To say that Potash Corp. (POT) has underperformed the broader market over the last couple of years would be an understatement. If you bought the company in early January 2010, the share price would be about the same today as it was at that time. It hasn't changed much since then either. A January 2012 entry point would has brought the same results as a January 2010 entry point did.
Since the demand for food and desire for better results per acre remain in place, it may be time to take a closer look at Potash as the lack of performance in the midst of the high-flying market may signal the stock is poised to jump.
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Showing posts with label Potash. Show all posts
Showing posts with label Potash. Show all posts
Saturday, June 1, 2013
Monday, February 4, 2013
Mohr Sees Strong Commodity Growth, Weaker Gold
In the near term Scotiabank’s commodity market specialist, Patricia Mohr, sees commodities in general doing very well, with gold going through a consolidation period, moving up to $1,725 an ounce in 2013.
Over the longer haul, Mohr sees commodities to continue rising based upon growth in emerging markets. Of particular note for Mohr is the potential growth of automobile ownership in Asia, specifically in China, where only about 80 in 1,000 people own vehicles at this time.
She also like fertilizer companies because of farmers holding back on buying fertilizers recently. With food prices higher and margins widening, farmers should have a positive outlook going forward, which should result in higher demand for potash especially.
Another area that looks promising is uranium, which should enjoy strong growth as demand continues to rise, even though the media reports only part of the story. While there have in fact been some cutbacks in production in some countries for political expediency, they simply make it up by importing uranium for other countries, allowing the illusory policies to stay in place, distorting the fact that uranium demand will continue to grow.
Also of note with uranium is the program instituted by the U.S. and Russia dubbed Megatonnes to Megawatts. That will result in close to 24 million pounds of U308 no longer in the market, affecting supply.
Mohr sees uranium climbing to as high as $65 a pound by the middle of the decade, up from the $40s range it has been in lately.
As for copper, that is seen by Mohr as slowly dropping from the $3.50 she sees in 2013, to about $3 a pound over the longer term. Increased mine capacity is her reasoning there.
Over the longer haul, Mohr sees commodities to continue rising based upon growth in emerging markets. Of particular note for Mohr is the potential growth of automobile ownership in Asia, specifically in China, where only about 80 in 1,000 people own vehicles at this time.
She also like fertilizer companies because of farmers holding back on buying fertilizers recently. With food prices higher and margins widening, farmers should have a positive outlook going forward, which should result in higher demand for potash especially.
Another area that looks promising is uranium, which should enjoy strong growth as demand continues to rise, even though the media reports only part of the story. While there have in fact been some cutbacks in production in some countries for political expediency, they simply make it up by importing uranium for other countries, allowing the illusory policies to stay in place, distorting the fact that uranium demand will continue to grow.
Also of note with uranium is the program instituted by the U.S. and Russia dubbed Megatonnes to Megawatts. That will result in close to 24 million pounds of U308 no longer in the market, affecting supply.
Mohr sees uranium climbing to as high as $65 a pound by the middle of the decade, up from the $40s range it has been in lately.
As for copper, that is seen by Mohr as slowly dropping from the $3.50 she sees in 2013, to about $3 a pound over the longer term. Increased mine capacity is her reasoning there.
Wednesday, September 26, 2012
Potash (POT) (RIG) (CCJ) (CHK) (EPL) (UDRL) (AGU) Ratings Changes and Initiations
Shares of Potash Corp (POT), Transocean (RIG), Cameco Co. (CCJ), Chesapeake Energy (CHK), Energy Partners, Ltd. (EPL), Union Drilling, Inc. (UDRL) and Agrium (AGU) had ratings on them adjusted or initiated by analysts.
Goldman Sachs (GS) upgraded Transocean (RIG) from a "Sell" rating to a "Neutral" rating. They have a price target of $54.00 on the company.
TD Securities downgraded Cameco Co. (CCJ) from a "Buy" rating to a "Hold" rating. They have a price target of $24.00 on the company.
