It has been reported that the CEO of Mosaic was at a conference recently during which he observed that potash sales by Canpotex during 2013 could exceed the 1.1 MMT recently agreed to in a supply contract announced earlier. He based this contention on the proposition that there is a real comeback in Indian potash demand under way. Of course it remains to be seen just how evident this new found interest in increased potash supplies really is given the state of Indian perverse nutrient subsidy policies, the decline in the value of the rupee and rampant inflation in the country. For the moment though, we have been charmed.
abb i always look forward to your takes on the ferts. you seem to really know your stuff. i belive we will see a big price movement on all these stocks over the next five years. the yield that farmers will need to feed this ever growing world will demand what these stocks have to offer. and the price of entry is huge which will keep much of the comp out. everything seems to be heading in the right direction. i am surprised we have not seen more upward movement to this point. maybe i am not seeing the whole picture. what do you think is keeping these stocks down, isn't wallstreet foreward looking. maybe i am blind to the otherside as a holder of both pot and mos. my mos is a much larger part of the pie.
Thinking that you are right about the increased demand to feed the growing world population. The market is usually a step ahead of most of us and if you look back to say 2005 you will see pot has already made great gains. It might have gotten a bid ahead of itself and is taking a plateau break for a while. Do think the run up in price of potash in the last 8 years has spured new interest and lots of talk about new sources and suppliers, which has cooled with the price lately. so probably pot is going higher in fits and starts. Thinking the bhp takeover bid was a sign of the most exuberant.excited time. still think its going higher but 2013 might be a year to get in on weakness, before the next leg up. probably something all commodities do. glta
The share price of POT is sinking because the per ton price of potash is sinking, and has been for the past 18 months.
The price of potash is sinking because the price of corn is sinking, and has been for a few months also.
If the USofA plants 96 mil acres of corn this spring and favorable weather occurs, guess where the price of corn will be come September.
You are asking me a really tough question; namely, why are the stocks we own going down instead of up? Although I will be obliged to enter the world of speculation and mind reading in order to do that, I will make the effort. But of course it is necessary to take what I have to say as an expression of confusion as much as it is an expression of clear eyed examination.
Believing as you do that the agricultural nutrient sector is the place to be for the long term (i.e.., 15-20 years), I made a field bet on POT, AGU and MOS in 2007 and increased my position in these companies in every year except last year when I decided to diversify my holdings further by investing in oil and gas midstream partnership units. AGU has been getting hammered lately but it did exceed its all time high recently so that stock cannot be viewed as a disappointment. Instead I believe it will eventually recover and go much higher, especially if JANA Partners succeeds in getting its picks onto the AGU BOD. POT has suffered from disappointing earnings quarter after quarter. I don't blame POT. It is the the company with the greatest excess capacity but unfortunately current market conditions do not call for that utilization. A combination of price pressure, volume declines, continued substantial CAPEX spending and a product line which does not have to be applied annually have all combined to make the stock less than attractive. Add to that that a number of analysts have taken a dim view of POT over the next several years, believing that its stock price will remain moribund because of price pressures, lower volumes, competition from others, etc. such that its heyday has passed it by. I may not agree but I am merely a little guy in a sea of much bigger ones who move the stock price. MOS has different problems from POT as well as some of the same ones. Price pressures and volume pressures on its potash and phosphate operations have kept the stock price subdued. So too have the strictures placed on MOS by virtue of the terms of its separation from Cargill which fortunately will expire in May. The company has a strong balance sheet but doesn't have much that it can productively do with it other than wait until it can repurchase its shares from the Cargill Trusts who will definitely be interested in selling. As an aside, if I had been CEO Prokopanko, I would never have ventured an opinion regarding the likelihood that India would potentially buy more potash from Canpotex. I would have kept my mouth shut, merely hoping that India would honor the contract they just made with Canpotex. Anything beyond that would have been found money and gravy.
If I had to guess, I would venture that all these stocks will be doing a lot better during the 3rd quarter than they are now. In other words, well into the next growing season. When I decided to invest in this area, my pecking order was POT, then AGU and then MOS in terms of where to invest the greater amount of cash. So far, it looks as if I didn't do too badly with my allocation. It sounds as if you left AGU out of your equation which is unfortunate.