Tight supplies and high prices of agricultural products including corn and wheat are expected to increase demand for fertilizers, through the near future, however, sometime past 2012, more plentiful supplies should halt potential shortages.
The recent earnings season was record-setting for many fertilizer producers, and despite a shaky global economy analysts expect that high-profits will continue into the foreseeable future.
Fertilizer producer stocks were hit by last week’s sell-off; however, investment firms are maintaining their bullish stance on the sector’s outlook.
The stocks of potash producers are predicted to outshine those of more nitrogen focused companies, due to what brokerage firm Goldman Sachs calls “peaking corn prices.” In a statement issued this past Monday, Goldman Sachs (NYSE:GS) noted that the current corn price of $6 to $7 per bushel is unsustainable.
Financial services firm Citigroup believes that the recent rally in stock prices of Potash Corp. of Saskatchewan and Mosaic is about to lose steam.
The share prices of many potash and phosphate producers are battle-scarred this week, as instability in the Middle East and Africa has sent markets on a tailspin. One of the key markets impacted by the turmoil is the grain markets.
Three top fertilizer producers, with exposure to potash, phosphate and nitrogen, were upgraded over this past week.
It will take a change in the fundamentals of the potash market before producers will see an increase in share value. After a strong start to 2010, fertilizer consumption fizzled in the second quarter.
Wednesday, November 9, 2011