Stifel Nicolaus downgraded Chesapeake Energy (CHK) from a "Buy" rating to a "Hold" rating. They have a price target of $22.00 on the company.
Stifel Nicolaus downgraded Energy Partners, Ltd. (EPL) from a "Buy" rating to a "Hold" rating.
Gabelli downgraded Union Drilling, Inc. (UDRL) from a "Buy" rating to a "Hold" rating.
Dundee Securities initiated coverage on Agrium (AGU). They placed a "Buy" rating on the company.
Dundee Securities initiated coverage on Potash Corp. (POT). They placed a "Buy" rating on the company.
Tuesday, October 19, 2010
Agrium (NYSE:AGU), Viterra (TSE:VT) Set to Outperform?
Much of the agricultural news has been overshadowed by the interesting story related to BHP's (NYSE:BHP) bid of Potash Corp. (NYSE:POT), but the real story is how the lower estimated corn yields will have on nitrogen more than anything, as that's the main fertilizer used on corn. Agrium Inc. (NYSE:AGU) and Viterra Inc. (TSE:VT) could be among the stronger beneficiaries of the trend.
Some analysts are starting to realize that phosphate and potash producers may not benefit near as much as people looking at the sector in a general way may realize.
Corn prices are expected to have support over $5 a bushel over the next 12 months and maybe longer, and that means corn farmers will have more capital to use to invest in nitrogen.
Agrium is set to surpass analysts' expectations, and Viterra has a strong export portfolio which should benefit them in relationship to nitrogen.
Some analysts are starting to realize that phosphate and potash producers may not benefit near as much as people looking at the sector in a general way may realize.
Corn prices are expected to have support over $5 a bushel over the next 12 months and maybe longer, and that means corn farmers will have more capital to use to invest in nitrogen.
Agrium is set to surpass analysts' expectations, and Viterra has a strong export portfolio which should benefit them in relationship to nitrogen.
Thursday, September 30, 2010
Compass Minerals (NYSE:CMP) Raising Product Prices for Specialty Fertilizer
Compass Minerals International Inc. (NYSE:CMP) subsidiary Great Salt Lake Minerals Corp. is going to increase the selling price on its entire line of sulfate of potash specialty fertilizer products, according to Great Salt.
The increase in prices will start with shipments going out on November 1, or as contracts allow.
Included in the price raise will be worldwide shipments of both standard and granulated products.
Compass was trading down on Wednesday, dropping to $78.03, falling $0.48, or 0.61 percent, as of 3:10 PM EDT.
The increase in prices will start with shipments going out on November 1, or as contracts allow.
Included in the price raise will be worldwide shipments of both standard and granulated products.
Compass was trading down on Wednesday, dropping to $78.03, falling $0.48, or 0.61 percent, as of 3:10 PM EDT.
Monday, September 13, 2010
Teck Resources (NYSE:TCK) Not Focusing on Potash
Before BHP Billiton (NYSE:BHP) made a bid for Potash Corp. (NYSE:POT), there wasn't a lot of thought from mining companies about entering into that sector, which was confirmed by Teck Resources (NYSE:TCK), which said they haven't been thinking along those lines.
A Teck executive did confirm there was a large demand for the fertilizer.
Senior Vice President for Corporate Development Ronald J. Vance said, "Potash is a commodity that is clearly in demand,” although it's “not something we’ve spent a lot of time thinking about, frankly.”
We'll probably see a bunch of copycats now following BHP, thinking they're missing out of something they must enter into. But BHP is unique in its size and financial position, and not that many miners could follow in their footsteps, even if they wanted to.
For most, like Teck, to go off their core business and enter into one they know nothing about, would probably end up being a disaster.
There's no doubt fertilizer will be a huge sector in the years ahead, but that has nothing to do with the mining industry.
