We discussed the analyst commentary a few days back on the upgrade of Potash (POT) [Potash and Monsanto Upgraded] re: the prices coming out of India. Here is a more in depth story but bottom line, visibility, visibility, visibility combined with price increases, price increases, price increases - I just cannot find a better story out there. (and I search daily). At some point the analysts who have been SO far behind the curve will push up earnings estimates to the appropriate level and the companies will "miss", but from everything I read they still seem to be well behind the curve. I will be very interested to see what prices China is forced to pay after being pushed kicking and screaming - near monopolies (potash) are cool like that. Even a $500+ price for China with the amount they need to buy would be huge...
p.s thanks to my 3 person team of fertilizer "analysts" who email me stories almost daily on the fertilizer stocks ;)
- North American potash producers are eyeing even higher prices in the hot world fertilizer market after Russian competitors signed a major deal with India last week, analysts said on Monday.
- "It's significant news for the potash market around the world," said Ashley Harris, manager of investor relations with Agrium Inc. "It definitely sets a precedent about the types of increases expected," Harris said.
- India typically negotiates yearly deals after China, the world's largest volume importer, inks its annual contract. China normally buys at a discount to prices paid by importers in other markets like Brazil and southeast Asia.
- But tight world potash supplies combined with pressures to control food inflation this year have prompted India to leapfrog ahead of China to secure annual supplies with Belarussian Potash Co, which trades for Uralkali (URKA) and Belaruskali.
- The deal was done at the going spot market price of $625 per tonne (delivered) -- more than double last year's contract price of $270 per tonne.
- Canadian producers Potash Corp (POT), Mosaic Co (MOS) and Agrium negotiate export deals to India and China jointly at values that are usually similar or higher to the Russians.
- JP Morgan analyst David Silver said he now expects potash producers to negotiate a price hike of $200 to $250 per tonne to China from his 2007 estimated price of $260 per tonne -- up from his earlier estimate of a $150-$200 per tonne increase.
- "North American potash stocks remain near record lows, and major suppliers are essentially sold out," Silver said in a research note.
