PotashCorp Shares Up on Rising Potash Prices

Potash Corp. of Saskatchewan Inc. (POT) shares were up more than 4% on Monday as investors react positively to rising global potash prices reflected in the recent contract between Belarusian Potash Company and Indian Potash Ltd.

Under terms of the new contract, BPC and Indian Potash Ltd. agreed to a May 2008 to March 2009 contract potash price of $625 per tonne delivered versus C$270 per tonne previously.

RBC Capital analyst Fai Lee said the Indian contract settlement should put pressure on China to reach a contract settlement with BPC and Canpotex. Canpotex is the world's largest exporter of potash and is wholly-owned by the Saskatchewan potash producers, Agrium Inc. (AGU), The Mosaic Company (MOS), and Potash Corp.

In a note to clients Mr. Lee said:

With global prices outside of China generally at about $600 per tonne or higher on a delivered basis (i.e. net realized price of approximately C$500 per tonne), we believe it is only a matter of time before Chinese potash prices approach global levels.

As such, we have increased our 2008 and 2009 potash price assumptions from C$300 per tonne and C$350 per tonne, respectively, to C$340 per tonne and C$495 per tonne.

The analyst said Potash Corp. offers an attractive valuation for investors raised his rating on Potash Corp. shares from "outperform" to "top pick" and increased his price target from $195 to $250.

Comments

[GeneralBeauregard]

As a Ag scientist and working in this industry for the past 30 years there is no doubt when you analyze the need for plant food POT, AGU and MOS are well position to take it to the next level.