BHP (NYSE:BHP) Saying Goodbye to $130 Potash (NYSE:POT) Bid?

Now that an unexpected factor offers support to Potash Corp. (NYSE:POT), BHP (NYSE:BHP) may have to rethink their bid of $130 a share for the company as rising grain prices have changed the game since that time.

Interesting that the market is now driving the value of Potash and other fertilizer and agricultural companies.

The good news for BHP, if they view it that way, is the added value of Potash, if they are approved for and win the company, is they will inherit a company whose intrinsic value is higher for a reason, and not because Potash executives pointed to a mythical period down the road when it would happen.

Now you've got the debt issue on the plate for BHP as well. But the higher value of Potash should help ease that, even it it's different from the original intent of the company.

Another major change from the higher price of grains is the attitude of Potash shareholders, who seemed poised to accept the deal, but now probably will consider $130 a share far too little.

Of course things change quickly in the volatile agriculture sector as far as prices go. The trend for corn, and by extension, soybeans and wheat, has been going up for months, and the lower corn and soybean yields should support that trend for awhile.

That means if BHP continues to pursue Potash, those prices will remain in place during the time of negotiations and due diligence. It looks like BHP will no longer come close to the $130 price if they want to land Potash.

Corn, Soybeans, Wheat, Oats Up on Expected Midwest Rains

Weather has given and now weather is taking away, the price of the major grains in the U.S., as hot and dry weather in the western and eastern parts of the Midwest had traders pushing up the prices on concerns over a smaller harvest for corn, soybeans, wheat an oats.

That has changed now as longer term contracts dropped on news the majority of the Midwest should receive up to 3 inches of rain over the next week, essentially eliminating the potential for damage.

Approximately 90 percent of the fields north of Omaha, Nebraska and Columbus, Ohio are expected to receive the rain.

Soybean delivery for November dropped 2.75 cents, or 0.3 percent, to $9.8525 a bushel, while corn futures for December delivery declined 1 cent, or 0.2 percent, 50 $4.0425 a bushel early in the Friday trading session on the Chicago Board of Trade.

Since the end of June, corn futures have gained 18 percent on revised production, weather concerns and demand from China and ethanol producers.

Wheat had also been going higher because of the possibility it would have to be used as a supplement for animal feed if corn faltered.