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Potash Corp. of Saskatchewan, Inc. Message Board

  • phogat_ajay phogat_ajay Aug 4, 2013 12:10 PM Flag

    My thesis and strategy

    If there is more downside it will be seen within this year. At present prices, I'm more bullish than bearish. IMO the cartel is be back together before 2015. This is a political play by Russians to mess with Belarus. Even with increased supply the prices may not crash as far as we think they will. At cheaper prices farmers world-over may increase their aggregate consumption. What I would like to know is how is this going to affect Nitrogen fertilizer prices. Does anyone have a keen understanding of mechanics of Nitrogen and Potassium consumption? Please share.

    Sept $27 Put- $0.85 (2 contracts)
    Dec $25 Put- $1 (1 contract)
    Jan $32 Call- $1.45 (2 contracts)
    Jan 2015 $35 Call: $1.8 (1 contract)

    For nitrogen exposure I like UAN. Their costs are contained. Have no exposure to natural gas prices (unlike AGU and CF). Nicer dividend at 10%. Obviously more risky than the other two.

    Critique and suggestions welcome!

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    • The Russians want Belarus to privatize and some Russian billionaires want to buy their potash operations. Uralkali just cut everyone's market cap big time, as well as the estimated value of the Belarus assets. Perhaps another merger down the road makes for one huge company, No doubt though the Russians are playing hardball with Belarus. They also crush the marginal players and keep others from entering the business (BHP and Rio Tinto come to mind). Cap ex industry wide is probably winding down fast. Some pain near-term but healthy Darwinism at work here also. The low-cost giants survive and thrive while weaker players flounder.

    • I think you make sense saying that consumption will increase, it's pure supply and demand thing and that downside is very limited imo.

      you sold puts or bought?

32.08-0.51(-1.56%)May 5 4:04 PMEDT