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Gregory Orr

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  • Update: Potash Corp Market Fundamentals Remain Challenged [View article]
    How does a bumper crop and perfect growing conditions reduce demand? The north american market is sold out, nutrient uptake from the soil has been substantial in the last 2 years, farmers have cash in pocket, and the nutrient is near-term cheap. I look back to the 2010 USDA Soil Survey that said that most of the North American corn belt soils were marginal to deficient in potash. Is the whole potash thing a hoax? Or do low soil levels actually reduce yield?
    I look at POT as an inflation-protected bond that throws off a 4% yield, and it seems like the cash flow situation is only improving, without price increases. If your reasoning is accurate, than BHP would have to be masochistic to move forward with Jansen.
    Oct 2 06:12 PM | Likes Like |Link to Comment
  • Potash Corp.: A Victory Lap That Is Well Deserved [View article]
    Two good years of rainfall, and the canadian producers are selling out of inventory. URALL investors are not happy with their share price. POT has reaffirmed the dividend, and will continue to pump out cash. Any incremental price increase goes right in the pocket of investors. URALL has signaled a 10% increase in the China price. The dividend yield is 4.16. The correlation is to rainfall, which actually drives consumption, not grain prices. When everyone gets a decent sized piece of a very large pie, that's good. When developing populations can afford grain, that's good too. The uncertainty is out, except for those who manufacture it for a living.
    Sep 12 09:14 AM | Likes Like |Link to Comment
  • Plunging Corn Prices Encourage Livestock Producers To Fatten Up The Flock [View article]
    Enlightenment! Does anyone keep track of fish production and corn demand?
    Aug 15 02:29 PM | Likes Like |Link to Comment
  • Potash downgraded at Raymond James on valuation [View news story]
    Very rational of RJ to do so. Clearly, RJ is minding the store, and giving their clients timely advice.
    Aug 1 10:23 AM | Likes Like |Link to Comment
  • Is Potash Corp. Expected To Remain Under Pressure? [View article]
    And guess what? AG PROFESSIONAL just published a piece that URALL may increase the china contract price 10% for 2015...
    Jul 30 08:11 PM | 1 Like Like |Link to Comment
  • Is Potash Corp. Expected To Remain Under Pressure? [View article]
    URALL produces less than 12MM tons in a 55MM market. Do they have the capacity to "dump" much more product on the market?? Think they're shooting for 15MM tons, but still, they can't supply the entire market. It's just the China contract price that they can impact. POT management has demonstrated a commitment to hold prices as much as possible, and cut production. Does anyone know the condition and age of URALL infrastructure, or their safety record?? I don't, but I've always had a gut feeling that a major accident is a real possibility, and could be a white swan event for the Canadian producers, perhaps more so than a rapprochement between Bela and Urall, which is also still a real possibility. Would be great if anyone in our community knew what was actually happening on the ground(or, underground??) in Russia. Will Europe and North America pressure China to cut Russian imports? This should be the most boring business in the world, but it reads more like a spy novel. The near-term outlook for demand is "sluggish to improving", but the geopolitical wild cards remain, and should be taken into account. POT can maintain modest margins in this environment, and keep paying out the dividend. Weaker players will fall by the wayside. And the current prices are a real discouragement to new players building, or expanding capacity. POT will supply the marginal demand when it returns, at a higher price than the China contract for sure.
    Jul 30 07:00 PM | 3 Likes Like |Link to Comment
  • Is Potash Corp. Expected To Remain Under Pressure? [View article]
    Only people living under rocks for the last year would have been disappointed by the earnings release. When you beat consensus by 25%, either the analysts were all asleep, or the news was encouraging, not disappointing. No offense, Apex, but have you been following this market, or did you just fall off the turnip truck and decide to write a potash article?
    Jul 30 04:12 PM | 6 Likes Like |Link to Comment
  • Potash beats by $0.11, beats on revenue [View news story]
    Most bizarre price action I've ever seen. Up $1.68 in pre-market, went to -.03 late in the session ...If you just looked at the chart, you would see an up day with big volume, have to look closely to see the price action. Odd that they would beat on earnings by 25% and wind up flat for the day. I mean really! POT was euphoric in pre-market, up 4.6%, and sold off all day. Also thought it was odd that TD would downgrade to hold, while maintaining a 39 price target, right before earnings. Any thoughts out there?? I'm expecting it to go higher, and it's definitely got momentum...
    Jul 24 06:14 PM | Likes Like |Link to Comment
  • Potash Corp. Continues Pricing Strategy And Enters Period Of Lower Growth [View article]
    Will read through the archives, and look forward to your next piece!
    All the best..
    Jul 18 03:28 PM | Likes Like |Link to Comment
  • Potash Corp. Continues Pricing Strategy And Enters Period Of Lower Growth [View article]
    Thanks, GC. Just read the MF article. You mentioned that you expect grain prices and potash to realign into a new cycle of demand. Could you expand on that?
