Global potash inventories have dropped for the first time in almost a year, amid some signs of green shoots in fertilizer markets.

Noth American potash producers' stocks, which in June hit their highest since at least 2005, fell 129,000 tonnes last month to less than 3.5m tonnes, data from PotashCorp showed.

The decline was the first monthly drop since August last year, before a slump in crop markets prompted farmers to make steep cutbacks in spending on fertilizers, whose prices have also tumbled.

Shares in potash groups rose following the report

Revival signs?

The stocks decline was termed a "surprise" by Broadpoint AmTech analyst Edlain Rodriguez, given that it occurred without much help from deliveries under an Indian deal signed last month.

"Most market observers did not expect any positive momentum given that producers did not begin to ship to India until an agreement was reached in late July."

And the PotashCorp data showed signs of stabilisation in other fertilizer markets, following sharp cutbacks in production.

Urea became more expensive in North America, Russia and the Middle East, with some phosphate prices also rising.

Meanwhile, fertilizer group's ammonia margins have more than doubled from early-summer lows.

'Earnings risk'

However, other observers have warned that it looks too early to call a revival in the industry, particularly in potash, where China has yet to follow India in signing up to a fresh supply agreement with foreign producers.

A note from Sterne Agee warned that it did not look like potash prices had reached a floor given that "China may not settle at all this year".

Icap, the London broker, on Tuesday warned of "earnings risk" at German fertilizer giant K+S, noting that many potash buyers were waiting for prices to fall further.

Shares rise

In the markets, K+S shares ended 0.4% higher at E35.72 in Frankfurt, while stock in Russian potash producer Uralkali jumped 4.4% in Moscow.

PotashCorp stood 2.3% higher at Can$103.03 in late trade in Toronto, with Agrium up 2.5% at Can$52.00.