BHP is obviously developing into a different kind of company, and they have the financial strength to do it. Most miners will do best to stick with what they know and let BHP do what they want.
Hopefully Teck will continue to ignore the faddish quality of the pursuit of potash resources and keep doing what they're good at.
A Teck executive did confirm there was a large demand for the fertilizer.
Senior Vice President for Corporate Development Ronald J. Vance said, "Potash is a commodity that is clearly in demand,” although it's “not something we’ve spent a lot of time thinking about, frankly.”
We'll probably see a bunch of copycats now following BHP, thinking they're missing out of something they must enter into. But BHP is unique in its size and financial position, and not that many miners could follow in their footsteps, even if they wanted to.
For most, like Teck, to go off their core business and enter into one they know nothing about, would probably end up being a disaster.
There's no doubt fertilizer will be a huge sector in the years ahead, but that has nothing to do with the mining industry.
BHP is obviously developing into a different kind of company, and they have the financial strength to do it. Most miners will do best to stick with what they know and let BHP do what they want.
Hopefully Teck will continue to ignore the faddish quality of the pursuit of potash resources and keep doing what they're good at.
Thursday, September 9, 2010
Over 1 Billion Tons of Potash Discovered in Brazil
Potassio do Brasil announced it has discovered over 1 billion tons of potash in the Amazon region of the country.
After the discovery, executive director Helio Diniz they are thinking about making an initial public offering on the Brazilian stock market.
Diniz estimated the company should begin potash production by 2015 or 2016, with output of around 2 million tons a year.
Assuming the numbers are close to accurate, this is a big find for Potassio do Brasil and the country, which has had to import about 90 percent of its potash.
Potash demand and price are expected to rise once the recession is over and sustainable demand begins again. That will probably increase for many years into the future.
After the discovery, executive director Helio Diniz they are thinking about making an initial public offering on the Brazilian stock market.
Diniz estimated the company should begin potash production by 2015 or 2016, with output of around 2 million tons a year.
Assuming the numbers are close to accurate, this is a big find for Potassio do Brasil and the country, which has had to import about 90 percent of its potash.
Potash demand and price are expected to rise once the recession is over and sustainable demand begins again. That will probably increase for many years into the future.
Thursday, September 2, 2010
Potash (NYSE:POT) Getting Interest from Sinochem as they Hire HSBC (NYSE:HBC)
Adding credence to the rumor China's Sinochem may be interested in acquiring Potash Corp. (NYSE:POT), they hired HSBC (NYSE:HBC) to advise them on the options available to them.
This isn't to say there is a definitely going to be a bid from Sinochem, but it does show the seriousness to China of losing the resource to a major competitor.
China is buying stakes in companies, and entire companies, in an effort to prepare for the tremendous demand in food and raw materials the country will experience in the near future.
Potash has said in the past that they've held talks with Sinochem, but it's hard to know if it's a negotiation tactic or serious overtures.
Either way, there can be no doubt China in general is very interested in Potash Corp., and Sinochem is one of the stronger companies they have to bid for them.
One problem is a bidding war could start, and it would depend on how serious BHP Billiton is in securing Potash and its assets as to how high they could go.
This isn't to say there is a definitely going to be a bid from Sinochem, but it does show the seriousness to China of losing the resource to a major competitor.
China is buying stakes in companies, and entire companies, in an effort to prepare for the tremendous demand in food and raw materials the country will experience in the near future.
Potash has said in the past that they've held talks with Sinochem, but it's hard to know if it's a negotiation tactic or serious overtures.
Either way, there can be no doubt China in general is very interested in Potash Corp., and Sinochem is one of the stronger companies they have to bid for them.
One problem is a bidding war could start, and it would depend on how serious BHP Billiton is in securing Potash and its assets as to how high they could go.
Wednesday, September 1, 2010
BHP (NYSE:BHP) Says Potash (NYSE:POT) Assets Not for Sale
BHP Billiton (NYSE:BHP) said the rumors floating around that there are plan in place to sell off some of the assets of Potash aren't true, if they are successful with the bid for the fertilizer giant.
