreed to a second rise in six months in prices they pay for the nutrient, raising pressure on Indian peers attempting to hold out for a cut-price deal.

Canpotex, the North American producers' cartel, said it had agreed to supply China with 630,000 tonnes of potash during the second half of 2011 at a price some $70 a tonne higher than those achieved in the first six months. This implies a price of some $470 a tonne.

The statement came shortly after Belarusian Potash Company - the cartel for potash groups in the former Soviet Union, the other major producing region - revealed it had also agreed with China a price of $470 a tonne, including freight, for 500,000 tonnes of the nutrient, with an option for a further 200,000 tonnes.

The close announcement of the two deals breaks with a tradition of Canpotex taking a back seat in agreements with China until after BPC has settled.

Canpotex's last deal, in January, with China, the top potash importer, was announced more than a week after BPC's.

'New benchmark' 

The announcement also comes amid longstanding, and sometimes acrimonious talks, over a fresh supply deal to India, the second biggest importer, but which is offering only $420 a tonne.

Vladimir Nikolayenko, the BPC chief executive, said that the latest China contract would set "a new price benchmark which will undoubtedly influence both spot prices and long-term contract prices".

Canpotex said it was "now fully committed for sales" in the July-to-September period, and "has significant volumes confirmed for the fourth calendar quarter".

Indeed, the agreement to supply 630,000 tonnes of potash, at the low end of a range set down by a long-term supply agreement struck between China and Canpotex last year, reflected the cartel's "tight supply position".

Market reaction 

Shares in Canada-based PotashCorp stood 2.0% higher at Can$55.07 in morning deals in Toronto, with stock in fellow Canpotex member Agrium 0.1% lower at Can$85.84, while shares in Mosaic jumped 3.6% to $67.50 in New York.