Potash prices have remained stuck at about $350 a tonne despite levels of inventories held by North American producers falling 21% below their long-term average.

Stocks slid in March for a fifth successive month, ending up below 2m tonnes for the first time since late 2008, data from PotashCorp, the world's biggest producer of the nutrient, said.

The decline continued a reversal from last year, when a slump in farmer demand prompted by low crop prices and tight credit sent stocks soaring to more than twice average levels.

Nonetheless, despite the tighter supplies, prices in Vancouver, the base for North American potash exports, remained at the $350 a tonne level that they have held all year.

Share downgrades

While lower than the $900 a tonne and more reached during the farm commodities boom two years ago, that level of pricing is high by historic standards.

Indeed, on Wednesday, Goldman Sachs raised doubts that producers would make relatively high prices stick in a report removing PotashCorp from its list of "conviction buy" stocks and cutting its price target for the stock by 5.5%, to $123.69 a share.

The bank also downgraded stock in US fertilizer group Mosaic from "buy" to "hold", reducing the target share price by some 6% to $64.

While fertilizer groups have counted on strong demand from North American farmers, wanting to replenish nutrients after last year's buyers' strike, Goldman said that producers may have to wait until South American orders come in around this summer "to re-establish upward momentum".

Alarm bells

While prices in Russia, North America's main competitor in potash, have been rising they remain, on the domestic market, considerably below those elsewhere.

Uralkali last month said it had raised by 8.7% to 4,300 roubles - equivalent to less than $150 a tonne - the price it would sell potash to Russian manufacturers of multi-nutrient fertilizers.

Nonetheless, prices have raised alarm bells Russian authorities, who are attempting to raise domestic grain production at a time when farm spending is still limited by tight credit and profitability undermined by weak crop prices.

Russia's anti-monopoly agency on Wednesday said it would back proposals for an 8.5% duty on potash exports.

Market reaction

Thursday's data helped a revival in shares in potash groups.

PotashCorp shares gained 1.4% to Can$111.18 in afternoon trade in Toronto, recovering half losses prompted by the Goldman Sachs report, while Mosaic shares stood 0.8% higher at $55.84 in New York.

In Frankfurt stock in German potash group K+S ended 2.0% higher at E43.99.