Potash producers in the former Soviet Union have undercut North American rivals to strengthen their grasp on India's important import trade in the nutrient.

India has agreed to buy 1.2m tonnes of potash for $490 a tonne, including freight, from Belorusian Potash Company (BPC), the export marketing cartel representing Belorussia-based Belaruskali and Russia's Uralkali.

The deal is the second announced in two days, after India on Tuesday night ended a protracted stand-off with producers to seal a deal with the North American Canpotex consortium.

However, the deal with Canpotex, a tie-up between Canada's Agrium and Potashcrop and US-based Mosaic, was for 670,000 tonnes, and struck at an average price of $500 a tonne.

Historically, former Soviet Union potash groups have supplied about half of Indian requirements.

And Ukralkali signalled ambitions to lift its exports to India further, with an aim to deliver a further 1`.3m tonnes by the end of March.

The BPC deal also provides for immediate exports to India, whose inventories of the nutrient are reported as falling woefully thin. Supplies from the Canpotex agreement do not kick in until at least October.

'Key driver' 

Vladislav Baumgernter, the Uralkali chief executive, said that he was "sure that this contract is beneficial for both parties", strengthening their partnership and promoting stability in the Indian potash market.

He added that "the new contract with the world's major potash importer will be a key driver of [world] market growth in 2012".

The ending of the deadlock with India, which had been holding out for lower prices, now ended, would "chivvy the rest of the market along", a person familiar with Uralkali's thinking told Agrimoney.com.

Meanwhile, Canada's PotashCorp, the world's biggest potash group, has raised concerns over whether world production capacity can keep up with demand.

Steve Dechka, the Canpotex chief executive, said late on Wednesday that the group's India deal had left the cartel "fully committed for sales in the fourth quarter of 2011".

Uralkali shares closed 2.0% lower at 256.96 roubles in Moscow.