Standard & Poor's has delayed until spring its forecast date for a recovery in potash sales, and shares in nutrient groups fallen by up to 7%, as PotashCorp's profits warning placed a cloud over the sector.

S&P, cutting to "negative" its ratings outlook on PotashCorp, said that the global decline in demand for fertilizer, in particularly potash, had been "greater than expected".

The ratings agency said that, with farmers continuing to scrimp on potash applications and dealers running down inventories it now expected that there would "not be a marked improvement" in sales of the nutrient during the second half of 2009.

"Potash volumes will not improve until the spring of 2010," S&P said, adding that PotashCorp's credit metrics in the potash sector would "remain weak" in the short term.

'Not good news'

The comments followed PotashCorp's cut, late on Friday, to earnings forecasts for 2009, the Canadian giant's third profits warning this year.

The company blamed "lower than forecasted potash sales volumes, due to continued slow demand and limited restocking by fertilizer distributors around the world".

"This clearly wasn't good news," analysts at Sterne Agee said, adding that they were "surprised" by a cut in PotashCorp's forecasts for 2010 potash sales "given how consistently bullish PotashCorp has been in the face of weak demand".

The warning sent shares in potash groups lower on Monday, with PotashCorp stock down 2.5% at Can$99.34 in lunchtime trade in Toronto. Shares in US rival Mosaic were 4.9% down at $51.57 in New York.

In Tel Aviv, shares in Israel Chemicals, the world's third-biggest fertilizer group by market capitalisation, closed down 3.7% to 42.00 shekels, while in Moscow, Uralkali stock plunged 7.0% to 105.29 roubles.

'Bleak' outlook

In Frankfurt, shares in Germany's  K+S ended 3.8% lower at E38.10.  

"The near-term profit outlook for K&S continues to look bleak," Icap analysts said, restating a "sell" rating on stock in the German potash and salt group.

"We continue to believe that volume expectations for potash both by management and by the market appear overly-optimistic."