{"id":4862,"date":"2009-09-23T09:55:36","date_gmt":"2009-09-23T13:55:36","guid":{"rendered":"http:\/\/www.thedisciplinedinvestor.com\/blog\/?p=4862"},"modified":"2016-09-20T05:00:30","modified_gmt":"2016-09-20T09:00:30","slug":"potash-pot-seeing-unrelenting-price-squeeze","status":"publish","type":"post","link":"https:\/\/thedisciplinedinvestor.com\/blog\/2009\/09\/23\/potash-pot-seeing-unrelenting-price-squeeze\/","title":{"rendered":"Potash (POT) Seeing Unrelenting Price Squeeze"},"content":{"rendered":"

We have been watching as Potash (POT) and other fertilizer suppliers are having a hard time negotiating with some of the world’s most influential customers. The problem started earlier this year when India pressed hard and negotiated a deal way below market for the products. Demand was so low that Potash and others had no choice.<\/p>\n

In their recent conference call after the abysmal earnings report, management expected prices to come down and predicted a soft market. That was \u00a0 reinforced after the market close last Friday when they again lower estimates. Now it looks like other customers have the idea that bargaining will work as demand is weak. This is not a good sign for companies in this industry.<\/p>\n

From the looks of it, prices are falling fast for potash and other fertilizer products through at least the end of 2010. Obviously the sharp decline in prices will erase any hopes for top line earnings growth. We continue to maintain a SELL for the sector and in particular Potash (POT).<\/p>\n

From Bloomberg News<\/p>\n

Sept. 22 (Bloomberg) — China may skip price negotiations \u00a0 to buy potash supplies this year on weak domestic demand, an \u00a0 analyst at Scotia Capital Inc. said. \u00a0 Buyers may instead start talks for 2010 contracts in the next two months, wrote analyst Na Liu in a report dated \u00a0 yesterday. Liu forecast contract prices for next year at $395 a \u00a0 metric ton, FOB. China is the world\u2018s biggest potash importer.<\/p>\n

China has not concluded annual negotiations on prices this \u00a0 year as demand has weakened with farmers replacing potash with \u00a0 other compound or organic fertilizers. Prices of the nutrient \u00a0 tumbled from a record last year as farmers around the world cut \u00a0 purchases because of slumping grain prices.<\/p>\n

\u201cDomestic potash sales remain very sluggish and real \u00a0 transaction prices keep slipping,\u201d\u009d Liu wrote in the report. The \u00a0 country was a net exporter of potash in July, she said.<\/p>\n

China\u2018s consumption of the crop nutrient has declined \u00a0 following a rally in prices and it will take more time for \u00a0 demand to recover, Liu said. \u201cDemand can only revive from the \u00a0 current level into next spring\u2018s planting season,\u201d\u009d Liu said. \u00a0 Producers including BPC and Canpotex, a trader representing \u00a0 North American potash suppliers, last year raised the price for \u00a0 Chinese customers to $567 a ton, excluding freight costs.<\/p>\n

Potash Corp. of Saskatchewan Inc. and other producers \u00a0 agreed in July to sell to India for $460 a ton, or about 26 percent below last year\u2018s price. \u00a0 Still, contracts to supply potash to China are likely to be \u00a0 signed before the year-end and may spur demand in Europe and \u00a0 other markets, Russian producer OAO Uralkali said Sept 8. It\u2018s \u00a0 \u201creasonable\u201d\u009d to expect a cut compared with last year\u2018s price \u00a0 given market conditions, Acting President Mikhail Antonov said.<\/p><\/blockquote>\n

\"potash\"<\/a><\/p>\n

Disclosure: Horowitz & Company<\/a> clients may hold positions of securities mentioned as of the date published.<\/p>\n","protected":false},"excerpt":{"rendered":"

We have been watching as Potash (POT) and other fertilizer suppliers are having a hard time negotiating with some of the world’s most influential customers. The problem started earlier this year when India pressed hard and negotiated a deal way below market for the products. Demand was so low that Potash and others had no […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"_et_pb_use_builder":"","_et_pb_old_content":"","_et_gb_content_width":"","footnotes":""},"categories":[24,12,21,42],"tags":[483,486,490],"class_list":["post-4862","post","type-post","status-publish","format-standard","hentry","category-earnings","category-markets","category-short-ideas","category-stocks","tag-markets","tag-short-ideas","tag-stocks","et-doesnt-have-format-content","et_post_format-et-post-format-standard"],"acf":[],"_links":{"self":[{"href":"https:\/\/thedisciplinedinvestor.com\/blog\/wp-json\/wp\/v2\/posts\/4862","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/thedisciplinedinvestor.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/thedisciplinedinvestor.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/thedisciplinedinvestor.com\/blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/thedisciplinedinvestor.com\/blog\/wp-json\/wp\/v2\/comments?post=4862"}],"version-history":[{"count":0,"href":"https:\/\/thedisciplinedinvestor.com\/blog\/wp-json\/wp\/v2\/posts\/4862\/revisions"}],"wp:attachment":[{"href":"https:\/\/thedisciplinedinvestor.com\/blog\/wp-json\/wp\/v2\/media?parent=4862"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/thedisciplinedinvestor.com\/blog\/wp-json\/wp\/v2\/categories?post=4862"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/thedisciplinedinvestor.com\/blog\/wp-json\/wp\/v2\/tags?post=4862"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}