The agriculture sector was hit with two major catalyst in the a similar period of time, giving companies like Potash Corp. of Saskatchewan (NYSE:POT), CF Industries (NYSE:CF), Mosaic (NYSE:MOS), Agrium (NYSE:AGU) and Intrepid Potash (NYSE:IPI) a big boost in share price.
It began when BHP (NYSE:BHP) made their $130 a share bid for Potash Corp. Then the confirmation came that corn and soybean yields would be far below prior estimates.
With the industry propped up from BHP's bid and assumptions some consolidation may start to happen, along with corn and soybean prices soaring, share prices of these companies and others connected to agriculture rose significantly.
Prices for all the companies mentioned above have soared since August.
Depending on if investors believe commodity prices are driving the move or the bid by BHP is the key factor, will determine how they are played. More than likely it's a combination of both. And depending on whether or not BHP is given the okay to take over Potash will decide how much of a factor that played in the sector.
At minimum if they are rejected, will see some pull back in the stocks. If they go forward, they could continue their upward climb for some time.
Another element is how much this will affect the price offered by BHP. They may have to push it up to somewhere in-between the existing share price of Potash and the $130 bid.
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