Potash Corp of Saskatchewan, the world’s biggest fertilizer producer, reported a lower-than-expected quarterly profit on Thursday and cut its outlook as prices of its crop nutrients fell.
Potash’s U.S.-listed shares dropped 4.5 per cent to $36.24 in trading before the market opened.
Producers of crop nutrients potash and phosphate have struggled to stop a slide in prices. Demand in key importer India has been soft because of reduced government subsidies and a weakening rupee.
The decline in potash prices has prompted several major companies, including Vale SA and Mosaic Co, to delay plans for new or expanded mines.
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As the harvest in southern Alberta presses on, a broker said that is one of the factors pulling feed prices lower in the region. Darcy Haley, vice-president of Ag Value Brokers in Lethbridge, added that lower cattle numbers in feedlots, plentiful amounts of grass for cattle to graze and a lacklustre export market also weighed on feed prices.
Stocks of North American potash have also piled up in the past year, sitting about 14 per cent above the five-year average in June. Both Potash and rival Mosaic have announced production curtailments.
Potash said on Thursday that it would run two of its mines at reduced rates for the rest of the year.
The company’s production curtailments are no surprise, considering ample supplies and soft prices, said Cowen Securities analyst Charles Neivert.
“You don’t keep producing when things stink,” he added.
The Saskatoon, Saskatchewan-based company, the world’s largest potash producer by capacity, said it expected 2013 earnings of $2.45 to $2.70 per share, down from a prior forecast of $2.75 to $3.25. Analysts on average had forecast $2.89, according to Thomson Reuters I/B/E/S.
