Tuesday, March 16, 2010

Potash (NYSE:POT) Increases Guidance 50 Percent on Rising Demand

Potash guidance increased by 50 percent for quarter

Citing rising demand for its product, Potash (NYSE:POT) radically changed its guidance for first-quarter earnings from $1.00 a share to $1.50 a share, a 50 percent surge in estimate for the company.

North American and international markets both look strong according to Potash, with the North American market poised for record sales for the quarter.

The demand was driven be inventories being largely depleted, with many companies holding off to see which way the economic winds were blowing.

Normal fertilizer replacement requirements on an annual basis were also part of the estimate changes, but expectations were also surprisingly high for crops this year; maybe the primary mover along with the inventory replenishment.

The high expectations were a surprise, as grains continue to take a price beating with little change in fundamentals to make things more positive. So it does make you wonder what the expectations were based upon.

There could be a huge planting this year, depending on the weather, but that doesn't a good year make, as it's the supply and demand which has been playing havoc with grain prices in the U.S. and Canada, as many countries around the world have been increasing plantings resulting in an abundance of supply and less export demand, which has also driven down prices.

Of course for fertilizer companies that doesn't matter, as the planting is where they make the majority of their money, and if farmers have high expectations about their crops this year, they're going to reap the benefits of that, whether the farmers are correct or not.

Potash guidance increased by 50 percent for quarter

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