March 20, 2012 / 2:52 PM / 5 years ago

Canpotex, Sinofert sign new potash supply contract

March 20 (Reuters) - Potash marketing consortium Canpotex said on Tuesday it has signed a contract with Sinofert Holdings to supply the Chinese fertilizer maker with 500,000 tonnes of potash in the second quarter of 2012, at pricing that is in line with year-earlier levels.

Canpotex, jointly owned by North American fertilizer producers Potash Corp, Mosaic Co and Agrium Inc , said the new contract includes an option to increase this tonnage by an additional 200,000 tonnes for delivery during that same period.

The latest announcement is a big boost for the crop nutrient producers as the potash market has been largely stagnant for months and large players such as Potash Corp and Mosaic have been scrambling to cut output in a bid to keep markets tight and keep prices for the nutrient from declining.

Last week, industry data indicated that potash inventories at the producer level in North America had fallen for the first time since October last year, largely due to the many production cuts. Prices for the nutrient have remained largely stable around the $500 a tonne level.

The Canpotex announcement on Tuesday, drove gains in shares of Potash Corp, Mosaic and fellow potash producer Agrium Inc.

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