Ben Isaacson, CFA, covers large-cap global equities within the fertilizer sector - as well as emerging fertilizer companies listed in North America - for Scotia Capital.
TWST: Where do you focus your attention in the fertilizer space these days?
Mr. Isaacson: Right now, we're focused more on the outlook of potash, which we believe will be the only one of the three nutrients - the others being phosphate and nitrogen - that will see continued positive price development through the next several years, until new supply comes on in the back half of the decade. In the phosphate market, we're already seeing early signs of margin contraction, as DAP prices have not been able to keep up with the rising cost of feedstocks, such as ammonia, sulfur and phosphate rock. As significant new capacity starts to come online over the next 18 months, we could see an oversupply situation by the end of 2012. In nitrogen, the margins look spectacular for North American producers like CF Industries (CF) and Agrium (AGU), but we're deeply concerned about Western European nitrogen margin contraction.