That is hard to believe though, as the cost to acquire Potash will probably have to be increased, and that would weigh on BHP, even though they claim they would have no need to sell off assets to shore up their balance sheet after the purchase.
A spokesman for BHP said, "Our financing is not dependent on asset sales and we do not require divestments to maintain balance sheet strength."
BHP CEO Marius Kloppers continues his mantra that the approximate $130-a-share offer is the only one made, and he is committed to remaining disciplined when it comes to the price to acquire Potash. No matter. If he wants it bad enough, we'll see the price increase even though he's attempting to downplay the possibility with a poker face.
While the company and Kloppers may not have any plans to divest of assets of Potash in place, there is sure to be some movement in that direction concerning non-core assets, even if the purpose isn't to strengthen the balance sheet. Some of them may not make sense for the company.
But there is a strong possibility the majority of the assets would remain under the BHP umbrella, as they are hungry for raw materials, and the world will continue to be once we move out of the recession, which is probably still several years away at best.
Long term this is a super deal for BHP if they can swing it, and adds to a strong, diversified portfolio of assets which will generate solid revenue and earnings for many years.
That is hard to believe though, as the cost to acquire Potash will probably have to be increased, and that would weigh on BHP, even though they claim they would have no need to sell off assets to shore up their balance sheet after the purchase.
A spokesman for BHP said, "Our financing is not dependent on asset sales and we do not require divestments to maintain balance sheet strength."
BHP CEO Marius Kloppers continues his mantra that the approximate $130-a-share offer is the only one made, and he is committed to remaining disciplined when it comes to the price to acquire Potash. No matter. If he wants it bad enough, we'll see the price increase even though he's attempting to downplay the possibility with a poker face.
While the company and Kloppers may not have any plans to divest of assets of Potash in place, there is sure to be some movement in that direction concerning non-core assets, even if the purpose isn't to strengthen the balance sheet. Some of them may not make sense for the company.
But there is a strong possibility the majority of the assets would remain under the BHP umbrella, as they are hungry for raw materials, and the world will continue to be once we move out of the recession, which is probably still several years away at best.
Long term this is a super deal for BHP if they can swing it, and adds to a strong, diversified portfolio of assets which will generate solid revenue and earnings for many years.
Monday, August 30, 2010
Agrium (NYSE:AGU) Interested in Potash (NSYE:POT) Assets
If BHP Billiton Ltd. (NYSE:BHP) acquires Potash Corp. of Saskatchewan Inc. (NSYE:POT), Agrium (NYSE:AGU) has let it be known that they would be interested in buying up some of the assets of the fertilizer company once the takeover was completed.
Agrium Chief Executive Officer Mike Wilson said in an interview, “If those assets come out at a value that makes sense for Agrium, of course we would look at them. The company is interested in agricultural assets and businesses in any part of the world.
Units that could possibly be put up for sale would be those producing nitrogen and phosphates. Wilson said he would even be interested in some of their potash if it was put up for sale.
Wilson sees the overall outlook for nitrogen, phosphate and potash fertilizers as very good. Phosphate could come under pressure in 2011 because of increased supply. Wilson sees demand over the next year and a half absorbing that and new supply will be needed at that time.
Agrium is in midst of attempting to acquire Australian largest wheat exporter AWB Ltd., as they're waiting for approvals to go forward.
Agrium Chief Executive Officer Mike Wilson said in an interview, “If those assets come out at a value that makes sense for Agrium, of course we would look at them. The company is interested in agricultural assets and businesses in any part of the world.
Units that could possibly be put up for sale would be those producing nitrogen and phosphates. Wilson said he would even be interested in some of their potash if it was put up for sale.
