The reason so much resistance has emerged from the BHP Billiton (NYSE:BHP) bid for Potash Corp. (NYSE:POT) has been the socialist nature of the agricultural industry in general, and the potash industry in particular.
With the Canpotex consortium and the Belarusian Potash Co., they pretty much control the potash market and its prices. That needs to end and free market prices allowed to determine how much the fertilizer will cost.
In the case of Potash, the Canadian Province of Saskatchewan sucks a bunch of money out of them, the reason they want things to continue on as they are with controlled prices, rather than allowing the market to dictate events.
The Canadian consortium includes Agrium (NYSE:AGU) and Mosaic (NYSE:MOS), along with Potash. They oppose the acquisition by BHP as well, as they would have to compete with them directly, rather than continue the cozy relationship among one another.
Competition is always the best way to decide who wins in business, and to keep Canpotex operational goes against that idea, as well as keeps the costs of Potash artificially high.
Interestingly, China is concerned about higher prices of Potash if BHP takes over the fertilizer giant, and the Province of Saskatchewan is concerned about lower prices if they do.
All that government has to do is start to become more limited, the best way to deal with out-of-control spending and promises.
Either way, BHP is good for the industry, and whether they land Potash or not, they'll eventually ramp up their Jansen property, which may produce 8 million tons of potash a year.
Showing posts with label Potash Supply. Show all posts
Showing posts with label Potash Supply. Show all posts
Wednesday, September 29, 2010
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.
Monday, June 14, 2010
Mosaic (NYSE:MOS) May Acquire Mexican Fertilizer Company
Mosaic (NYSE:MOS) has been in negotiations to acquire Mexican fertilizer company Grupo Fertinal SA for the last several months, and word is they may be getting closer to making the deal.
There are reportedly other parties of interest, but Mosaic is probably the company which will land the deal.
Major potash producers like Mosaic are moving against the growing threat of BHP Billiton (NYSE:BHP), which has one of the premiere potash deposits in the world in Canada, and is set to begin production which will directly challenge the other major potash players like Mosaic.
This is probably the major impetus behind Mosaic seeking out other potash deposits through acquisition, as they can bring production online in a way that will immediately affect the the company's revenue and earnings.
The price being thrown around for the acquisition is about $1 billion.
There are reportedly other parties of interest, but Mosaic is probably the company which will land the deal.
Major potash producers like Mosaic are moving against the growing threat of BHP Billiton (NYSE:BHP), which has one of the premiere potash deposits in the world in Canada, and is set to begin production which will directly challenge the other major potash players like Mosaic.
This is probably the major impetus behind Mosaic seeking out other potash deposits through acquisition, as they can bring production online in a way that will immediately affect the the company's revenue and earnings.
The price being thrown around for the acquisition is about $1 billion.
Tuesday, June 8, 2010
BHP Billiton (NYSE:BHP) Major Potash Player
There hasn't been much noise or notice about the entry of BHP Billiton (NYSE:BHP) into the potash market, but that seems to be about to change as the reserve estimates for its potash mining project in Saskatchewan is huge, and will make them a force to be contended with in the global potash market for years into the future.
To add insult to injury to one of the major potash players, Potash Corp. (NYSE:POT), the project of BHP Billiton is located on the border of the Potash property named Lanigan. BHP's project is called Jansen.
Estimated reserves for BHP at Jansen are 3.37 billion tons of high quality potash, which includes over 25 percent potassium, the key ingredient which makes up potash.
Included with three other major potash mines currently under development, BHP is expected to produce over 20 million metric tons of potash annually, which would account for 40 percent of estimated global production in 2010.
To give an idea of how quickly that has happened, Potash Corp. produced 13 million metric tons in 2009. BHP has been at it for only about 2 years.
This would put them in the pricing drivers seat in regard to competitors and those they're supplying, which should be a big boost to the bottom line of the company.
Now it remains to be seen how the rest of the industry will respond to this major threat.
To add insult to injury to one of the major potash players, Potash Corp. (NYSE:POT), the project of BHP Billiton is located on the border of the Potash property named Lanigan. BHP's project is called Jansen.
Estimated reserves for BHP at Jansen are 3.37 billion tons of high quality potash, which includes over 25 percent potassium, the key ingredient which makes up potash.
Included with three other major potash mines currently under development, BHP is expected to produce over 20 million metric tons of potash annually, which would account for 40 percent of estimated global production in 2010.
To give an idea of how quickly that has happened, Potash Corp. produced 13 million metric tons in 2009. BHP has been at it for only about 2 years.
This would put them in the pricing drivers seat in regard to competitors and those they're supplying, which should be a big boost to the bottom line of the company.
Now it remains to be seen how the rest of the industry will respond to this major threat.
Tuesday, May 25, 2010
Potash (NYSE:POT) Among Most Efficient in their Industry
Potash (NYSE:POT) is among the most efficient companies in their industry, as its earnings for each employee stands at $219,591 over the last year. Revenue per employee during that same time period was $927,588.
Some other fertilizer companies did well too, as prices dropped they worked on cutting costs and streamlining their businesses.
