Potash, Mosaic Climb on Improved Fertilizer Price Outlook

Potash Corp. of Saskatchewan Inc., the world’s largest crop-nutrient maker by market value, led fertilizer stocks higher after Credit Suisse Group AG increased its estimates for nutrient prices on “robust” grain demand.

Potash Corp. climbed 6.5 percent to C$49.44 in Toronto, while Plymouth, Minnesota-based Mosaic Co. (MOS), the world’s largest maker of phosphate fertilizer, rose 4.3 percent to $55.77 in New York.

“The outlook for grain prices looks robust,” London-based analyst Lars Kjellberg said today in a note to clients.

Kjellberg expects the price of granular potash, a form of potassium, in the U.S. Midwest to rise to $557 per short ton this year, up from a previous estimate of $546, according to the note. Diammonium phosphate on the U.S. Gulf Coast will rise to $631 a metric ton, more than the previous estimate of $603.

Kjellberg expects higher fertilizer prices to lift industry-wide net profit by 3 percent this year, 17 percent next year and 23 percent in 2013, buoyed by robust grain prices and tight supplies of crop nutrients.

The price of urea, a nitrogen-based fertilizer, in the U.S. cornbelt will rise to $475 a ton this year, up from a previous estimate of $462.

“On the back of the recent market sell off, valuations for the fertilizer sector look highly compelling,” Kjellberg said in the note. “We recommend investors take advantage of the sell off to build a position in the sector.”

Potash Corp. is based in Saskatoon, Saskatchewan.