What follows is taken in part from Canaccord Genuity's Morning Coffee report
Potash stocks were higher on reports that Vladislav Baumgertner, CEO of Uralkali, the world’s largest potash producer, was detained in Belarus on charges of abuse of office.
Uralkali later confirmed that Baumgertner was taken into custody in Minsk. The company has refuted any allegations of wrongdoing on the part of Baumgertner or any other officials of Uralkali.
Reuters reported late Monday that Belarusian investigators intend to seize property and assets of Uralkali.
Investigators said that Uralkali had incurred $100 million in damages to Belarusian interests.
At the end of July, Uralkali turned the global potash market upside down when it broke-up a marketing venture that controlled about 43% of global potash exports.
The global potash market remains quiet as both buyers and producers continue to evaluate the implications of pricing on the BPC split.
One industry official said the situation is difficult to assess because potash, a fertilizer ingredient, is sold under contract by two large marketing groups which together control roughly two thirds of the $22 billion global potash market.
One is Belarusian Potash Co., which has included Uralkali and Belaruskali OAO.
The other is Canpotex, the marketing agency for the big North American producers, including
Potash Corp. of Saskatchewan Inc. (
TSX: T.POT, Stock Forum), Mosiac Co. (
NYSE: MOS,
Stock Forum) and Agrium.
Secondly, politics is likely playing a major role in the decision to detain the Uralkali officials.
“It’s a mysterious story that is bound to get more interesting,’’ said Mike Blady, spokesman for
Pacific Potash Corp. (
TSX: V.PP,
Stock Forum) in Vancouver. “I’m sure there will be more twists and turns in the next couple of weeks.’’
Meanwhile, Canaccord Genuity says prices have begun to move lower in a number of markets.
While the southeast Asian benchmark was reported at US$400-US$420 per tonne, versus US$440 to US$50 previously, reports suggest an even lower pricing level of US$370 to US$380 per tonne.
The Brazilian benchmark declined a further US$10 per tonne to US$380-390 per tonne.
The outlook remains for lower pricing, but the extent of the price move will not be substantially tested until the fall season begins, Canaccord said it its report.
U.S. pricing remained unchanged at US$400 per tonne fob Midwest despite earlier suggestions buy North American producers that their US$20 per tonne decrease two weeks ago was a “one week special.”
If Ben Affleck can play Batman, is it out of the realm of possibility to believe that Uralkali may do a backtrack on their new strategy and get back together with Belaruskali.
Potash Corp. of Saskatchewan Inc. (
TSX: T.POT, Stock Forum), the market leader, was off 1.5% to $31.61 Tuesday, leaving a market cap of $27.4 billion, based on 867.7 million shares outstanding. The 52-week range is $45.98 and $29.67.
Mosiac Co. (
NYSE: MOS,
Stock Forum) eased 2% to $41.48, leaving a market cap of $12.3 billion, based on 425.8 million shares outstanding. The 52-week range is $64.65 and $39.75.
Agrium Inc. (
TSX: T.AGU,
Stock Forum) was off 1.2% to $92.90, leaving a market cap of $13.7 billion, based on 148.7 million shares outstanding. The 52-week range is $116.38 and $83.46.
Smaller companies in the sector were also hit hard.
Karnalyte Resources Inc. (
TSX: T.KRN,
Stock Forum) saw its stock price ease 0.47% to $2.12, leaving the company with a market cap of $58.26 million, based on 27.5 million shares outstanding. The 52-week range is $9.65 and $1.85.
Passport Potash Inc. (
TSX: V.PPI,
Stock Forum) was unchanged at 10 cents, leaving a market cap of $18.3 million, based on 183.6 million shares outstanding. The 52-week range is 26 cents and 14 cents.