Agrium Inc. (NYSE: AGU - News), based in Alberta, Canada, is a major retailer of agricultural products and services in North and South America, a leading global wholesale producer and marketer of all three major agricultural macronutrients such as nitrogen, potash and phosphate, and a premier supplier of micronutrients and specialty fertilizers.
Agrium is growing through acquisition and organic expansion. The acquisition of United Agri-Products (UAP) is driving revenues and profits supported by an expanded product line in the major business segment. However, the company is affected by the global credit crunch resulting in postponement of fertilizer purchases by farmers.
Nevertheless, Agrium expects the situation to improve in the near future. The company also has a significant free cash flow. Therefore, we rate the shares a Buy with a target of $43.00.
Thursday, February 12, 2009
Wednesday, February 11, 2009
CF Industries Reports
CF Industries Holdings (NYSE: CF - News) reported results for the 4th quarter of 2008. Net earnings for the quarter were $3.59 per diluted share, compared to $2.38 in the 4th quarter of 2007. Net sales for the quarter totaled $1.07 billion, a 26% increase over the 4th quarter of 2007
The increase in sales can be attributed significantly to higher prices for all of the company's products. Nitrogen net sales were $705.6 million, up 23% from $603.7 million in the comparable quarter of 2007. Increased prices for all of the nitrogen products have more than offset the decline in volumes, driving net sales well above year-earlier levels.
The average selling price for ammonia was $653 per ton, up from $410 in the year-ago quarter; for urea, $480 per ton, up from $357 in the year-ago quarter; for UAN [a solution of urea and ammonium nitrate in water], $352 per ton, up from $239 in the year-ago quarter.
Net sales of phosphate totaled $366.4 million, 65% increase from the 4th quarter of 2007. Substantial price increases for phosphate products have more than offset lower volumes during the quarter. The average selling price was $906 per ton for DAP [diammonium phosphate], up from $431 in the year-ago quarter; and $903 per ton for MAP [monoammonium phosphate], up from $431 in the year-ago quarter.
During November 2008, the company completed its program, announced on October 27, 2008, to repurchase $500 million of its common stock. The company purchased 8.5 million common shares, representing about 15% of its outstanding common stock at September 30, 2008 at an average price of $58.96. The company had approximately 48.4 million shares outstanding authorization at December 31, 2008.
The increase in sales can be attributed significantly to higher prices for all of the company's products. Nitrogen net sales were $705.6 million, up 23% from $603.7 million in the comparable quarter of 2007. Increased prices for all of the nitrogen products have more than offset the decline in volumes, driving net sales well above year-earlier levels.
The average selling price for ammonia was $653 per ton, up from $410 in the year-ago quarter; for urea, $480 per ton, up from $357 in the year-ago quarter; for UAN [a solution of urea and ammonium nitrate in water], $352 per ton, up from $239 in the year-ago quarter.
Net sales of phosphate totaled $366.4 million, 65% increase from the 4th quarter of 2007. Substantial price increases for phosphate products have more than offset lower volumes during the quarter. The average selling price was $906 per ton for DAP [diammonium phosphate], up from $431 in the year-ago quarter; and $903 per ton for MAP [monoammonium phosphate], up from $431 in the year-ago quarter.
During November 2008, the company completed its program, announced on October 27, 2008, to repurchase $500 million of its common stock. The company purchased 8.5 million common shares, representing about 15% of its outstanding common stock at September 30, 2008 at an average price of $58.96. The company had approximately 48.4 million shares outstanding authorization at December 31, 2008.
Terra Industries Inc. (TRA) has reported 2008 4th quarter and full year results and the recent past was very good for the company (Call Transcript). I
Terra Industries Inc. (TRA) has reported 2008 4th quarter and full year results and the recent past was very good for the company (Call Transcript). I will take a quick look at how the company did and try to make a guess on what the future will bring.
First, for you income and Terra Nitrogen LP (TNH) fans, the company declared a distribution of $2.97 per unit. Shareholders for the entire 2008 earned $13.60 in distributions. Early in 2008 I recommended TRA vs. TNH when the net income distribution shifted in favor of the general partner, TRA. TNH shareholders are now getting $3.00 per share on the same income that a year ago would have earned them $4.50 (roughly). The current partnership agreement gives TRA about 40% of the net income off the top, then they pick up 75% of the distributions for the units they own.
