Cut-price potash deals with India may not prove as helpful for reviving demand for the nutrient as some fertilizer groups are making out, Intrepid Potash has warned, unveiling a halving in second-quarter earnings.

Agreements to provide potash to India at $460 a tonne, a 26% reduction on last year's record contract prices, may extend a strike by buyers who have been waiting for prices to follow those of other nutrients sharply lower, Intrepid said.

"The decreases in prices may continue to cause hesitation by the purchasers of our products," Intrepid, America's biggest potash producer, said.

Clarity question 

The comments appear at odds with those from Canada's Agrium earlier in the week that the India deals had "provided additional clarity on prices" which would stimulate demand.

PotashCorp, the world's biggest potash group said last month it expected a global pick-up in potash sales spurred by "confidence in pricing" following the India deal.

Potash applications fell by a record 40% in the year to June, after lower crop prices prompted steep cutbacks in farm spending.

Stocks run down

Intrepid added that it believed dealers had yet to begin restocking after a period when they have relied on inventories to meet the softer farm demand.

"Due to the uncertainty around the price of potash, we believe that the tons currently being sold in the market are being applied directly onto the ground," Intrepid said.

The reluctance to rebuild stocks was in part responsible for a 30% drop to $73.4m in revenues for the April-to-June period.

Earnings tumbled from $32.4m to $14.4m, equivalent to $0.19 per share, below Wall Street forecasts of a $0.23-a-share result.

Intrepid shares recovered from an early slide of more than 5% to stand 0.3% higher at $26.28 in afternoon deals in New York.