Sector Snap: Fertilizer Cos.

Shares of potash producers continue to fall on Russian company plan to pull out of cartel

Associated Press

NEW YORK (AP) -- Shares of fertilizer companies continued to tumble Wednesday on news that a big Russian fertilizer company plans to stop cooperating in a pricing cartel.

That will likely slash prices for the fertilizer potash, which could in turn cut into profits for potash companies.

Potash, a major fertilizer used by farmers worldwide, has been selling for almost $400 per ton. Some analysts believe the price could fall below $300 now.

The Belarusian Potash Co. sells potash made by JSC Belaruskali and Russian mining company Uralkali. They accounted for about a quarter of the world's potash trade this year, giving them significant influence over global potash prices.

That's all changing because instead of limiting production and keeping prices higher, Uralkali now says it will max out its production and sell at spot prices.

The news prompted Goldman Sachs analyst Adam Samuelson to downgrade a trio of potash companies, saying that Uralkali's decision "marks an unprecedented change for the sector that is likely to have long-lasting implications if maintained."

Samuelson cut his rating for Intrepid Potash Inc. to "Sell" from "Neutral," pointing to its high production costs. In afternoon trading, that company's shares fell $1.13, or 8.1 percent, to $12.76, after dropping to $12.63 earlier in the session and setting a new 52-week low.

Over the past two days, Intrepid shares have lost about 34 percent of their value.

Samuelson also cut his ratings for Mosaic Co. and Potash Corp. of Saskatchewan Inc., both to "Neutral" from "Buy," and backed his "Neutral" rating for Agrium Inc.

Mosaic shares fell $1.86, or 4.3 percent, to $41.94, after dipping as low as $41. Over the past 52 weeks, its shares have traded between $39.95 and $64.65. Over the past two days, the stock has lost about 22 percent of its value.

Meanwhile Potash Corp. shares fell $1.47, or 4.7 percent, to $30.16, after dropping to $29.80 and approaching their 52-week low of $29. Those shares have dropped about 20 percent since the news broke.

Elsewhere in the sector, Agrium shares lost $2.28, or 2.6 percent, to $84.22; CF Industries Holdings Inc. edged down $1.16 to $196.08; CVR Partners LP lost 26 cents to $21.94 and Rentech Nitrogen Partners LP fell 23 cents to $32.

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