Wilson sees the overall outlook for nitrogen, phosphate and potash fertilizers as very good. Phosphate could come under pressure in 2011 because of increased supply. Wilson sees demand over the next year and a half absorbing that and new supply will be needed at that time.
Agrium is in midst of attempting to acquire Australian largest wheat exporter AWB Ltd., as they're waiting for approvals to go forward.
Monday, August 23, 2010
Potash (NYSE:POT) CEO Vows Company Won't Sell Cheap
After the board of Potash (NYSE:POT) officially rejected the bid from BHP Billiton (NYSE:BHP), CEO Bill Doyle said in an interview the company is worth billions more than the offer from BHP.
Boyle noted, “Two years ago we hit $240 and in the meantime we have been adding capacity through our capital program of expansions.”
The highs for Potash would be valued at close to $71 billion if that's what the would bring.
Although current market conditions couldn't justify those numbers, taking into account the surety of increased demand for potash and other fertilizers in the years ahead does give Potash some support and justification for pushing up the price, and they very well could get billions more, especially if it ends up being a bidding war.
This could happen because of the sector they're in, as several emerging markets, especially China, don't have the fertilizers needed domestically to handle their growing demand, and so are looking for partnerships or deals to address that large need.
Rumors have several companies from China being interested in Potash, but price is a factor, along with leverage, which could punish a company for a long period of time if both are exorbitant.
Boyle noted, “Two years ago we hit $240 and in the meantime we have been adding capacity through our capital program of expansions.”
The highs for Potash would be valued at close to $71 billion if that's what the would bring.
Although current market conditions couldn't justify those numbers, taking into account the surety of increased demand for potash and other fertilizers in the years ahead does give Potash some support and justification for pushing up the price, and they very well could get billions more, especially if it ends up being a bidding war.
This could happen because of the sector they're in, as several emerging markets, especially China, don't have the fertilizers needed domestically to handle their growing demand, and so are looking for partnerships or deals to address that large need.
Rumors have several companies from China being interested in Potash, but price is a factor, along with leverage, which could punish a company for a long period of time if both are exorbitant.
Friday, August 20, 2010
If BHP (NYSE:BHP) Takes Over Potash (NYSE:POT), No More Canpotex
BHP (NYSE:BHP) has let it be known if they win the bid to take over Potash Corp. of Saskatchewan Inc. (NYSE:POT), they will leave the marketing consortium of the industry, Canpotex.
The mining giant said it will market the potash of the company independent of Canpotex, although they were quick to add they'll honor “existing commitments and contractual arrangements.”
This was according to a filing with the U.S. Securities and Exchange Commission when they filed the original offer for the fertilizer company.
Canpotex is owned by Potash, Agrium (NYSE:AGU) and Mosaic (NYSE:MOS). Together they represent about 40 percent of the potash supply in the world.
The mining giant said it will market the potash of the company independent of Canpotex, although they were quick to add they'll honor “existing commitments and contractual arrangements.”
This was according to a filing with the U.S. Securities and Exchange Commission when they filed the original offer for the fertilizer company.
Canpotex is owned by Potash, Agrium (NYSE:AGU) and Mosaic (NYSE:MOS). Together they represent about 40 percent of the potash supply in the world.
China May Bid on Potash (NYSE:POT) Says JPMorgan (NYSE:JPM)
JPMorgan's (NYSE:JPM) Ian Henderson, who manages about $7 billion in resource assets for the financial institution, says there's a strong possibility China may make a bid for Potash Corp. of Saskatchewan Inc. (NYSE:POT), now that BHP Billiton (NYSE:BHP) has revealed it's interested in acquiring the fertilizer giant.
Henderson noted in a Bloomberg Television interview, that China and Brazil may be interested, but China is “dependent upon potash exports so they are a big customer of Potash Corp.," while “Brazil does have its own potash reserves and these can be developed and I think Vale is increasing their own production plans already.”
From China the most likely companies to make a bid include the sovereign wealth fund, China Investment Corp.; Sinochem Group; or Sinofert Holdings.
