Potash Corp. downgrades earnings amid market uncertainty

Saskatchewan’s Potash Corp. says it will earn less than expected in the third quarter because of lower potash sales.

The company issued earnings guidance Friday saying its earnings per diluted share are expected to come in at 41 cents, down from 45 to 60 cents as it had predicted in July.

Potash shares lost 29 cents to $32.68 in early trading on the Toronto Stock Exchange. 

The company said buyers were deferring "significant purchases amidst near-term market uncertainty."

The greatest uncertainty in the potash market is the break-up of Belarusian Potash Company (BPC), a sales cartel jointly operated by the Russian oil giant Uralkali and state-owned Belaruskali that previously controlled more than 40 per cent of global potash exports.

Uralkali announced in July it would raise production and attempt to claim more of the Chinese market for fertilizer.

• Potash price hammered as Russians may flood market
• Potash dispute sparks Belarus-Russia power struggle

The bitter split with its Belarusian partner in July created expectations of a glut of potash and falling prices, but it hasn’t worked out that way, according to analysis from TD Economics.

"Headlines would suggest  that prices have fallen off but not to the extent that had been initially feared," the bank's economics research division said in its outlook for the Saskatchewan economy. "As a result, we expect production  to pull-back in the second half of 2013 after recording a solid increase in production thus far into 2013."

TD expects that purchasers who had been waiting on the sidelines will soon re-enter the market, stabilizing the outlook for the fertilizer sector.

It did not expect Saskatchewan's economy, one of the strongest among the Canadian provinces at just under three per cent, to be much affected in the medium term.