For the 4th quarter TRA earned $1.65 per share, a 150% increase over the same quarter in 2007. The earnings were also in line with the $1.64 earned in the 3rd quarter of 2008. For the year TRA earned a record $6.20 per share, a 225% increase over 2007. According to Yahoo Finance the consensus estimate for the quarter and year were 92¢ and $5.52, pretty big misses. Revenue gains were made on higher selling prices as volumes for nitrogen, UAN and ammonia fell 12%, 16% and 30% respectively.
Going forward, this is what I see:
The biggest negative is that TRA’s product prices fell sharply at the end of the 4th quarter, forcing a $48 million writedown in inventories. The combination of lower sales volumes and lower prices could have a significant effect on the bottom line.
The positives list is a little longer: TRA idled a couple of plants when the global slowdown started cratering prices, allowing the company to do some needed upkeep and keep inventories under control. Natural gas, which is the major expense for the company, is at a 5 year low. Farmers skipped a significant portion of fertilizer application in the fall as fear of falling commodity prices took effect. They will need to make up those applications in the spring. Corn prices have recovered to about $3.80 from near $3.00 in December, and historically $4.00 corn is a very good number.
The earnings estimate on TRA for 2009 is about $3.00 per share. I believe the current pessimistic environment has that number at least $1.00 low. But at this point I really see Terra Industries as a value play with long term positive fundamentals. TRA has a market cap of $2.4 billion while it sits on $1 billion in cash and its 75% stake in TNH has a current value of $1.8 billion. TNH generates about 30% of TRA’s earnings. Also, at the end of Q3, TRA had $680 million in cash.
Although TRA has doubled from its recent low, I think 2009 will be a year of positive surprises for the company.
First, for you income and Terra Nitrogen LP (TNH) fans, the company declared a distribution of $2.97 per unit. Shareholders for the entire 2008 earned $13.60 in distributions. Early in 2008 I recommended TRA vs. TNH when the net income distribution shifted in favor of the general partner, TRA. TNH shareholders are now getting $3.00 per share on the same income that a year ago would have earned them $4.50 (roughly). The current partnership agreement gives TRA about 40% of the net income off the top, then they pick up 75% of the distributions for the units they own.
For the 4th quarter TRA earned $1.65 per share, a 150% increase over the same quarter in 2007. The earnings were also in line with the $1.64 earned in the 3rd quarter of 2008. For the year TRA earned a record $6.20 per share, a 225% increase over 2007. According to Yahoo Finance the consensus estimate for the quarter and year were 92¢ and $5.52, pretty big misses. Revenue gains were made on higher selling prices as volumes for nitrogen, UAN and ammonia fell 12%, 16% and 30% respectively.
Going forward, this is what I see:
The biggest negative is that TRA’s product prices fell sharply at the end of the 4th quarter, forcing a $48 million writedown in inventories. The combination of lower sales volumes and lower prices could have a significant effect on the bottom line.
The positives list is a little longer: TRA idled a couple of plants when the global slowdown started cratering prices, allowing the company to do some needed upkeep and keep inventories under control. Natural gas, which is the major expense for the company, is at a 5 year low. Farmers skipped a significant portion of fertilizer application in the fall as fear of falling commodity prices took effect. They will need to make up those applications in the spring. Corn prices have recovered to about $3.80 from near $3.00 in December, and historically $4.00 corn is a very good number.
The earnings estimate on TRA for 2009 is about $3.00 per share. I believe the current pessimistic environment has that number at least $1.00 low. But at this point I really see Terra Industries as a value play with long term positive fundamentals. TRA has a market cap of $2.4 billion while it sits on $1 billion in cash and its 75% stake in TNH has a current value of $1.8 billion. TNH generates about 30% of TRA’s earnings. Also, at the end of Q3, TRA had $680 million in cash.
Although TRA has doubled from its recent low, I think 2009 will be a year of positive surprises for the company.
Is Potash Corp. Overpriced?
Three years ago a single ton of fertilizer used to be worth $340, and in 2008 the price has jumped to $640. Since the summer of 2008 the price of grain commodities has crashed. As the world begins its sowing season, one must wonder,"will people be able to afford to buy fertilizer this year?" If not... then… Is POT over priced?
In this short qualitative piece, we will discuss key demand/market elements that many analysts and speculators are ‘bagging on’, and understand why the current POT price is unsustainable.
Demand: China will buy more!
