Potash prices have risen to their highest this year, joining in a round of fertilizer price increases, as North American stocks of the nutrients hit their lowest since at least 2007.

PotashCorp, the world's top potash producer, said that prices of the nutrient had climbed to about $380 a tonne, free on board in Vancouver.

The increase, after months of flat-lining at about $350 a tonne, represents a far smaller recovery than other nutrients have seen, with urea prices up by about two-thirds since the spring.

Phosphate prices in the US port of Tampa have approached $600 a tonne, double their price at a nadir in spring last year, as weak crop prices and the credit crunch persuaded farmers to hold back on nutrients.

However, the potash uptick will go somewhere to supporting views that the sector revival long heralded by groups such as PotashCorp is gaining traction, after being held back initially by prices which were held relatively high compared with those of other nutrients.

'Fundamentally positive'

Indeed, the data comes the day after K+S, the German potash giant, raised prices of muriate of potash, the most commonly held form of the fertilizer, by E18 to E335 a tonne for European customers.

The increase, the fourth this year, reflected higher crop prices, which have improved farmers' willingness to fork out for nutrients, the group said.

Meanwhile, Russia's Uralkali on Monday, unveiling a 5m-tonne supply deal with Norwegian fertilizer group Yara International, said the scope of the contract, "one of the largest in the potash industry's history… demonstrates that the global potash market is recovering and that the demand for potash continues to grow".

The deal was viewed by analysts at broker UralSib as "fundamentally positive for Uralkali as signing the next five-year long-term agreement points to the continuation of the practice of long-term agreements, which should be supportive for export prices".

Stocks decline

The PotashCorp report also showed potash inventories held by North American producers falling further behind historic levels last month.

At about 1.6m tonnes, stocks were 182,000 tonnes, or 22%, behind average levels, and the lowest for the time of year for at least four years.

Lower stocks are generally seen as supportive for prices, in forcing buyers to compete more strongly for supplies.

"The relatively low inventory levels should continue to buoy fertilizer prices in the wake of increasing global demand," analysts at Canada-based broker Salman Partners said.