Potash Producers Sink On Price Worries As Russian Cartel Looks To Grab Share

Fertilizer stocks were tumbling hard early Tuesday, on worries that moves by the world's largest potash producer will push down prices.

Big potash producers were taking the brunt of the hit. Potash Corporation of Saskatchewan (POT) was falling 23% after the open, and Mosaic (MOS) tumbled 24%. Other fertilizer and agriculture companies were also taking a hit, with Agrium (AGU) down more than 7% and Monsanto (MON) slipping more than 3%.

The problem is OAO Uralkali, the world's largest potash producer. Chief Executive Officer Vladislav Baumgertner said today that it was breaking up a sales venture with Belarus that had controlled 43% of global exports. That cartel was one of the world's largest, commanding around 70% of the global market.

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Uralkali is looking to grab market share in the new trading landscape it has created with the break, and said it will increase to consumers including China, which imports about a fifth of global supplies, after switching to its own unit, Uralkali Trading, the a joint venture.

These changes could push prices down drastically, to less than $300 a ton by the end of the year, Baumgertner said, a 25% percent drop from the current contract price with China.