Feb. 11, 2014, 12:05 AM
Feb. 10, 2014, 5:30 PM
Feb. 10, 2014, 10:49 AM
- Higher natural gas prices will have an outsized negative impact on Agrium (AGU) and Methanex (MEOH), CIBC says, explaining that the rising prices will squeeze margins for plants that do not have long-term gas contracts.
- Every $1/MMBtu increase in gas prices negatively impacts methanol margins by $38/metric ton, the firm says, adding that ~15% of AGU's and 22% of MEOH's gross profit could be hit by higher gas prices over the long term.
- Mosaic (MOS) and Potash (POT) are less impacted, according to CIBC.
Jan. 30, 2014, 8:22 AM
- Potash (POT) -4.3% premarket after posting a 45% drop in Q4 earnings and issuing weaker than expected earnings guidance for 2014 on expectations for continued pricing pressure.
- Gross margins fell as lower prices for all three fertilizer nutrients - potash, nitrogen and phosphate - outweighed improved costs and higher sales volumes.
- In its downside guidance, POT sees Q1 EPS of $0.30-$0.35 vs. $0.46 analyst consensus, and sees FY 2014 EPS of $1.40-$1.80 vs. $2.01 consensus.
- Q4 potash sales volumes rose 13%, largely fueled by North American activity, but average potash prices fell to $282/metric ton in the quarter from $387 a year earlier; while POT near-term pressure on potash prices appears to have subsided, "its impact is expected to suppress our offshore realizations through the early part of 2014."
- Among peers: MOS -1.2%, IPI -2.1% premarket.
Jan. 27, 2014, 3:57 PM
- Potash Corp. (POT +0.9%) is upgraded to Outperform from Market Perform with a $37 price target from $30 at Raymond James, which thinks dark clouds over potash are beginning to lift and sees the recent pullback is a long-term opportunity.
- Uralkali and Canpotex agreements with China are seen as a "new global floor price," and recent events suggest Uralkali and Belaruskali may be interested in repairing their relationship, the firm says.
- Over the weekend, Canpotex - the offshore marketing company for potash producers POT, Mosaic (MOS -1.5%) and Agrium (AGU -1%) - said it reached a deal to supply 700K metric tons of potash to China in H1 2014.
Jan. 22, 2014, 3:25 PM
- In suggesting investors shouldn't mistake a potash price floor for a long-term recovery, Goldman’s Adam Samuelson raises his price target for Potash (POT -1.2%) while downgrading peer Mosaic (MOS -1.3%) to Sell and maintaining a Sell rating for Intrepid Potash (IPI -1.2%).
- The firm keeps POT at Neutral thanks to greater valuation support at POT given its 4.1% dividend yield, which it sees as sustainable given its pricing/cash flow forecasts; a more favorable cost outlook following recent headcount reductions, which should help the company improve utilization at lower-cost facilities; and earnings ballast from a less negative near-term outlook.
- The firm's new $32 price target for POT, up from $24, still implies 5% downside, and its core industry view is that both companies will be significantly impacted.
Jan. 22, 2014, 7:44 AM
- Mosaic (MOS) is downgraded to Sell from Neutral at Goldman Sachs, which maintains a cautious coverage view on fertilizer stocks underpinned by a negative outlook for corn and soybean prices over the next 12 months that will pressure farmer economics and 2015 acreage potential.
- With MOS discounting $360-$370/metric ton potash prices in 2015, and down only 8% from the break-up of Belaruskali in late July, the firm believes shares already reflect an overly optimistic medium-term price recovery.
- MOS -0.8% premarket.
Jan. 21, 2014, 10:20 AM
- Uralkali (URALL) yesterday reached a potash sales deal with China for $305/metric ton, indicating a possible end to the uncertainty in the potash market after prices fell more than 25% from $400/ton last summer when the Russian producer left a trading partnership with Belarus and broke an informal global pricing cartel.
- While J.P. Morgan seems to see a return to price rationality, others aren't so sure; Morgan Stanley is looking ahead to H2, when demand is weak and there's incentive to price undercut again, while Cowen thinks the new contract is likely to keep pricing down for some time to come and, combined with Agrium's (AGU -0.1%) downward guidance, may weigh on fertilizer shares.
- Wunderlich notes Intrepid Potash (IPI -0.6%) sells granulated potash, which is priced at a 10%-15% premium to standard; at $335/ton potash, the firm figures IPI could see a ~$165M swing in free cash flow in 2014 from a negative $115M last year to a positive $50M-$55M in 2014.
- Also: POT -1.3%, MOS -0.5%.
Jan. 15, 2014, 3:15 PM
- Uralkali (URALL +9.7%) shares jump the most in four months on speculation that it may raise its prices for Brazil and China.
- Uralkali is signaling that Brazilian buyers will have to pay $350-$360/ton on a cost-and-freight basis for granular potash for March volumes compared to the current $320/ton, J.P. Morgan analysts say.
- Rumors also indicate Uralkali will sign its contract with China for the first half of the season soon at a possible price of $300/ton, which could set a price floor, according to Renaissance Capital.
