By Rod Nickel
REUTERS - Indian fertilizer buyers are unlikely to agree to new potash contracts with the world's two big suppliers until December at the earliest, the head of one of India's biggest fertilizer makers, Indian Farmers Fertiliser Co-operative (IFFCO), said.
Once the crop-growing season wraps up in December in parts of India, buyers like IFFCO will have a better idea of how much of the soil nutrient they need from Canpotex Ltd and Belarusian Potash Company, the off-shore potash marketing agencies for miners in Canada and Russia/Belarus respectively, said U.S. Awasthi, managing director of IFFCO.
IFFCO buys nutrients, including potash, to make into fertilizer products to sell to Indian farmers. Fertiliser makers get an idea of demand once farmers can assess their soils after the harvest.
"It all depends upon completion of our season sometime in November or early December," Awasthi said in an interview with Reuters from the eastern Canadian province of Quebec. "We (will) know really how much product is there and how long it's going to last."
Awasthi said the biggest impediment to negotiating contracts is soft demand from farmers. India will need to pay significantly less than the $490 per tonne of potash that it paid for its most recent contract with Canpotex, which expired earlier this year, he said, before saying later that it's "guesswork" to predict prices.
"Demand is down because of higher prices," he said.
The weakening rupee and a cut in Indian government fertilizer subsidies have made potash more expensive for Indian farmers. Awasthi said he doesn't expect India to restore its potash subsidy levels.
Weak demand from India has contributed to a stockpile of potash among North American producers, which was one-third larger in September than the five-year average. A new Canpotex contract with India had been expected as early as August this year, with some now expecting a deal as late as the first quarter 2013.
India and China buy Canadian potash through contracts renewed roughly annually, unlike other users, including Brazil, which buy on the spot market.
India imports all of its potash.
Potash Corp
Awasthi was in Canada to announce IFFCO's joint plan with a Canadian agriculture co-operative to build a 1.2-million tonne urea nitrogen plant by 2017, IFFCO's first investment in North America.
Awasthi said IFFCO has no similar plans to invest in small Canadian potash companies that are looking for capital to build mines.
