Potash producer stocks rise

Shares in global potash producers rose Thursday after the United States imposed sanctions on the Belarusian exporter, which accounts for 16% of world production, as well as wide-ranging sanctions on other companies in the country.

The Belarus Potash Company (BPC) is the export arm of the Belarusian state-owned potash producer Belaruskali and is the main foreign exchange earner of Minsk. BPC mainly supplies potash to China, India and Brazil.

The U.S. Treasury Department said Thursday that it had given general approval to process transactions with BPC by April 1.

"While there is a high likelihood that the license will be renewed, some customers will still try to avoid new deals," said VTB Capital. "It is vital to see how ready China and India are to sign new contracts (with BPC)."

BPC, which is currently shipping through the port of Klaipeda in Lithuania, did not immediately respond to a Reuters request for comment. Belaruskali was sanctioned in August and the deadline for doing business with the company is December 8th.

The general license allows activities to be cut to avoid disruptions to shipments in transit, but does not allow new business, said Brian O'Toole, a former Treasury official who now works for the Atlantic Council.

With no new deals approved, "there will likely be an immediate impact on price, especially in the US," he added.

With a production of 12.5 million tons of potash in 2021, Belaruskali is the world's second largest producer of the phytonutrient after Nutrien (NYSE: NTR) Ltd, according to VTB Capital.

"This news will continue to support the already high potash price, which is currently at a 13-year high," it continues.

The extended US sanctions won't change global supply and demand, but North American potash producers Nutrien and Mosaic Co (NYSE: MOS) will benefit, Scotiabank analyst Ben Isaacson said in a note.

Nutrien shares rose up to 3.4% in Toronto, while Mosaic shares rose as much as 3.9% in New York.