"The firm started Potash at Overweight and set a $297 price target, Agrium at Overweight with a $143 price target, Mosaic at Overweight with a $155 price target and CF Industries and Interpid Potash with Equal Weight ratings and $180 and $65 price targets, respectively.
Morgan Stanley's targets suggest huge price appreciation over the next 12 months; based on current levels, the firm believes Potash, Agrium and Mosaic could rise as much as 98%, 93% and 76%, respectively, while the firm sees upside of about 76% and 46% for Interpid Potash and CF, respectively.
Morgan Stanley said its new coverage on Potash, Agrium, Mosaic, CF and Interpid Potash is due to its belief that the slide in these ag names is "unfounded". Furthermore, the firm expects these companies to report peak earnings in 2011, suggesting that the fertilizer boom could be far from over.
Everyone knows it's unfounded, but when hedge funds guess wrong on certain parts of the market and they are forced to produce cash - then they are forced to sell their very best profit makers. Ag is alive and well and ferts should once again produce stellar earnings for Q3. POT is the only one I am concerned about with their strike. MOS and AGU should be off the charts once again with $1,000 pricing and NO strike. There will be a shortage in the world of this nutrient for the foreseeable future. BPC cannot ramp up excess capacity like POT can. Do not be surprised if you don't see $1,250 per ton from BPC at the end of Q4 for spot. IMO, the USDA will have to revise their crop forecast downward when harvesting is done and the results become clear that we had a mediocre year in corn with floods, dry weather, and a potential early frost.
Its time to jump in. I have maxed myself out actually with conviction.
This will be short lived. I will ride it until Sept 23 and go short on that day until the end of the month. You know what is about to happen at the end of the month. No manager wants a -30% mover on the books for the quarter.
What a genius he would be to purchase it in the new quarter. What foresight hehe. ;)