China has been a driver of the commodity price hikes in the last several years, and fertilizer was no exception. As many readers are aware, China is experiencing major drought right now; this is due to Communist Government’s lack of planning and poor judgment. However, China’s drought will not substantially increase China’s purchase of fertilizers. This may shock some readers, but I beg readers to think one step farther. This is because fertilizers are ‘hygroscopic’, meaning they absorb moistures from the surrounding environment. The application of fertilizer during the drought will result in a disaster, as dusty wind (drought) will simply blow away the fertilizer on top of the dry soil.
What about ‘other’ parts of China? Wouldn't they use fertilizer to increase production? Well, other parts of China (i.e. deeper inland) suffer from lack of proper infrastructure and system that will not efficiently utilize the benefits of fertilizer. Fertilizer should be applied in such a way that it will go into the soil to promote soil rejuvenation for 'many' years, and such application require proper analysis and planning, something China is struggling with. One can always hope that the Chinese government will make ‘another’ foolish blunder in order to increase the crop yield, but China will not make the same mistake twice. Hope is not a strategy.
Demand: Asia’s other developing countries.
Asia’s developing countries (who happen to purchase bulk of fertilizers) are facing severe pressure from the IMF and the World Bank to stabilize their currency by safe-securing sufficient amount of foreign reserves (i.e. the U.S. dollar). The purchases of fertilizers are being delayed, and cancelled. The governments in Asia are promoting home-made fertilizers in order to substitute the import fertilizers.
Demand: North America’s need for more grain!
One might expect other countries will invest in fertilizers to increase their yield, and increase their market share in the industry. However, that is an armchair economic theory. Until very recently, the farming industry has been under severe stress. In many parts of North America, small farming communities disappeared and turned into ghost towns. It is no secret that many farmers have been living off of generous government subsidies. This is why so many corn farmers were excited by ethanol production schemes. For the first time in many decades farmers were able to make serious money from actual farming! Unfortunately, these farmers over-extended themselves with cheap credit, and are now paying the price. The low grain prices are forcing farmers to default on their new ‘tractors’ and ‘planting machines’. This is evident by the fact that growing numbers of farmers are going ‘bankrupt’. At this point in time the worry of fertilizer is at the bottom of many farmers’ check list.
Demand: Grain Rally!
In the past, the prices on fertilizers were ‘justified’ due to high grain prices. However, as grain prices tanked, so did the fertilizer market. Many analysts are still talking about $1000/ton fertilizer and some reporters cite $1500/ton! This means that these analysts are banking on high grain prices. Although we can appreciate their analysis, higher grain price doesn’t necessarily result in higher fertilizer price; and most importantly, we do not expect the rise of grain prices any time soon.
In many countries there is something called ‘wheat board’ and ‘quota’. The ‘wheat board’ guarantees individual farmers that the board will purchase grain from each farmer according to the ‘quota’ that farmers are entitled to. This also means that farmers can’t sell their crops beyond their quota. When times were good, this quota rule was ignored, and farmers used fertilizer to increase their yield. However, with the falling grain prices, there is now no incentive to buy fertilizer to increase the yield, and farmers are playing safe by producing only up to the limit of their quota. This is evident in South America where farmers are seeing their soy bean prices crashing down due to weak demand in Asia. The free-market at work.
Then there are POT-bugs
Since 2008, people have been talking about fertilizer’s value in protecting one’s investment from: ‘THE US DOLLAR CRASH’ and ‘INFLATION.’ Many claimed that fertilizers will hedge against the US dollar and inflation. However, there has been no credible proof that fertilizer stocks have hedged against the foreign exchange risk or the inflation. Such groundless ‘speculation’ is based on ‘hope’ and ‘fear’, the two most dangerous words every investor should stay away from. People must understand that fertilizers are not gold, not even close.
Summary: Yes, $90/share is too much!
The worldwide fertilizer demand is disappearing fast, and although ‘hope’ is keeping this stock up and running, the underlying fundamentals cannot be ignored. So, how will all this play out? The technical shows POT has hit multiple resistances/supports between Dec/Jan (support around $65 and resistance around $80) in the last several weeks. Based on the list of qualitative points, a short is recommended for POT with target price at $65/share.
In this short qualitative piece, we will discuss key demand/market elements that many analysts and speculators are ‘bagging on’, and understand why the current POT price is unsustainable.
Demand: China will buy more!
