Potash prices have held near for a third successive month as inventories bucked historical trends and fell in November, data from PotashCorp have shown, amid growing expectations that China will strike a long-awaited supply deal.
The world's biggest fertilizer group said that potash prices, free on board in Vancouver, stayed at $480-490 a tonne last month.
The continued stability in potash prices at way above historic levels – for at least five years until 2004 they were stuck at $110-120 a tonne – co-incided with an unusual fall in North American producers' inventories in November.
Stocks fell by 146,000 tonnes to about 3.4m tonnes, as potash groups, including PotashCorp, maintained huge capacity cuts following a slump in demand in 2008-09 prompted by lower crop prices and tight credit.
Nonetheless, potash inventories remained 89% above their five-year average, a situation not mirrored in nitrogen and phosphate markets, whose prices have fallen back from early-2008 peaks to historic levels.
And there are reports of American and Brazilian farmer snapping up potash at way below the Vancouver price quoted by PotashCorp, which also faces a challenge from a long-awaited China supply deal.
Many observers have warned that the market looks vulnerable to declines until China, the world's biggest user, agrees a fresh import deal which has been in negotiation for months.
Jim Prokopanko, the chief executive of US fertilizer group Mosaic, said last week that he considered a Chinese deal "imminent".
"If it's not before Christmas, it's going to be shortly after the new calendar year," he told investors, adding that expectations were for a deal struck blow $400 a tonne.
Excluding transport costs from Vancouver, China could be paying $325-350 a tonne, he added.
PotashCorp shares stood 1.7% higher at Can$125.59 in afternoon trade in Toronto, with Mosaic shares 1.7% higher at $59.97 in New York.