Included in the resources Henderson manages are mining stocks such as BHP Billiton and Vale SA ((NYSE:VALE), a Brazilian natural resources company.
Henderson noted in a Bloomberg Television interview, that China and Brazil may be interested, but China is “dependent upon potash exports so they are a big customer of Potash Corp.," while “Brazil does have its own potash reserves and these can be developed and I think Vale is increasing their own production plans already.”
From China the most likely companies to make a bid include the sovereign wealth fund, China Investment Corp.; Sinochem Group; or Sinofert Holdings.
Included in the resources Henderson manages are mining stocks such as BHP Billiton and Vale SA ((NYSE:VALE), a Brazilian natural resources company.
Thursday, August 19, 2010
Potash (NYSE:POT) CEO Could Collect $445.4 Million in BHP (NYSE:BHP) Deal
If the attempt by BHP Billiton Ltd. (NYSE:BHP) to acquire Potash Corp. of Saskatchewan Inc. is successful, Chief Executive Officer Bill Doyle could earn a cool $445.4 million from his stock holdings and options.
In its most recent filing of Potash, Doyle was shown to hold 3.43 million shares of the company and options combined.
The filing showed that Doyle's salary in 2009 was $1.1 million, while receiving another $1.7 million in stock and $4.9 million in options awards.
BHP circumvented the desires of Potash yesterday after being rejected, taking their bid directly to shareholders.
Most think they'll end up making a much higher bid that would be acceptable to everyone, and in that case Doyle has said they wouldn't be opposed doing a deal.
In its most recent filing of Potash, Doyle was shown to hold 3.43 million shares of the company and options combined.
The filing showed that Doyle's salary in 2009 was $1.1 million, while receiving another $1.7 million in stock and $4.9 million in options awards.
BHP circumvented the desires of Potash yesterday after being rejected, taking their bid directly to shareholders.
Most think they'll end up making a much higher bid that would be acceptable to everyone, and in that case Doyle has said they wouldn't be opposed doing a deal.
Thursday, July 29, 2010
Potash (NYSE:POT) Earnings Double in Second Quarter, Revenue Soars
Potash Corp. of Saskatchewan Inc. (NYSE:POT) (TSE:POT) by all measures had a solid quarter, as earnings were over double what they were in the second quarter last year and revenue soared.
Earnings surged $472 million, or $1.55 a share, a major improvement over last year's $186.2 million, or 61 cents a share. Revenue for the quarter grew from $856 billion last year during the same quarter to $1.44 billion.
Analysts had been looking for earnings to come in at $1.19 a share, so Potash blew past those expectations. They also exceeded expectations for revenue, where analysts estimated $1.40 billion.
The company was led by increased sales of potash in the quarter, which rose over three times what they sold last year, generating $641 million, up from $210.7 million last year.
One negative factor was the fall in potash prices for the quarter, shrinking 35 percent to $309 a ton. Volume was able to overcome that though.
Sales of phosphate gained also, although much more moderately, reaching $363.5 million, from the $324.7 million last year. Pricing was better this time for phosphate, increasing 13 percent to $458 a ton.
Nitrogen sales were also much higher growing from $320.6 million last year to $433.3 million this year. Prices for nitrogen grew 20 percent, with volume up to 1.3 million tons from 1.2 million.
Earnings surged $472 million, or $1.55 a share, a major improvement over last year's $186.2 million, or 61 cents a share. Revenue for the quarter grew from $856 billion last year during the same quarter to $1.44 billion.
Analysts had been looking for earnings to come in at $1.19 a share, so Potash blew past those expectations. They also exceeded expectations for revenue, where analysts estimated $1.40 billion.
The company was led by increased sales of potash in the quarter, which rose over three times what they sold last year, generating $641 million, up from $210.7 million last year.
One negative factor was the fall in potash prices for the quarter, shrinking 35 percent to $309 a ton. Volume was able to overcome that though.