China has been a driver of the commodity price hikes in the last several years, and fertilizer was no exception. As many readers are aware, China is experiencing major drought right now; this is due to Communist Government’s lack of planning and poor judgment. However, China’s drought will not substantially increase China’s purchase of fertilizers. This may shock some readers, but I beg readers to think one step farther. This is because fertilizers are ‘hygroscopic’, meaning they absorb moistures from the surrounding environment. The application of fertilizer during the drought will result in a disaster, as dusty wind (drought) will simply blow away the fertilizer on top of the dry soil.
What about ‘other’ parts of China? Wouldn't they use fertilizer to increase production? Well, other parts of China (i.e. deeper inland) suffer from lack of proper infrastructure and system that will not efficiently utilize the benefits of fertilizer. Fertilizer should be applied in such a way that it will go into the soil to promote soil rejuvenation for 'many' years, and such application require proper analysis and planning, something China is struggling with. One can always hope that the Chinese government will make ‘another’ foolish blunder in order to increase the crop yield, but China will not make the same mistake twice. Hope is not a strategy.
Demand: Asia’s other developing countries.
Asia’s developing countries (who happen to purchase bulk of fertilizers) are facing severe pressure from the IMF and the World Bank to stabilize their currency by safe-securing sufficient amount of foreign reserves (i.e. the U.S. dollar). The purchases of fertilizers are being delayed, and cancelled. The governments in Asia are promoting home-made fertilizers in order to substitute the import fertilizers.
Demand: North America’s need for more grain!
One might expect other countries will invest in fertilizers to increase their yield, and increase their market share in the industry. However, that is an armchair economic theory. Until very recently, the farming industry has been under severe stress. In many parts of North America, small farming communities disappeared and turned into ghost towns. It is no secret that many farmers have been living off of generous government subsidies. This is why so many corn farmers were excited by ethanol production schemes. For the first time in many decades farmers were able to make serious money from actual farming! Unfortunately, these farmers over-extended themselves with cheap credit, and are now paying the price. The low grain prices are forcing farmers to default on their new ‘tractors’ and ‘planting machines’. This is evident by the fact that growing numbers of farmers are going ‘bankrupt’. At this point in time the worry of fertilizer is at the bottom of many farmers’ check list.
Demand: Grain Rally!
In the past, the prices on fertilizers were ‘justified’ due to high grain prices. However, as grain prices tanked, so did the fertilizer market. Many analysts are still talking about $1000/ton fertilizer and some reporters cite $1500/ton! This means that these analysts are banking on high grain prices. Although we can appreciate their analysis, higher grain price doesn’t necessarily result in higher fertilizer price; and most importantly, we do not expect the rise of grain prices any time soon.
In many countries there is something called ‘wheat board’ and ‘quota’. The ‘wheat board’ guarantees individual farmers that the board will purchase grain from each farmer according to the ‘quota’ that farmers are entitled to. This also means that farmers can’t sell their crops beyond their quota. When times were good, this quota rule was ignored, and farmers used fertilizer to increase their yield. However, with the falling grain prices, there is now no incentive to buy fertilizer to increase the yield, and farmers are playing safe by producing only up to the limit of their quota. This is evident in South America where farmers are seeing their soy bean prices crashing down due to weak demand in Asia. The free-market at work.
Then there are POT-bugs
Since 2008, people have been talking about fertilizer’s value in protecting one’s investment from: ‘THE US DOLLAR CRASH’ and ‘INFLATION.’ Many claimed that fertilizers will hedge against the US dollar and inflation. However, there has been no credible proof that fertilizer stocks have hedged against the foreign exchange risk or the inflation. Such groundless ‘speculation’ is based on ‘hope’ and ‘fear’, the two most dangerous words every investor should stay away from. People must understand that fertilizers are not gold, not even close.
Summary: Yes, $90/share is too much!
The worldwide fertilizer demand is disappearing fast, and although ‘hope’ is keeping this stock up and running, the underlying fundamentals cannot be ignored. So, how will all this play out? The technical shows POT has hit multiple resistances/supports between Dec/Jan (support around $65 and resistance around $80) in the last several weeks. Based on the list of qualitative points, a short is recommended for POT with target price at $65/share.
Wednesday, February 4, 2009
Anxiety Mounts in Agriculture
In October, I pondered whether there was agricultural angst ahead. The sector is seriously sagging -- with the curious exception of Archer Daniels Midland (NYSE: ADM) -- but psychology appears to be the driver here, rather than any real financial fragility.
