North America's potash giants have broken the deadlock over a supply deal to China, the world's bigger importer, agreeing the first contract in nearly two years.

Canpotex, the Canadian-US potash export consortium, said it would supply 350,000 tonnes of potash to Sinofert, China's main state-owned fertilizer group, by the end of March.

The deal follows months of talks between potash groups and China, which struck a deal with BPC, the Belorussian- Russian consortium, in December at $350 a tonne, a price considered below market expectations.

Price doubts 

However, Canpotex - which broke with historical precedent by failing swiftly to follow BPC's lead – declined to reveal whether its extra negotiations had been rewarded with better rates, merely saying that the deal had been struck at "competitive prices".

The failure to reveal a rate implied that the consortium, comprising Canada's Agrium and PotashCop and US-based Mosaic, had fallen short on hopes to squeeze out a higher price, broker Mackie Research Capital said.

"The fact that Canpotex did not disclose the settlement price and instead used 'competitive prices' suggests Canpotex was not able to secure a meaningful higher price, if at all," Mackie analyst John Chu said.

Last month, Mosaic chief executive Jim Prokopanko said that Canpotex was "not prepared to meet the kind of price expectation the Chinese have", adding that producers "able to find customers willing to pay higher prices".

'New era?' 

The deal also broke with precedent in being agreed on a spot basis, and in lasting only until March, rather than the annual contract that is usually agreed with China.

"We wonder if this is the beginning of a new potash era for China and Canpotex," Mr Chu said.

The switch follows some talk among producers about a switch to universal spot pricing, with China, India, Japan, South Korea and Taiwan the only buyers to remain on contract.

The volume of Monday's deal is also smaller than the 1m-2m tonnes historically achieved, although covers a shorter delivery period.

Canpotex's last China deal, in April 2008, covered shipments of 1m tonnes.

On the stock markets, Agrium shares stood Can$0.03 higher at Can$63.13 at 17:00 GMT, with Mosaic shares up 1.5% at $56.00 and PotashCorp stock up 0.3% at Can$111.40.