sophocles

Chicken Little...er...Morgan Stanley is Worried about Fertilizer

The fertilizer Institute put those inventory nimbers. we discussed it on the investorvillage VT.TO message board. You could see the same inventory numbers on POT website. You can see there is an inventory increase from Nov to Dec but inventory is lower than the 5-year average even after all those production raises by POT, MOS, AGU, etc. POT is opening a new mine in Brunswick and commissioned another one in Saskatchewan. BHP is doing a feasibility study in Saskatchewan. If there is no demand, why so much activity? I think the increase in inventory was NOT demand related. The Cornbelt potash price has increased $100/st in the last 4 weeks.


POT: Potash: Seasonality, rail delays behind potash restocking; buy on pullback- BofA

BofA says an there was an overreaction to inventory data. They see the recent pullback in fertilizer stocks (down 14-22% since 1/15 vs. 3.5% for S&P index) as an opportunity to add to positions in Buy-rated PotashCorp (POT) and Mosaic (MOS) ahead of what is likely to be a break-out year for potash. The firm suspects investors are overreacting to Dec producer inventory data, which showed a sequential increase to 1.8 mln short tons, but down 21% y-y. They think producers needed to replenish Dec stocks ahead of U.S spring planting, thus pushing the normal October/November restocking period out by one month. Potash shipments declined last month, adding to inventories, but railcar delays at C.P Rail rather than a lull in customer orders may be to blame.