Potash Corp of Saskatchewan Inc., North America’s largest fertilizer producer, cut its profit forecast after buyer estimates of lower prices delayed sales.
Third-quarter earnings will be about 41 cents a share, the Saskatoon, Saskatchewan-based company said in a statement yesterday after the close of regular trading. In July, it predicted profit of 45 to 60 cents. The average of 27 analysts’ estimates compiled by Bloomberg was for 46 cents, excluding one-time items.
“The change primarily reflects lower-than-forecast potash sales volumes late in the quarter as buyers continued to defer significant purchases amidst near-term market uncertainty,” the company said in the statement.
The world potash market was shaken at the end of July after OAO Uralkali, the biggest producer, exited a joint trading venture with Belarus supplier Belaruskali. The Russian company also said it would increase output, sending shares of potash producers plunging around the world on speculation that the price of the commodity would slump.
Uralkali agreed to sell potash to India last month for $375 a ton, a 12 percent discount to the Indian sales accord that the Uralkali-Belarus venture signed in February.
“While Uralkali heavily sells to China by rail, and ships potash to India, it leaves almost no space for other producers,” Elena Sakhnova, an analyst in Moscow at VTB Capital, said by phone.
Potash Corp. dropped 1.5 percent to C$32.49 at the close in Toronto. The shares have declined 16 percent since July 29, the day before Uralkali said it was quitting the Belarussian venture, which accounted for about 40 percent of global potash exports.
“Suppliers are struggling to find buyers willing to commit in many markets apart from Brazil,” Argus FMB Potash, an industry research company, said last month. Purchasers elsewhere are holding back in case someone offers them a lower price, it said.
Cooperation between Uralkali and Belaruskali should be restored, a move that would double the potash price, Belarus President Aleksandr Lukashenko said today at a media briefing in Minsk. A reconciliation will only be possible if there’s a change of ownership at Uralkali, he said.
Lukashenko also said Russia must lay criminal charges against Uralkali Chief Executive Officer Vladislav Baumgertner before he’s released from custody in Belarus. Baumgertner was arrested in Minsk on Aug. 26 and charged with abuse of office in his role as chairman of the marketing venture.