"The spread between potash and corn prices, which looks unfavourable in a historical comparison, is, we believe, a factor that is likely to continue to add pressure on potash prices near term," the bank said in a report.

While demand had started to recover in India and Brazil, which account for 23% of the global market between them, it remained poor in North America and Europe and most of Asia.

"We suspect weak apparent demand in these regions could continue well into 2010 as farmers await firmer direction of where prices may end up and product is readily available from high producer inventory," the note said.

'Floor price'

CS forecast that China would pay $400 a tonne, less than the $460 a tonne that India agreed to pay in July, and the $700 a tonne that some Asian buyers contract to earlier in the summer.

"We see a settlement in China establishing a floor price… and we believe potash volumes would pick up materially as a result," the report said, predicting a revival in sales starting "no later than" the April-to-June quarter of next year.

Deliveries, expected to slump 26% this year, would soar 49% in 2010.

Price revival

However, a price recovery would not set in until 2011, as the market worked through huge inventories built up during the slowdown.

Prices would average of $410 a tonne in Vancouver next year, 30% lower than in 2009, before revering to $490 a tonne in 2011.

The forecast is more downbeat than those released by some producers, such as Canada's Agrium, which has predicted an improvement in demand setting in during the last six months of 2009.

Credit Suisse said it saw Uralkali as the potash company best placed to benefit from market rebound, thanks to its "low cost base, helped by the weak rouble".