Chris Damas

Mosaic's Potash Attracts Vale's Eye

I would like to point out that foreign newspapers occasionally break stories of "impending deals" when a stock is down and perhaps needs a boost to allow people to profit. The stories often come to nothing (except perhaps to enrich the people buying in advance of the planted takeover rumour).

For example, last year the South China News ran a story that CNOOC or Sinopec was going to buy Talisman Energy and we are still waiting for that bid.

I find a Vale takeover of Mosaic possible but unlikely for two reasons:

It is hard for me to believe they would want to buy additional assets in North America at this particular time.

Vale Inco is currently experiencing (predictable) labour difficulties at the Sudbury mine they bought with the Inco takeover. Vale has found operating in Canada higher cost - our dollar has been strong. Environmental regulations are stringent in Canada.
Much easier to buy mines in developing countries.

Secondly, as has been pointed out - Cargill owns a majority position in Mosaic. So a takeover at supposedly "bottom of the cycle" prices would not be possible without Cargill shopping the stock around. And there is no sign that phosphate or nitrogen fertilizer products are at their cyclical lows.

Potash Corp: Dynamics of Supply and Demand Drive Earnings Growth

"I'll go out on a limb and predict. When POT has sustained trades at or above $182 it will rapidly climb to $200. Whe we get sustained trades at or above $202, we're off to the races to $240+ as the largest shorts will be taken out. We may not see the $182 level today, but we will tomorrow and $202+ by Monday/Tuesday.

This is of course depends on the non-substitution of burnt wood and chicken droppings (kind of "really-old tech") for premium, balanced fertilizer needed to increase crop yields to feed the planet."

Sorry, was that $202 or was that $172 on Monday...I am confused.

(From an old-tech stock trader that doesn't like to lose money).

Potash Corp: Dynamics of Supply and Demand Drive Earnings Growth

For a long time I have felt many writers on this site have been smoking POT in their bullish aspirations.

I heard the same rationale for soaring P/E ratios in 2000 when Nortel was the rage.

Has anyone considered that there are natural substitutes for high priced Western sources of K and P?

Potash can be had by burning wood - hence the name potASH. And guess what is a good source of Phosphorus? Chicken shit. Yes, manure. Even solid waste from sewage treatment plants is rich in P and can be used for farming.

It could very well be that the Chinese and Indian demand dries up above $1,000/ton and the dreams of unlimited wealth from these simple chemicals just dust in the wind.