Potash has said they're looking forward to stronger revenue and earnings in the growing season this year, and when addressing concerns over pricing pressures on potash fertilizer, CEO Bill Doyle said over the short term that is true, but going forward he sees a healthy price increase, and even today they're operating at margins over 60 percent.
Combining their efficiency and margins, it does look good going forward for Potash in the long term.
Some other fertilizer companies did well too, as prices dropped they worked on cutting costs and streamlining their businesses.
Potash has said they're looking forward to stronger revenue and earnings in the growing season this year, and when addressing concerns over pricing pressures on potash fertilizer, CEO Bill Doyle said over the short term that is true, but going forward he sees a healthy price increase, and even today they're operating at margins over 60 percent.
Combining their efficiency and margins, it does look good going forward for Potash in the long term.
Thursday, May 20, 2010
Potash (TSE:POT) CEO Sees Great Future Growth
Potash (TSE:POT) (NYSE:POT) president and CEO Bill Doyle said recently the company continues to focus on the long term, and he sees some great opportunities for growth going forward.
Doyle added, when talking at an investor conference, that they did nothing to cut back on expansion during the economic downturn, and that has positioned strongly for the future when demand soars.
Looking ahead, Doyle said he sees supply not being able to meet demand in 2012-2014, as North and South America, along with emerging market giants China and India, will need a lot of the fertilizer to meet their needs.
A number of the expansion project Potash is working on will be timed right to meet that growing demand, and the company is estimated to account for over 50 percent of production growth of potash over the next decade, and along with that get the majority of the business from the countries and farmers needing it.
Potash seems to be a good long-term play, as there's no doubt once things really do begin to turn around, that focus on meeting the food needs of growing populations will become a priority again.
Once that happens, Potash will have a more consistant and predictable future, rather than the recent ups and downs they've been experiencing.
Doyle added, when talking at an investor conference, that they did nothing to cut back on expansion during the economic downturn, and that has positioned strongly for the future when demand soars.
Looking ahead, Doyle said he sees supply not being able to meet demand in 2012-2014, as North and South America, along with emerging market giants China and India, will need a lot of the fertilizer to meet their needs.
A number of the expansion project Potash is working on will be timed right to meet that growing demand, and the company is estimated to account for over 50 percent of production growth of potash over the next decade, and along with that get the majority of the business from the countries and farmers needing it.
Potash seems to be a good long-term play, as there's no doubt once things really do begin to turn around, that focus on meeting the food needs of growing populations will become a priority again.
Once that happens, Potash will have a more consistant and predictable future, rather than the recent ups and downs they've been experiencing.
Thursday, May 13, 2010
Potash (NYSE:POT), Mosaic (NYSE:MOS) and World Food Demand
The price of potash has moved up and down with the economic conditions over the recent past, and that has held down companies with a strong exposure to the fertilizer like Potash (NYSE:POT) and Mosaic (NYSE:MOS).
Although in the short term it'll probably take some time to work their way out of this, in the long term, the future looks bright, as the growing need for fertilizers as the world population grows and needs a lot more food will strongly benefit fertilizer companies.
Global shipments of potash this year are estimated to be from 47 million to 50 million.
One unexpected positive demand is in Canada, where a mild spring and strong planting of canola - about 16.9 million acres - make it probable that even in the near term there will be a boost in potash sales. But the long term demand for food and fertilizer should make Potash Corp. and Mosaic very good investments.
Although in the short term it'll probably take some time to work their way out of this, in the long term, the future looks bright, as the growing need for fertilizers as the world population grows and needs a lot more food will strongly benefit fertilizer companies.
Global shipments of potash this year are estimated to be from 47 million to 50 million.
One unexpected positive demand is in Canada, where a mild spring and strong planting of canola - about 16.9 million acres - make it probable that even in the near term there will be a boost in potash sales. But the long term demand for food and fertilizer should make Potash Corp. and Mosaic very good investments.
Thursday, May 6, 2010
Potash (NYSE:POT) Upgraded by TD Newcrest
Potash Corp. of Saskatchewan (NYSE:POT) was upgraded by TD Newcrest from "Reduce" to "Hold," with a target price of $100 based on weakesses in the stock price recently.
TD Newcrest said, "We are upgrading Potash Corp. to HOLD based solely on recent stock price weakness, essentially approaching our target price. Our EPS estimates and fertilizer price forecasts are unchanged.
Potash sales for the company for 2010 are estimated by TD Newcrest to come in at 8 million tons, which coincides with the top end of guidance given by Potash Corp. executives, who are looking for 7.4 million to 8 million tons in their latest projections.
TD Newcrest said, "We are upgrading Potash Corp. to HOLD based solely on recent stock price weakness, essentially approaching our target price. Our EPS estimates and fertilizer price forecasts are unchanged.
Potash sales for the company for 2010 are estimated by TD Newcrest to come in at 8 million tons, which coincides with the top end of guidance given by Potash Corp. executives, who are looking for 7.4 million to 8 million tons in their latest projections.
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