Sales of phosphate gained also, although much more moderately, reaching $363.5 million, from the $324.7 million last year. Pricing was better this time for phosphate, increasing 13 percent to $458 a ton.
Nitrogen sales were also much higher growing from $320.6 million last year to $433.3 million this year. Prices for nitrogen grew 20 percent, with volume up to 1.3 million tons from 1.2 million.
Friday, July 16, 2010
JPMorgan (NYSE:JPM) Upgrades Mosaic (MOS), Raises Price Target
Mosaic was upgraded by JP Morgan (NYSE:JPM), with the company raising them from "Neutral" to "Overweight."
The fertilizer producer, and overall sector, should perform strongly in the near term, probably the reasoning behind the upgrade. Long-term, there are a lot more challenges for Mosaic and others, and there isn't anything that can be seen which will change that.
Unfortunately Mosaic focuses on concentrated potash and phosphate, which will remain under pricing pressure after this season. Nitrogen should be a more profitable fertilizer, and that isn't the specialty of Mosaic.
Even so, the price target was raised by JP Morgan for Mosaic from $45 to $52.
The fertilizer producer, and overall sector, should perform strongly in the near term, probably the reasoning behind the upgrade. Long-term, there are a lot more challenges for Mosaic and others, and there isn't anything that can be seen which will change that.
Unfortunately Mosaic focuses on concentrated potash and phosphate, which will remain under pricing pressure after this season. Nitrogen should be a more profitable fertilizer, and that isn't the specialty of Mosaic.
Even so, the price target was raised by JP Morgan for Mosaic from $45 to $52.
Wednesday, July 14, 2010
Goldman (NYSE:GS) Projects Low Potash Prices - Potash (NYSE:POT), Agrium (NYSE:AGU), CF (NYSE:CF) Will Struggle
The news wasn't good for potash producers, as Goldman Sachs (NYSE:GS) said potash prices will hit a two-year low, and while the autumn fertilizer season could have some strength to it, over the next several years fertilizer companies like Potash Corp. of Saskatchewan, Inc. (NYSE:POT), Agrium (NYSE:AGU) and CF Industries (NYSE:CF) will continue to struggle.
So in the near term, there could be some money to be made in fertilizer companies, buy beyond the fall season, it doesn't look good until at least 2013, said Goldman.
"An early planting season may translate into an early harvest, which lends itself to a nice window for fall application before the winter descends," Goldman said in a note.
Here are the price points Goldman sees going forward:
2010: phosphate, $403; potash, $369
2011: phosphate, $402; potash, $364
2012: phosphate, $395; potash, $365
Even worst news is there could be an oversupply reached in 2014, which may only have 2013 with potential for some growth, although that's obviously not guaranteed either.
This could come about from a large potash project in Saudi Arabia, as well as BHP Billiton entering the potash market via Canadian assets.
For now, Goldman sees demand having no problem being supplied, which seems to be indicated in the flat prices of potash listed above.
So in the near term, there could be some money to be made in fertilizer companies, buy beyond the fall season, it doesn't look good until at least 2013, said Goldman.
"An early planting season may translate into an early harvest, which lends itself to a nice window for fall application before the winter descends," Goldman said in a note.
Here are the price points Goldman sees going forward:
2010: phosphate, $403; potash, $369
2011: phosphate, $402; potash, $364
2012: phosphate, $395; potash, $365
Even worst news is there could be an oversupply reached in 2014, which may only have 2013 with potential for some growth, although that's obviously not guaranteed either.
This could come about from a large potash project in Saudi Arabia, as well as BHP Billiton entering the potash market via Canadian assets.
For now, Goldman sees demand having no problem being supplied, which seems to be indicated in the flat prices of potash listed above.
