Trump’s Belarus potash plan may have limited bite

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US President Donald Trump’s proposed “massive” potash deal with Belarus rattled fertilizer stocks, but BMO Capital Markets says limited supply and costly export routes make the country an unlikely threat to Canadian producers.

Trump said Monday that the US was working to buy Belarusian potash for “substantially less” than it currently pays Canada, which supplies about 80% of US potash imports. He gave no details on volumes, timing or proposed prices.

Belarus could resume supplying some potash to the US as relations between Washington and Minsk thaw, but those tonnes would probably sell at prevailing market prices rather than at deep discounts, BMO fertilizer and chemicals analyst Joel Jackson said in a note.

“We expect those tonnes would be sold at market-based prices, not deep discounts, and in volumes unlikely to materially alter North American potash supply dynamics,” Jackson said.

The prospect hit North American fertilizer stocks after Trump’s announcement. Nutrien (TSX: NTR)(NYSE: NTR) fell about 2.3% Monday, while Mosaic (NYSE: MOS) slipped about 0.4%.

Supply limits

Belarus, one of the world’s largest potash producers, has rebuilt much of its export business since Western sanctions disrupted its traditional routes following Russia’s 2022 invasion of Ukraine. But the landlocked country remains dependent on more expensive Russian logistics because European Union sanctions restrict access to Lithuania’s Klaipeda port.

That makes Belarus a difficult replacement for Canadian potash, which benefits from established North American transportation infrastructure and Saskatchewan’s enormous production base. Belarus produces about 12 million tonnes annually, split between granular and standard grades, while the US consumes roughly 10 million tonnes, predominantly granular product, according to BMO.

Economics also work against Trump’s suggestion that Belarus could sell large quantities at steep discounts. US potash prices of about $350 to $360 per short ton at New Orleans have risen on strong demand and offer Belarusian suppliers competitive returns relative to other major markets, Jackson said.

Belarus therefore has little incentive to discount one of its largest sources of foreign currency simply to capture US market share.

There may also be little uncommitted product available.

Belarusian President Alexander Lukashenko said Monday the country had redirected exports east and its potash production was already committed under existing contracts. Even if Western markets reopened completely, Belarus lacked additional volumes to supply them, he said.

Lithuania, meanwhile, has shown no sign of reopening the cheaper Baltic export route. EU restrictions on Belarusian potash remain in place, meaning additional shipments to the US would probably have to move through Russian ports.

Pricing pressure

The more immediate risk for Canadian producers may be psychological rather than physical, Jackson wrote. According to the analyst, the prospect of additional Belarusian tonnes could make Nutrien and Mosaic think twice before pushing North American potash prices materially higher, even if Belarus cannot supply enough product to fundamentally reshape the market.

US demand remains robust and BMO still sees room for further potash price increases. But Trump’s announcement introduces another potential source of competition into a market where Canadian producers have long enjoyed a dominant position.

For Belarus to seriously challenge that dominance, it would need substantially greater export capacity, competitive logistics and enough uncommitted granular potash to serve US buyers. These conditions, BMO’s analysis suggests, are not currently in place.