Reports of China deal send fertilizer stocks soaring
Fertilizer stocks are flying today on news, reported by Industrial Minerals http://www.mineralnet.co.uk/Article/2350062/Potash-market-flat-in-November.html , that China and Belarusian Potash are negotiating a contract for as much as 850,000 metric tons.
Such a deal would be huge for fertilizer producers and stock since even the most optimistic analysts haven’t seen China buying potash in 2009. Read more
Update Yara International (YARIY.PK)
Yara International (YARIY.PK) reported stinko revenue and earnings numbers for the third quarter of 2009 on October 21. Net income per share, for example, fell by a little more than 88% from the third quarter of 2008.
So this was exactly the kind of kitchen sink quarter I was looking for when I last updated this stock on October 5. Included in the huge drop in net income per share, for example, were end-of-the-cycle items such as a $26 million write down of potash inventories.
I look for kitchen-sink quarters because companies tend to deliver these huge lets clear-out-all-the-bad-news quarters because they can see the business cycle turning. I think that’s the case for Yara International. Read more
Update Yara International (YARIY)
The just-ended and about to be reported third quarter is shaping up as Yara International’s (YARIY) kitchen-sink quarter.
Order volumes for 2010 have picked up but prices, in many cases set way back in June, are still low. Yara, a Norwegian fertilizer producer and the global leader in nitrogen fertilizer production, has been cutting prices to reduce inventory going into the end of 2009 and the company is likely to take a big write down in this quarter as a result of those write downs.
That will, however, let the company go forward into 2010 poised for the pickup in fertilizer demand as farmers start to order for the 2010 growing season in the northern hemisphere. (For my most recent update on my other fertilizer buy Potash of Saskatchewan (POT) follow this link http://jubakpicks.com/2009/09/22/update-potash-of-saskatchewan-pot-2/ ) Read more
Are you contrarian enough to own farm stocks?
So when’s the farm rebound?
The U.S. Department of Agriculture can’t cut its forecasts of farm income fast enough.
Farm income will drop 38% in 2009 from 2008 levels, the USDA said on August 27. The forecast of $54 billion would mark a seven-year low in farm income and is down from a USDA forecast of $71 billion last February and down, down from the $87 billion projected at the end of 2008.
Falling prices for farm commodities are, of course, a big part of the problem. But farmers are also getting squeezed since prices for what they produce have fallen faster than the cost of things that they must buy. Read more