    Jul 17 09:29 AM | Likes Like |Link to Comment
  • Potash Corp. Continues Pricing Strategy And Enters Period Of Lower Growth [View article]
    Thanks for your excellent work, GC. Any thoughts about how Russian sanctions might impact potash markets?
    Jul 17 09:19 AM | Likes Like |Link to Comment
  • Potash Corp. Continues Pricing Strategy And Enters Period Of Lower Growth [View article]
    Yes, would be good to hear more about the physical plant. My understanding is that Canpotex distribution infrastructure is state-of-the-art. Yes, URALL produces at a lower cost per ton, but I always have this picture in my mind of a guy with a bushy moustache pounding his fist on the table demanding more production. A major accident in Russia seems like a possibility to me, just a gut feeling. That could make for a "White Swan" event in the potash markets. I definitely have my money on the Canadians to produce a quality product, maintain infrastructure, and focus on worker safety. That steady-as-she-goes approach always wins in the long run. The chance of a major Russian screw-up has to be considered in the big picture, as well as the possibility of URALL and BPC returning to cartel status.
    Jul 16 10:59 AM | Likes Like |Link to Comment
  • Potash Corp. Continues Pricing Strategy And Enters Period Of Lower Growth [View article]
    Another excellent piece, G.C., if not sobering. POT are starting to look like\ utility stocks, or inflation-protected bonds. What do you think of the whole Ekonomics story? Do farmers who apply consistently achieve consistently higher yields than those who don't, all other factors being equal? Are crop yields in India as dismal as reported, and is lack of nutrient the main reason? I generally assume if grain prices are low, then the crop is large, and everyone is making a fair buck. And has cash to buy fertilizer, IF they see a difference in yield per acre.
    I think what makes the difference is simply the weather, especially rainfall. My pet theory is that rainfall is the biggest driver of real potash demand, via uptake, leaching, or worst-case, runoff and severe flooding. In a drought, the K just lays in the soil, correct?
    If the political climate changes in India, do you think they're more likely to buy from URALL, or Canpotex? Does it matter?
    It feels to me like much of the investment community is pretty uninspired by the Ferts, in a world of Amazon, Netflix, and Tesla. Do you think investors might go to POT, like they might run to utilities, in a selloff of the growth stocks, esp. tech?
    Would love to get your take on the above. Thanks for another excellent piece.
    Jul 15 10:31 AM | 2 Likes Like |Link to Comment
  • What To Do Now With The Potash Stocks [View article]
    Hi KRV, yes, it's a concern. I think the offsetting factor is that POT is winding down CapEx, and cash flow should remain stable to improving, unless there is another drop in prices, which I think is unlikely. They dodged a bullet when the Israeli Chemicals buyout fell through. Think POT will pass on acquisitions, unless someone like IPI goes belly up, and can be bought on the cheap. Think management will continue to pay out in dividends, or buy back stock. Maybe continue smaller infrastructure improvements to bring down cost of production. POT is a cash cow, and there isn't much else exciting to do with the money.
    Agree with Newbie that the long-term story for POT is great. I think it's the safest investment on the planet. It's just a foot race between new demand and new capacity. Demand will pull ahead at some point, but I think it's gonna be neck-and-neck for the near-term.
    Another interesting tidbit was that Benzinga posted a rumor that BHP may want to buy MOS for $62 a share. MOS oversold pretty hard on Thurs, and I'm watching it this morning to open a call position. POT and MOS are both somewhat oversold right now, so I think it's a good entry point for an investor. MOS just has the added cherry on top of a possible buyout, which actually is a better business decision for BHP than developing Jansen. 62 looks rich. MOS is trading around 19x, 62 would be 25x. Maybe that's where the number came from. From BHP's gloomy outlook in iron ore, 25x might look good, especially if they're really thinking long-term.
    Jul 14 09:25 AM | 1 Like Like |Link to Comment
  • What To Do Now With The Potash Stocks [View article]
    That's the key as I understand it. You don't just drill a hole in the ground and start selling a million tons of potash a month later. The number I've heard on construction cost is $2000 per ton of new capacity. Then there is the already overburdened rail capacity in Canada. You have to get your product to market. I think PotCorp is producing at around $90 a ton. No way RT or BHP can compete there. The price collapse a year ago really hurt buy-and-hold investors, but was a really good thing for the long-term outlook for POT. The economics just don't make sense for a new player to jump into the potash game. I love the long-term story for a conservative investor, especially now at $35 a share. You get a nice yield from the dividend, with improving cash flow, and no really attractive alternative other than to buy back stock or pay out dividends. The big question on fundamentals is how will the supply/demand equation play out. In the near term, demand is soft. Will it turn around this fall? A year from now? 5 years? 10 years? At $35, it's a classic widows-and-orphans blue chip, possibly one of the safest investments on the planet right now. A big fat cash cow. POT will be the Last Man Standing in a price war, other than URALL. There is the possibility for a white swan event also to kick the share price up. But supply/demand will most likely be a grind for a good number of years to come.
    Jul 11 08:49 AM | 1 Like Like |Link to Comment