New Fertilizer Dump, India and USDA (POT, MOS, AGU, CF, TRA, TNH, IPI, MOO)

Fertilizer stocks just can’t catch a break.  If it isn’t an official earnings warning to watch out for or the stock market and economic growth concerns, then it government data.  New data reported from the U.S. Department of Agriculture has raised concerns that farmers are going without fertilizer.  Add in a report of another price drop in potash in India and you have the double whammy.  Potash Corp. of Saskatchewan, Inc. (NYSE: POT), Mosaic Co. (NYSE: MOS), Agrium Inc. (NYSE: AGU), CF Industries Holdings, Inc. (NYSE: CF), Terra Industries Inc. (NYSE: TRA), Terra Nitrogen Company, L.P. (NYSE: TNH), and Intrepid Potash, Inc. (NYSE: IPI) are all seeing some action today.  Just not good action.  Even the Market Vectors Agribusiness ETF (NYSE: MOO) is getting hit.

The USDA’s July estimates showed that farmers across the country had planted more acres of corn and soybeans than what was expected.  And prices were revised lower on all fronts.  Fewer acres needed next year translates to lower fertilizer demand, and lower prices.  It seems farmers are able to push off buying fertilizer and potash as a result.

Citigroup noted that major purchase prices were lower in India as well.  That was said to be as much as 25% lower, although the specific data is not gospel.  For whatever it is worth, it seems that the lower price is something that should have been expected based upon recent warnings.  The overall trend in lower oil and commodity prices is another factor that makes this somewhat of a given.  It also seems that price negotiation in India would be repeated by China.

• Potash Corp. of Saskatchewan, Inc. (NYSE: POT) is off by over 8% at $85.56.
• Mosaic Co. (NYSE: MOS) is down 4% at $41.06.
• Agrium Inc. (NYSE: AGU) is down 4.3% at $36.24.
• CF Industries Holdings, Inc. (NYSE: CF) is down 4.5% at $68.68.
• Terra Industries Inc. (NYSE: TRA) is only down 0.5% at $24.95.
• Terra Nitrogen Company, L.P. (NYSE: TNH) is down 3% at $96.38.
• Intrepid Potash, Inc. (NYSE: IPI) is off by 8% at $23,37.
• Market Vectors Agribusiness ETF (NYSE: MOO) is down 2% at $32.39.

Jon C. Ogg
July 10, 2009