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Potash cartel breakup could help U.S. farmers, consumers

  • The breakup of the potash cartel could benefit U.S. farmers and eventually trickle down to U.S. consumers, analysts say.
  • A 25% drop in potash prices to ~$300/ton by year-end could save the average U.S. corn farmer ~$10/acre in production costs, which would cut total costs by 3% for many producers.
  • Top fertilizer stocks Potash (POT), Mosaic (MOS) and Agrium (AGU) suffered big hits today as lower potash prices will impact earnings, but U.S. farmers could wind up using more of the crop nutrient; potash now accounts for ~21% of U.S. fertilizer consumption.
  • Large diversified agribusiness companies, such as Monsanto (MON), shouldn't be directly affected by the potash turmoil.
Comments (7)
  • RS055
    , contributor
    Comments (1876) | Send Message
     
    wow - the tactical chess move by a russian company has taken on the aura of received truth!!! And all the hedgies are adjusting strategies and what not!!
    I would not be so sure. This is just a chess move - a pawn sacrifice. Dont think you have a checkmate of potash yet!! Da?
    30 Jul 2013, 07:14 PM Reply Like
  • ckarabin
    , contributor
    Comments (55) | Send Message
     
    I agree 100%! Just why would the cartel break up just to minimize their own profits? Of course this is a negotiating ploy. Now that they have stared into the abyss, look for them to turn back and negotiate.

     

    This has been a classic tactic of Saudi Arabia towards OPEC in the past.
    31 Jul 2013, 11:31 AM Reply Like
  • doc47
    , contributor
    Comments (992) | Send Message
     
    Good, with the farmers now able to cut costs and make more money, maybe Congress can stop taking my retirement money to subsidize all of those country squires!
    30 Jul 2013, 11:20 PM Reply Like
  • bigbenorr
    , contributor
    Comments (734) | Send Message
     
    I wouldn't count on it.....
    31 Jul 2013, 01:40 PM Reply Like
  • bberuch
    , contributor
    Comments (264) | Send Message
     
    I hold both MOS and IPI (Intrepid Potash) All appearances seem to point to a severe hurt to both of these potash producing companies,but a serious benefit to farmers and to food distribution companies like ADM, Bunge, Kraft,General Mills, Kellogg, General foods, mdlz,( I think that is the correct symbol for the recent Kraft spinoff) etc.
    If some African nations suffering serious annual losses in arable land wish to address their problems in this area it can be a huge move to reduce the impact of famines in several nations.
    30 Jul 2013, 11:28 PM Reply Like
  • Michael Bryant
    , contributor
    Comments (5363) | Send Message
     
    (POT) down 16% in a day. Doesn't that seem a little excessive?
    30 Jul 2013, 11:35 PM Reply Like
  • krb202
    , contributor
    Comment (1) | Send Message
     
    I seriously doubt that this will lead to the 25% drop in potash price/tonne as postulated. The break away, Uralkali, would be hard pressed to justify at their executive table and to investors carving away so much of their earnings; it would be self defeating long-term (hostile takeover anyone?). The fact is potash buyers are seasonally demanding, and demand hasn't been high in the last couple years, reserves have built up at producers expense along with their internal frustrations. So speculation and consistently justifiably stable books by the likes of PCS/Agrium drove P/E in the sector. Brazil alone has a growing population/economy and is highly dependent on potash for food production. Predictably, China and US consumers will capitalize on the opportunity for lower potash near-term, producers will unload over-volume and in two-quarters this will be old news and prices will stabilize (maybe 5-10% lower per tonne). The drastic drop is just a flash pan reaction by the idiots that believe every word of expert speculation. [Note I don't own any securities in potash market]
    31 Jul 2013, 10:04 AM Reply Like
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