Drooping Crops Drive Corn And Fertilizer Stock Prices Higher

by: Jonathan Wolfe

Fertilizer stocks, CVR Partners (NYSE:UAN), Rentech Nitrogen Partners (NYSE:RNF) and Terra Nitrogen Partners (NYSE:TNH) are all up 7-10% here midday Tuesday. The suspected reason for this run up is a second straight week of declining crop conditions, as reported by the USDA in a report issued late Monday. Only about 63% of the corn is rated as good or excellent condition, compared to 66% a week ago, and 70% a year ago. The news for soybeans is even worse, with a 56% rating today, compared to 68% at this time last year.

All this news has raised CORN futures to their highest level in a month, with December futures sitting at $5.53 a bushel. July corn prices have gone up all the way to $6.15, and have now settled a bit to $6.08 a bushel. Also private forecasts are now predicting that fields will only produce 160 bushels per acre, and not the aggressive 166 bushels that was projected earlier in the season. Also corn stockpiles are projected to hit a 16 year low this summer.

This news has also pushed Potash Corporation of Saskatchewan Inc (NYSE:POT) up nearly 5% today, Agrium Inc (NYSE:AGU) up about 3% and CF industries (NYSE:CF) up 5%.

As I wrote in an article just about a month ago, the bears with limited information scared many investors out of these stocks. Any continued poor weather will push these fertilizer stocks even higher.

Disclosure: I am long UAN, RNF.