U.S. Awasthi, managing director of the Indian Farmers Fertiliser Cooperative, one of India's biggest fertilizer makers, told Reuters that Indian farmers are unlikely to settle contract negotiations until after the Indian growing season has wrapped up. That will happen in late November to early December, and at that time farmers will be able to assess soil requirements.
An inflated rupee and a cut in fertilizer subsidies by the Indian government have left many Indian farmers unwilling to pay high prices for potash. India's most recent contract with Canadian potash export body Canpotex settled at $490/tonne, a price Indian farmers are unlikely to pay again.
China is also looking for a better price in its upcoming contract negotiations, which now may not happen until the first quarter of 2013.China buys potash from Canpotex and Belarusian Potash Company in contracts and is holding out for a better price, according to Jim Prokopanko, CEO of Mosaic (NYSE: MOS). Prokopanko told Bloomberg in an interview that China is “very determined” to pay less than the $470/ton of potash that it agreed to for the first six months of 2012. Competition from increased rail-delivered potash from Belarusian Potash is one component of its desire for lower prices, but weakening demand has also played a part. PotashCorp (TSX:POT) has interpreted this weaker demand as a reason to cut its projected earnings as sales volumes fall to lower-than-expected levels, Reuters reported. The result of deferred contract settlements with China and India will likely be growth in North American potash stocks as the countries evaluate future purchases. North American potash stockpiles eased in September by 3 percent, about 73,000 tonnes, but remain 39 percent higher than the five-year average of around 2.332 million tonnes, Reuters reported.