Six months ago, we were all rocking out at Potashapalooza. Now that we're all caught in a deflationary deluge, even the fertilizer companies are feeling more than a drizzle.
Scary thing is, potash is the best of the bunch. Prices have hardly budged, based on recently negotiated rates between the Canpotex crew (comprising PotashCorp, Agrium, and Mosaic
This attempt at defending prices will face a true test in the more decisive, ongoing negotiations with China. At least the potash players have a fighting chance. Stock prices for phosphate and nitrogen-based fertilizers, on the other hand, have already fallen out of bed.
Everyone from Mosaic to Agrium to Terra Industries
Speaking of OPEC, maybe phosphate players will see relief courtesy of Saudi Arabia. There's a major new source of supply looming, courtesy of Saudi state miner Ma'aden. Rio Tinto
Compared with many industries, the fertilizer players are in reasonably good shape headed into 2009. While the outlook is weak for the first quarter, several companies have spoken of a back-half recovery as farmers come back into the market for fertilizer. Because of its tight market structure, not to mention the crippling effect that this environment has had on aspiring new entrants, potash is the go-to plant power-up. PotashCorp -- which, by the way, continues to buy back boatloads of stock -- thus remains my top pick in the sector.
Interestingly, the Fool community favors Agrium, having bestowed upon it a top five-star rating in Motley Fool CAPS. You can chip in your two cents on either PotashCorp or Agrium -- and make a forecast of your own.