Potash of Saskatchewan (POT) has been doing a lot of talking recently at private dinners with Wall Street analysts and Wall Street conference calls.
The picture that emerges is of a company a lot more confident that it can see the turn in the fertilizer market.
In a research note on February 26 Credit Suisse reported that at a dinner with Potash of Saskatchewan’s CFO the company confirmed that it is seeing improving demand in several markets with January sales in North America at 15-year highs.
On February 25 Potash told a Morgan Stanley Global Basic Materials conference call that it’s seeing re-stocking of inventories in Brazil and a return to normal levels of demand for potash in global markets.
All that talk lends weight to a reported decline in North American potash inventories in January. Inventories were 18% below December 2009 levels even though production was up 72% from December. Falling inventories on higher product sure adds up to rising demand to me.
One piece of news is a cloud on the horizon. In India’s new budget for the fiscal year that starts on April 1, 2010, announced on February 26, the government is ending its fixed maximum retail price subsidy for farmers who buy fertilizer and changing to a system based on fertilizer nutrient content. The government has said that it doesn’t expect that the new program will change the price of fertilizer or the subsidy in the short-run, but in the long run it will encourage the fertilizer industry to offer more nutrient-efficient products.
Truth is, though that no one knows how the new rules will change demand from what was the world’s largest importer of potash in 2009. (Brazil was No. 2 and China No. 3.)
Full disclosure: I own shares of Potash of Saskatchewan in my personal portfolio.
Regarding the India subsidy change:
One site, Indian Manufacturing Corporation, has an article that explains there are local manufactures of fertilizer and a list of possible joint ventures with other countries/manufacturers.
Could this subsidy change be the begining of a stepped up push for less imports, or at least more local control?
I could not figure out if Potash of S had any Indian joint ventures or local mfg in india from that web site.
ifxeyes,
I’m actually not jealous. Would you really want the “inside scoop” from a professional PR person? Even assuming the PR person knew something useful, do you think they would share it with you?
BTW, I don’t suppose you noticed that 80% of companies reporting earnings last quarter EXCEEDED expectations. That means a lot of these analysts were wrong, even though they allegedly followed these companies closely, and undoubtedly attended more than a few dinners…
Looks to me as if these “dinners” certainly give the advantage to those players long before us little guys know any of this news….
bsdgv,
The better question: Do you REALLY want to have a dinner with a fertilizer manufacturer?
Aren’t these “private dinners with Wall Street analysts” illegal? (Conferences are OK.)
Jim,
Any thoughts on a new Brazil ETF: Emerging Global Advisors Brazil Infrastructure ETF (BRXX)?
BRF has been doing well for us. Could BRXX be a good way to play Brazil’s build-out for the Olympics?
Hi Jim
can you please comment on Monsanto?
Thanks for the update!
Hi Jim please update us on HSBC is you get a chance.
thanks!