SEP 3 2014
Overview Update: Learn More About PotashCorp and Its Industry
Website is at – http://www.potashcorp.com/overview/
Updated in August 2014, our Overview of PotashCorp and Its Industry offers a snapshot of the factors that influence our company’s performance. On the site, users will find graphs, interactive tools and discussion in both online and printable formats. Our Overview provides insight into our nutrients, markets and potential.
What users will find:
Introduction Learn about PotashCorp and our key business strategies
Fertilizer 101 Updated content on key demand drivers for agricultural and fertilizer markets
Nutrients Learn the essentials of N, P and K including key characteristics, supply & demand dynamics and market outlook
Advantages Discover what we believe makes PotashCorp unique amongst its peers
Resources Helpful information including conversion terms, nutrient facts and more
Beyond these topics, we encourage you to visit the site to utilize our interactive tools!
Looking for data on crop production or a specific market? Try out our Crop and Market Tools designed for users to take a more in-depth look into key crops and markets for N, P and K.
Looking for a specific graph or topic? Try out our Filter Tool created to help users find the information they need more easily.
Potash Corp.: A Victory Lap That Is Well Deserved
Sep. 4, 2014 10:31 AM ET
Disclosure: The author is long POT, KPLUY. The author wrote this article themselves, and it expresses their own opinions. The author is not receiving compensation for it (other than from Seeking Alpha). The author has no business relationship with any company whose stock is mentioned in this article. (More…)
- Potash Corp. currently trades at $35.
- The potash company has substantially rebounded after the sector meltdown last year and actually returned to pre-crisis levels in June 2014.
- Excellent long-term fundamentals and a dip back to the $35 region make Potash Corp. a Strong Buy once again.
Just about a year ago, at the end of July 2013, Uralkali (OTC:URALL) announced that it would leave the Belarusian Potash Company, a joint venture with Belarussian partner Belaruskali, in order to pursue a volume-over-price strategy. The industry structure in the potash market is oligopolistic and with Uralkali announcing its exit from the cartel, investors quickly panicked about falling prices in the potash market.
As a result of Uralkali’s announcement, shares of potash companies were thrown under the bus and immediately traded at distressed valuations. Potash Corp. of Saskatchewan (NYSE:POT), for instance, a major player in the global potash business, lost 25% of its market capitalization as a result of Uralkali’s unsubstantiated supply announcement in a matter of days last year.
I have quite aggressively recommended Potash Corp. after the sell-off last year as well as The Mosaic Company (NYSE:MOS) — original thesis here and here — and even suggested, that both companies could return to pre-crisis price levels once the dust in the sector settled.
For instance, at the beginning of February 2014 I have asserted, that shares of Potash Corp. will very likely regain their strength as investors will shift their focus away from short-term pricing uncertainty in the potash market and toward the favorable long-term value proposition Potash Corp. makes. I wrote:
Hefty share price declines oftentimes define the beginning of a slow and gradual recovery trend and it was of no real surprise that potash companies rebounded nicely in the second of half of 2013 and the beginning of 2014. Now, share prices of potash firms are correcting once again which I attribute to an overall profit-taking mentality in the marketplace. However, long-term investors can still find a decent bargain in Potash Corp. of Saskatchewan over the next two or three years and I have repeatedly argued that I expect shares of potash firms to climb back to pre-crisis levels (in the case of Potash Corp. this would imply a target price north of $38 per share).
It was quite clear at the time, that investors’ actions were completely driven by irrational fear and I also pointed out that a variety of industry CEOs strongly disagreed with the downward revisions of analyst target prices as a result of Uralkali’s shift in strategy.
Specifically, I wrote:
The recent market turmoil has the characteristic of indiscriminate panic selling and provides great opportunity for investors/shareholders who want to snatch up shares when they are on sale. There is more than a slight chance that the general investing public exaggerates the implications of Uralkali’s announced supply increase. This logic gains weight with reference to the above mentioned statements from K+S, Passport and Potash Corp. While basic economics dictate that increased supply will lead to lower prices, the degree to which profitability will be impacted remains unclear. In addition, potential pricing impacts are openly contested by the firms in the arena. I take the statement from K+S and Passport Potash as confirmation that inside players also disagree with the ensuing hysteric market reaction. As such, I follow Warren Buffett’s precise judgment to “be greedy when others are fearful”. There is no fundamental reason to believe the industry will go down.
As potash companies appeared to quickly bottom out after panic selling last year, I also recommended a lower-risk alternative to all-in potash firms: K+S (OTCQX:KPLUY), a German potash company with a sizable salt business that helped mitigate concentration risk and which has become my largest position in the fertilizer sector.
Fast forward one year and share prices of potash companies, including K+S have solidly recovered — as expected. The share price of Potash Corp., for example, actually reached $38 in June and indeed recovered all of its losses sustained during the sector meltdown. A great lesson in contrarian investing it was.
Chart situation After marking a 52-week High at $38.58 in June, shares of Potash Corp. have consolidated back to the $35 region where they now offer another interesting investment opportunity for long-term minded investors.
Fundamentals remain intact Little has changed with respect to my outlook for Potash Corp. and I am reaffirming my positive stance on the company due to solidly intact fundamentals:
- Land for agricultural use remains limited.
- The world population is growing.
- Emerging markets require higher crop yields to feed a fast-growing local population.
These fundamental long-term drivers of Potash Corp.’s business are unlikely to change any time soon. In fact, the company raised its guidance on global potash demand in China and North America for 2014 as part of its second quarter earnings release in July
(Source: Potash Corp. Second Quarter Earnings Presentation)
Conclusion Potash Corp. remains an excellent long-term bet on rising fertilizer demand driven by population growth and increasing pressure on the food supply chain. I think an investment in Potash Corp. is particularly suitable for long-term investors who want to buy an industry leader at a time when pricing uncertainty still exists in the potash market.
Potash Corp. is a textbook contrarian investment example that I believe has further potential to run. If earnings and cash flow continue to improve, which I expect over the medium-term, higher share prices and new 52-week Highs are only a question of time. Bullish thesis reiterated: Long.
Editor’s Note: This article discusses one or more securities that do not trade on a major exchange. Please be aware of the risks associated with these stocks.
Fire at PotashCorp Cory mine
No one hurt after blaze on the third floor of a building at mine
Reported by Trelle Kolojay
First Posted: Sep 3, 2014 6:23am | Last Updated: Sep 3, 2014 7:12am
A fire Tuesday night at the PotashCorp Cory mine southwest of Saskatoon had Saskatoon fire trucks rushing to the scene.
The Saskatoon Fire Department received a 911 call from the mine just before 10 p.m. Tuesday night.
When they arrived, PotashCorp fire crews were already throwing water on the third floor blaze, but the Saskatoon aerial truck came in handy to get above the fire and put out spot fires on the roof.
The Saskatoon Fire Department said the fire started above the scrubber room which is part of the potash drying process. Heat and stream from drying potash in that room is expelled through a large exhaust stack.
The fire was out after about 40 minutes.
No one was hurt and damage estimates are not in yet.