Just day after getting a lift after it was revealed a noted hedge fund manager had taken a stake in one its holdings, the Market Vectors Agribussiness ETF (NYSEArca: MOO) was stung by news of the breakup of Belarusian Potash Co. (BPC).

One way of looking at BPC is that it is, or was, comparable to the OPEC of potash fertilizer. The cartel was formed eight years ago Russian potash giant Uralkali and Belarusian Belaruskali. It was the former that has put MOO and its constituents in flux by opting out of BPC. That news sent the ETF’s marquee fertilizer holdings such as Agrium (NYSE: AGU), Mosaic (NYSE: MOS) and Potash (NYSE: POT) tumbling. [Fertilizer ETF Gets a Lift on Loeb’s CF Buy]

Those companies are members of a North American equivalent of BPC, Canoptex. The two groups dominate global potash production and have been able to operate somewhat harmoniously. Uralkali’s defection from BPC could mean trouble for North American potash producers though.

Uralkali has said that it believes that its departure from BPC will cut the price of potash by 25%, from around $400 a metric ton to $300, reports Paul Ausick for 24/7 Wall Street

That leaves rival potash producers with an unattractive choice: Boost production to compete with Uralkali on price or sell the crop nutrient at higher prices than the Russian company and hope for the best.

As for the potential impact on MOO, it is a matter of simple math. Uralkali is a MOO holding, but with a scant weight of 2.2%. On the other hand, the aforementioned North American fertilizer firms combine for 14.3% of MOO’s weight. Overall, the U.S. commands almost 44% of MOO’s weight, Russia gets just a 3.2% slice of the ETF. [Agribusiness ETF for Rising Food Prices]

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