David White

Potash Heats Up: $1000 a Tonne?

POT is now at its 50-day moving average. It usually bounces up from there. On days when oil goes up, POT tends to go up (probably due to the increased desire to produce ethanol when oil prices are higher). So far oil is up today in Asia. Things are looking very good for a bounce upward. Also keep in mind that POT recently raised their guidance. Remember that that was before Canpotex raised the potash price by 21%. This should eventually cause another guidance raise. Also POT reports earnings on July 24. Those are likely going to be a beat. Certainly the CEO has been very happy lately. There should be a run up before the earnings report. Further one analyst raised his one year price target for POT to $425. This was before the last potash price increase. It was also before the 2.7M tonnes extra capacity coming online announcement (yesterday). Further Corn is now trading in the 600-650 range. There is extremely strong technical support at 600. It is unlikely corn will go down further than that in the near future. In essence, there are many good reasons for POT to go up. There are increasingly few reasons for it to go down. A prediction like this can always be wrong. However, the odds for an upswing prior to earnings on July 24 seem excellent.