Fertilizer Mergers: I Asked, But Santa Hasn't Delivered - Yet

by: Chris Damas

I wrote Santa for a merger of Agrium (AGU) /CF or CF/Terra (TRA) several times this Fall.

It looks like he isn't going to deliver. I must have been a more naughty trader than nice.

But in my defence, over the past 14 months I

  • Positioned myself for a bull rally in October, December and finally February.
  • Ignored the Permabears and other market skeptics.
  • Bought stocks and REITs on and off, most of the year.
  • Made my portfolio grow double digits.

Alas, the Grinch that stole the Fertilizer Mergers seems to be winning out and I fear Santa will pass my house by, my stocking left empty except for trade commission bills.

But I am still hopeful.

Next year I see the following developments in Q1:

  • Stronger USD, lower gold and commodity prices as US economic growth slows.
  • 5 to 7% US stock market correction.
  • US fertilizer prices for Spring 2010 delivery already seeing their peaks.
  • Corn and bean prices decline due to bumper crops and stalled RFS mandates.
  • Agrium is unable to redeem the CF poison pill or influence its Board of Directors.
  • Terra finds a second bidder or decides to take an enhanced CF offer.

Finally, I see a fat paycheque for all the fertilizer company managements, their bankers, lawyers and finally, investors and journalists, for having the patience to ride out what has been a long 12 months of intrigue, high drama, and disappointment in the fertilizer.

Have a Happy Holiday and a Prosperous New Year!

Disclosure: long TRA