- Following up sharp gains yesterday, POT +3.4%, MOS +3.2%, AGU +1.4%, ISCHY +2.7%, SQM +6.8%, KPLUY +3.3%, IPI +3% today.
Jan. 6, 2014, 12:35 PM
- The Obama administration is considering measures to toughen rules on fertilizer plants, farmers and oil drillers using or storing explosive chemicals such as those tied to a fatal blast in rural Texas last year, Bloomberg reports.
- Among policies being considered: lowering the threshold at which the government would be notified that ammonium nitrate is being used or stored; requiring farmers and oil drillers to report on explosive chemicals they possess; and adding chemicals to the hazardous substances lists.
- Related stocks: POT, CF, TNH, MOS, IPI, AGU, MON, BG, SQM.
Dec. 9, 2013, 10:16 AM
- Mosaic (MOS -1.1%) agrees to repurchase 43.3M class A shares held by charitable trusts associated with the Cargill family with a market value of ~$2B.
- The buyback helps resolve the ownership of 128.8M MOS shares Cargill Inc. transferred to charitable trusts and Cargill family members in 2011 when it sold its 64% stake in MOS.
- "This is a major step toward our goal of a more efficient balance sheet by mid-2014,” according to MOS CEO Jim Prokopanko, but investors may be disappointed by the structure of the agreement and the size of the repurchase.
Dec. 4, 2013, 3:59 PM
- Fertilizer equities are higher following new coverage from RBC Capital, which prefers Mosaic (MOS +3.2%) and Agrium (AGU +2.4%) in the sector.
- MOS and AGU are rated Outperform thanks to to a recent trend toward "improving demand in the potash and phosphate markets" and an expectation for "substantial" returns to holders over the next few years; MOS' solid position in the phosphate market could better position it if others are interested in its potash assets.
- Potash (POT +1.3%), CF Industries (CF +10.7%) and Intrepid Potash (IPI +2.4%) are each started with Hold ratings.
- Also impacting the ag names is news that CF is working with investment banks about creating an MLP.
- ETFs: MOO, CROP, PAGG, VEGI.
Dec. 4, 2013, 3:52 PM
- A bounce in potash markets is possible next year, assuming China steps back into the market and Russia and Belarus paper over differences that have disrupted the market, Potash Corp. (POT +1.4%) says at the Citi basic materials conference.
- A supply contract in Q1 2014 between China and Canpotex - the export arm of Potash, Mosaic (MOS +3.3%) and Agrium (AGU +2.5%) - would set a price floor, then Indian buyers might lock in prices with Canpotex, followed by deals in other markets, setting up a chance for a "nice bounce" in H1 of next year, POT CFO Wayne Brownlee says.
- POT says its decision to cut its workforce by ~18% will lead to cost reductions across the board; it anticipates a one-time cash charge in Q4 of ~$70M.
Dec. 3, 2013, 6:15 PM
- The layoffs and production cuts announced by Potash (POT) illustrate the key problem in the fertilizer sector: There has been no potash demand growth for six years while supply has been growing.
- The job cuts have nothing to do with Uralkali's move to produce at full capacity, POT CEO Bill Doyle says; it's about demand weakness across all nutrients that began well before the chaos caused by Uralkali.
- The two most important emerging markets for fertilizer are China and India, and demand is far lower than anticipated in both.
- Barclays views the planned cuts as "a good and needed move" in response to the ills plaguing the industry.
- Other fertilizer producers: MOS, AGU, IPI, CF, SQM.
- ETFs: MOO, CROP, PAGG, VEGI.
Nov. 22, 2013, 3:21 PM
- The end of the uncertainty weighing on Potash (POT +0.1%) and Mosaic (MOS +2.2%) may be at hand, J.P. Morgan analyst Jeffrey Zekauskas writes, believing the point of Uralkali's (URALL) ownership change is the alteration of its go-to-market strategy, and an execution of a change in strategy should raise the value of POT and MOS given their sensitivity to changes in product prices.
- POT and MOS are "undervalued," the firm says: Both companies have replacement values nearly twice their current share prices, POT has a 7.5%-8% sustainable free cash flow yield following the conclusion of its large potash capacity expansion, and MOS has a large share repurchase program it plans to execute beginning at the end of this month.
Nov. 21, 2013, 7:58 AM
- Belarus agrees to extradite Uralkali (URALL) CEO Vladislav Baumgertner to Russia, days after a buyer was found for the stake of Uralkali’s biggest owner.
- At least one analyst thinks Baumgertner will resign; a lot depends on the attitude of the Belarus president toward him, and "given that it may be not warm, it would be easier for Uralkali to negotiate the terms of the new trading venture with Belarus with another CEO.”
- Baumgertner was arrested in August and spent a month in a Belarusian jail after he withdrew his company from a joint venture with potash supplier Belaruskali.
- Related tickers: POT, MOS, AGU, SQM, IPI.
- ETFs: MOO, CROP, PAGG, VEGI.
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