By Tim Seymour
The food trade is alive and well, according to the company set to become the world’s biggest potash fertilizer producer later this year.
The company’s CEO says food inflation and other rising commodity prices should be strong for potash over the next few years — and that as it is, the situation looks unusually similar to the boom year 2008.
Back then, potash prices soared to record peaks, only to crash again with the global economic recession that followed.
You might not be able to trade Uralkali, but POT is trading well and seems to have gone through its pain on global growth concerns already.
This is not an intuitive trade — many traders are still sore from the 2008-9 retreat in potash prices and have taken their angst out on the soft commodities that were previously flying so high.
Time to reengage on POT as well as secondary names in the space like Mosaic (MOS).
Soft inflation will continue — hopefully at a more controlled pace than three years ago. And $500 a ton for potash is not priced into POT yet. At best, traders seem to have baked in only $390 a ton.