Russia-India deal boosts potash price forecasts

By Roberta Rampton

WINNIPEG, Manitoba, March 24 (Reuters) - North American potash producers are eyeing even higher prices in the hot world fertilizer market after Russian competitors signed a major deal with India last week, analysts said on Monday.

"It's significant news for the potash market around the world," said Ashley Harris, manager of investor relations with Agrium Inc (AGU.TO).

"It definitely sets a precedent about the types of increases expected," Harris said.

India typically negotiates yearly deals after China, the world's largest volume importer, inks its annual contract. China normally buys at a discount to prices paid by importers in other markets like Brazil and southeast Asia.

But tight world potash supplies combined with pressures to control food inflation this year have prompted India to leapfrog ahead of China to secure annual supplies with Belarussian Potash Co, which trades for Uralkali (URKA.MM) and Belaruskali.

The deal was done at the going spot market price of $625 per tonne (delivered) -- more than double last year's contract price of $270 per tonne.

Canadian producers Potash Corp (POT.TO), Mosaic Co (MOS.N) and Agrium negotiate export deals to India and China jointly at values that are usually similar or higher to the Russians.

"I expect that China, being the largest buyer in the world, would buy at a discount to this (India price), but it definitely sets something of a benchmark," Harris said.