I've been slowly gathering snippets from players in the space, so let's see if we can't synthesize a bit here.
The most bullish comments I'm seeing in the space are from the seeds and traits sultans like Monsanto (NYSE: MON), DuPont (NYSE: DD), and Dow Chemical (NYSE: DOW). DuPont, which has an extremely broad revenue base, recently forecast weakness across all its end markets, with the exception of agriculture. Dow says that farmers are in a "relatively strong position," and that the long-term fundamentals in the segment haven't changed. Monsanto remains a profit monster.
Engine builder Cummins (NYSE: CMI) saw strong demand for its agricultural wares through the fourth quarter, but most equipment makers have turned rather morose in recent weeks. CNH Global sputtered out, leading to a sectorwide sell-off last month. Lindsay followed up a week or so later, guiding irrigation sales down by 30% to 40% year-over-year. GPS guru Trimble Navigation saw agricultural sales grow by double digits in the fourth quarter, but, given "general nervousness" in the sector, only describes itself as guardedly optimistic today.
Cycling back to Lindsay, the company cited uncertain farm economics, given lower and volatile commodity prices. The firm described farmers' behavior as a deferral of equipment orders, which leaves the door open to an order boost in the following weeks. This is a very similar situation to the one described by the likes of Mosaic (NYSE: MOS) and PotashCorp (NYSE: POT).
Those fertilizer shops make a fair point that farmers can't hold back indefinitely. Mosaic even characterized the situation as a game of chicken. I think that may be a bit unfair, given the wobbly global economy. You can't blame anyone for being overly cautious in this environment, and given farmers' experiences with painful periods of lower crop prices during past cycles, they may have longer memories than most.
I'm afraid I don't have too definitive a conclusion here, but I would suggest that agriculturally inclined Fools keep a close eye on developments as we approach planting season. If farmers really go on a buyer's strike, business for many of the aforementioned firms will be grim. If prices stabilize, however, they may come back to the table soon..fool.com
I've been slowly gathering snippets from players in the space, so let's see if we can't synthesize a bit here.
The most bullish comments I'm seeing in the space are from the seeds and traits sultans like Monsanto (NYSE: MON), DuPont (NYSE: DD), and Dow Chemical (NYSE: DOW). DuPont, which has an extremely broad revenue base, recently forecast weakness across all its end markets, with the exception of agriculture. Dow says that farmers are in a "relatively strong position," and that the long-term fundamentals in the segment haven't changed. Monsanto remains a profit monster.
Engine builder Cummins (NYSE: CMI) saw strong demand for its agricultural wares through the fourth quarter, but most equipment makers have turned rather morose in recent weeks. CNH Global sputtered out, leading to a sectorwide sell-off last month. Lindsay followed up a week or so later, guiding irrigation sales down by 30% to 40% year-over-year. GPS guru Trimble Navigation saw agricultural sales grow by double digits in the fourth quarter, but, given "general nervousness" in the sector, only describes itself as guardedly optimistic today.
Cycling back to Lindsay, the company cited uncertain farm economics, given lower and volatile commodity prices. The firm described farmers' behavior as a deferral of equipment orders, which leaves the door open to an order boost in the following weeks. This is a very similar situation to the one described by the likes of Mosaic (NYSE: MOS) and PotashCorp (NYSE: POT).
Those fertilizer shops make a fair point that farmers can't hold back indefinitely. Mosaic even characterized the situation as a game of chicken. I think that may be a bit unfair, given the wobbly global economy. You can't blame anyone for being overly cautious in this environment, and given farmers' experiences with painful periods of lower crop prices during past cycles, they may have longer memories than most.
I'm afraid I don't have too definitive a conclusion here, but I would suggest that agriculturally inclined Fools keep a close eye on developments as we approach planting season. If farmers really go on a buyer's strike, business for many of the aforementioned firms will be grim. If prices stabilize, however, they may come back to the table soon..fool.com
Tuesday, February 3, 2009
CF Industries to go hostile in its bid for Terra
* CF to offer 0.4235 shares for every Terra share
* CF to launch exchange offer mid-month
* CF plans to nominate three directors for Terra's board
* Terra again says CF's bid is too low
NEW YORK, Feb 3 (Reuters) - Fertilizer maker CF Industries Holdings Inc (CF.N) on Tuesday said it plans to launch a hostile bid for rival Terra Industries Inc (TRA.N) later this month, moving forward with a bid that Terra has already rejected.
