Potash Corp. of Saskatchewan Inc. (NYSE:POT), the largest North American producer of its namesake fertilizer, said it doesn't expect a dispute between Russia's OAO Uralkali and Belaruskali to last and that forecasts of a slump in fertilizer prices are overblown.
Potash CEO Bill Doyle said in a company webcast that the the disagreement between the two companies is likely to be “shorter rather than longer."
The comments were his first since Uralkali quit Belarusian Potash Co., a marketing joint venture with Belaruskali. The company had accused its Belarusian partner of selling fertilizer outside a marketing agreement, the UK Telegraph said. Belaruskali once held 43 percent of the global potash export market.
Uralkali CEO Vladislav Baumgertner said last week that he objected to Chinese potash sales by Belaruskali outside of their joint venture agreement, Bloomberg reports. He said the price of potash, which helps strengthen plant roots and improve resistance to drought, may now fall to less than $300 a ton as his company ramps up full production to gain market share. The last agreement between China and the joint venture was for $400 a ton.
Shares of the company and North American potash producers fell sharply after the Russian producer said it will start selling the crop nutrient freely in markets for the first time in eight years, Bloomberg reports. Last week, shares of Uralkali fell by 25 percent, while Potash Corp. of Saskatchewan, Agrium Inc. (NYSE:AGU) and Mosaic Co. (NYSE:MOS) also plunged.
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Through a cartel, North American potash producers control about 70 percent of the world’s market. There had been some concern that they would have to cut prices further to compete on the global market.
Doyle, however, said he believes fears of a price slump are unfounded. “Logic tends to prevail. I don’t find too many people who self-destruct intentionally.”