Potash prices have taken a sharp drop recently, offering Midwestern producers the chance to lock in favorable prices for the 2010 growing season.

Canadian producer Potash Corp. announced on Dec. 29 that it was cutting its U.S. Midwest price to $390/metric ton for the Jan. 4 to Feb. 28 period.

That price cut followed the news on Dec. 23 that Belarusian Potash Company (BPC) had agreed to sell 1-1.2 million metric tons of potash to top world buyer China at $350/ton CIF (including freight) for 2010 delivery.

The price was lower than expected, with industry analysts calculating the FOB price (not including freight) of the BPC potash sale at about $300/ton.

Potash was quoted last week at $390/ton FOB St. Louis, which was down from more than $500/ton in early fall and $750/ton in the first quarter of 2009.

The potash market may edge a bit lower in the near-term even though general industry expectations are that the BPC sale to China will provide a price floor for potash by triggering a step up in demand from other users.

The BPC-China deal creates positive momentum" for the global market that may boost global consumption and start driving prices up from 2011, Marina Alexeenkova, a Moscow-based analyst of Renaissance Capital said in a research note on Dec. 29.

"If not, we might see further pressure on the potash price in 2010 to $300-350/metric ton, including freight, which represents the total operating and financial expenses of the largest potash producers in the European Union and North America," she wrote, according to a report from Bloomberg News.

Editor’s note: Richard Brock, Corn & Soybean Digest's marketing editor, is president of Brock Associates, a farm market advisory firm, and publisher of The Brock Report.