RBC Boosts Estimates For Agrium, PotashCorp On Expected Potash Price Increase

Agrium Inc. (AGU) is expected to follow PotashCorp of Saskatchewan's (POT) lead and raise prices for North American potash sales, according to RBC analyst Fai Lai.

PotashCorp announced Wednesday a US$55 per tonne increase for January and February shipments after a temporary suspension due to a potential supply disruption at Russian-based Silvinit, the world's fifth largest potash producer.

Meanwhile, The Belarussian Potash Company [BPC] also announced a $40 per tonne price increase for Southeast Asia and a $55 per tonne increase for Brazil.

"Based on yesterday's price announcements, we have increased our 2008 realized potash price (net of freight) assumption from $250 per tonne to $275 per tonne," Mr. Lai said in a note to clients.

As a result, he increased his 2008 earnings per share estimate for Agrium from US$3.20 to US$3.47.

His US$67 price target and "sector perform" rating remains unchanged.

As for PotashCorp., Mr. Lai increased his 2008 EPS estimate from US$4.94 to US$5.40 and left his US$145 price target and "outperform" rating.