North American potash producers have agreed to sell the nutrient to Indian buyers at $370 a tonne, a cut of 20% on the price of a deal struck last July.

Canpotex, the export consortium backed by Agrium, Mosaic and PotashCorp, said the price had been agreed for shipments totalling 600,000 tonnes, for delivery in the second quarter, and included freight costs.

The price of the deal, struck with a consortium of buyers including Coromandel International and Tata Chemicals, is markedly lower than the $460 a tonne, including freight, that India paid under its last contract, sealed in July.

However, it is higher than the $350 a tonne that Russian and Belorussian producers agreed with Chinese buyers in December, a price viewed by many analysts as setting a bottom for the market.

Canpotex agreed a Chinese supply deal with China last week, but did not reveal financial details of the contract. 

Market reaction 

The price of last July's India deal proved a considerable disappointment to investors, after many producers had been holding out for more than $600 a tonne.

The potash industry has been attempting to keep prices at well above levels seen before the 2008 spike in crop markets allowed them to raise charges to up to $1,000 a tonne.

However, Friday's settlement was welcomed by analysts at Canadian broker Mackie Research Capital as "positive", in creating further "visibility" around the potash market. 

"The volumes of 600,000 tonnes for shipment through to June suggests annualised volumes of at least 1.2m tonnes, which is relatively in-line with the 1.5m tonnes Canpotex shipped in 2008," the broker added.

"Thus, it appears [Indian] demand should be robust for 2010."

Nonetheless, shares in Agrium closed down 0.5% at Can$68.48 in Toronto, with PotashCorp, the biggest supplier to Canpotex, gaining 0.1% to Can$119.19.

In New York, Mosaic closed up 0.4% at $60.78.

Bigger is better? 

Separately, Agrium extended to March 22 its deadline for investors to accept its $5.4bn cash-and-shares offer for US-based CF Industries.

This week's takeover of Terra, the US nitrogen group, by Norwegian rival Yara International "illustrates the important benefits of being part of a larger, global company", Agrium chief executive Mike Wilson said.

"We continue to believe that Agrium and CF combined will create an excellent company and deliver significant value for all stockholders," he added.