Saturday, June 26, 2010
Goldman (NYSE:GS) See Potash Demand Growing at 4 Percent Annual Rate
Goldman Sachs (NYSE:GS) sees the rate of demand for potash fertilizer to grow at an annual rate of four percent over the next several years, citing increasing emerging market food demand as the catalyst.
For the most part, during that time, new capacity shouldn't put any downward pressure on potash prices, as it'll take time for it to come online, so in the short-term is shouldn't be a factor.
In the long term, on the other hand, it could also not be that relevant, as eventually the global economy will rebound, and even if it takes several years, demand will increase, and even with more supply prices could hold up because of that increase in potash demand.
The more important question for existing potash producers is how they'll respond to BHP Billiton's (NYSE:BHP) entry into the market, which over time will definitely be a major player in potash.
Some have started looking for acquisitions to build up scale in order to compete on price if BHP goes that route as their strategy. That's a way away yet, but it is something that must be included in long term strategies by potash companies, who will regret ignoring BHP if that's how they think and respond.
For the most part, during that time, new capacity shouldn't put any downward pressure on potash prices, as it'll take time for it to come online, so in the short-term is shouldn't be a factor.
In the long term, on the other hand, it could also not be that relevant, as eventually the global economy will rebound, and even if it takes several years, demand will increase, and even with more supply prices could hold up because of that increase in potash demand.
The more important question for existing potash producers is how they'll respond to BHP Billiton's (NYSE:BHP) entry into the market, which over time will definitely be a major player in potash.
Some have started looking for acquisitions to build up scale in order to compete on price if BHP goes that route as their strategy. That's a way away yet, but it is something that must be included in long term strategies by potash companies, who will regret ignoring BHP if that's how they think and respond.
Wednesday, June 9, 2010
Potash (NYSE:POT), Mosaic (NYSE: MOS), Agrium (NYSE:AGU) Expanding Through Existing Mines
The current three major producers of potash, Potash (NYSE:POT), Mosaic (NYSE: MOS) and Agrium (NYSE:AGU), aren't convinced the latest and formidable competitor BHP Billiton (NYSE:BHP) will be able to produce the fertilizer at profitable levels because of starting from a new mine.
Current potash prices of just under $400 a ton is the reasoning behind it, with the companies believing starting from scratch isn't a viable business model.
All of the big three are producing potash from existing mines rather than opening up new ones.
BHP disagrees, saying the strength of the company and the tremendous resource of the Jansen project make it a viable and profitable venture.
Of course saying that and delivering on that promise and assertion are two different things.
One thing they do have going for them is the quality of the Jansen project, which has a high concentrate of potash within it.
Current potash prices of just under $400 a ton is the reasoning behind it, with the companies believing starting from scratch isn't a viable business model.
All of the big three are producing potash from existing mines rather than opening up new ones.
BHP disagrees, saying the strength of the company and the tremendous resource of the Jansen project make it a viable and profitable venture.
Of course saying that and delivering on that promise and assertion are two different things.
One thing they do have going for them is the quality of the Jansen project, which has a high concentrate of potash within it.
Friday, June 4, 2010
Potash (NYSE:POT) Expanding Capacity in Saskatchewan
Potash (NYSE:POT) chief financial officer Wayne Brownlee said the company will be committing $1.4 billion for expansion of capacity at projected in Saskatchewan in 2010.
Brownlee said at this time the projected are at a 32 percent completion rate. He added this will surpass the $1.2 billion spent in 2009.
Expectations are spending should stabilize at $1.4 billion for 2011 as well.
Traders have been buying puts on Potash lately, and the share price was $95.58, down 2.12 or 2.17%, as of 1:41 PM EDT.
Brownlee said at this time the projected are at a 32 percent completion rate. He added this will surpass the $1.2 billion spent in 2009.
Expectations are spending should stabilize at $1.4 billion for 2011 as well.
Traders have been buying puts on Potash lately, and the share price was $95.58, down 2.12 or 2.17%, as of 1:41 PM EDT.
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