Reap What You Sow with Potash

Well, as the saying goes, you reap what you sow. And the harvest this year has been good for farmers and is looking great for farming supply companies. As such, I’ve already dedicated two blog entries to playing the agriculture supply business. I recently profiled Bunge Ltd (BG)) and back in September, I covered a couple others, Ag Growth Income and Hemisphere GPS Inc, inspired by a newspaper article covering an agricultural investment conference. Recently, the legend himself (love him or hate him), Mr. Jim Cramer has also jumped on the agriculture bandwagon and recommend Bunge. Great minds think alike.

As stated before, the driving forces behind this play are: rising demand for grains in the developing world; use of crops for ethanol and other bio-fuels; rising world population; unpredictable weather making the farming industry more dependent on technology and chemistry; and finally, less farming land making farming more dependent on technology and chemistry for greater yields. In short, a classic case of rising demand and a decreasing supply.

The big name in Canadian agriculture supply, especially fertilizer, is Potash, based out of Saskatchewan. I have been waiting to pull the trigger on this one for a while now, and just last week, I bought it at its lowest dip. I am willing to ride this one throughout the winter, and pick more up if it drops. As I stated before, this sector has got a bull-run going. So, like Bunge, buy this baby on the dips.
As mentioned before, farming companies are now flush with harvest dollars due to a great year featuring record crop prices (think corn!) and have money to spend on equipment and supplies. The next quarter for Potash and Bunge should reflect a bit of that. Good long-term upside. Plant those investment seeds and watch the dollars grow!

Check out Potash on Google Finance

FYI: Potash can easilly move up or down 3-5% in day - time your buy if you decide to pick some-up.

Disclosure: I own shares in Bunge Ltd and Potash. As always, do your own research before buying a stock.