CF also said it plans to nominate three directors to replace three members of Terra's board at this year's annual meeting.
CF said it plans to start an exchange offer for Terra's common stock at the middle of the month. The offer would give Terra shareholder 0.4235 CF shares, currently worth about $20.66, for every Terra share.
Terra shares closed at $21.09 on the New York Stock Exchange on Tuesday.
Terra reiterated that it believes CF's bid does not present a compelling value for shareholders, as it is too low. It also said that many of its major shareholders have expressed support of Terra and its strategy.
"While we believe the Terra stockholders will support a combination by voting for our nominees, our preference continues to be to enter into a negotiated transaction," CF Industries Chief Executive Stephen Wilson said in a statement. "We are confident that our offer represents full and fair value."
Terra has a classified board with staggered terms. Three directors will be elected to serve a three-year term at this year's annual meeting.
While it does not have a 'poison pill' shareholder right's plan, it is incorporated in Maryland, which has some takeover laws that are favorable to targets. (Reporting by Michael Erman; Editing by Bernard Orr)
* CF to launch exchange offer mid-month
* CF plans to nominate three directors for Terra's board
* Terra again says CF's bid is too low
NEW YORK, Feb 3 (Reuters) - Fertilizer maker CF Industries Holdings Inc (CF.N) on Tuesday said it plans to launch a hostile bid for rival Terra Industries Inc (TRA.N) later this month, moving forward with a bid that Terra has already rejected.
CF also said it plans to nominate three directors to replace three members of Terra's board at this year's annual meeting.
CF said it plans to start an exchange offer for Terra's common stock at the middle of the month. The offer would give Terra shareholder 0.4235 CF shares, currently worth about $20.66, for every Terra share.
Terra shares closed at $21.09 on the New York Stock Exchange on Tuesday.
Terra reiterated that it believes CF's bid does not present a compelling value for shareholders, as it is too low. It also said that many of its major shareholders have expressed support of Terra and its strategy.
"While we believe the Terra stockholders will support a combination by voting for our nominees, our preference continues to be to enter into a negotiated transaction," CF Industries Chief Executive Stephen Wilson said in a statement. "We are confident that our offer represents full and fair value."
Terra has a classified board with staggered terms. Three directors will be elected to serve a three-year term at this year's annual meeting.
While it does not have a 'poison pill' shareholder right's plan, it is incorporated in Maryland, which has some takeover laws that are favorable to targets. (Reporting by Michael Erman; Editing by Bernard Orr)
Economic Woes Slow Food Demand, But Potash Prices Should Stay Strong
The fertilizer market has ground to a halt over the past couple of months as economic woes put a clamp on global food demand, but according to a co-authored report from UBS, investors in the sector can rest assured the downturn will be minor.
Analysts at UBS wrote in a research note to clients:
Clearly the world needs to eat and while the global economic crisis will impact food consumption growth rates we expect both meat and grain consumption to be flat to negative 1% year on year versus 2008.
They added that meat consumption during past recessions has grown at 0 to 1% during past recessions.
The analysts said potash volumes are likely to be down 5% year on year with consumption in urea and phosphate expected to grow respectively by 1.5% and 3%.
Potash prices, meanwhile, are expected to stay strong at $700 per tonne, while urea and phosphate prices remain under pressure due to supply/demand weakness. The analysts forecast urea at $250 to $300 per tonne and phosphate at $250 per tonne.
As such, the investment firm prefers potash producers over urea producers, naming Potash Corp. of Saskatchewan Inc. (POT) and Agrium Inc. (AGU) among its favourite stocks..seeking alpha
Analysts at UBS wrote in a research note to clients:
Clearly the world needs to eat and while the global economic crisis will impact food consumption growth rates we expect both meat and grain consumption to be flat to negative 1% year on year versus 2008.
They added that meat consumption during past recessions has grown at 0 to 1% during past recessions.
The analysts said potash volumes are likely to be down 5% year on year with consumption in urea and phosphate expected to grow respectively by 1.5% and 3%.
Potash prices, meanwhile, are expected to stay strong at $700 per tonne, while urea and phosphate prices remain under pressure due to supply/demand weakness. The analysts forecast urea at $250 to $300 per tonne and phosphate at $250 per tonne.
As such, the investment firm prefers potash producers over urea producers, naming Potash Corp. of Saskatchewan Inc. (POT) and Agrium Inc. (AGU) among its favourite stocks..seeking alpha
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