Citi slashes ferts on urea prices, share sell-off

26 September 2008 18:35  [Source: ICIS news]

TORONTO (ICIS news)--Sharply lower urea prices and declining stock markets prompted Citigroup on Friday to downgrade the shares of North American fertilizer producers Agrium, Terra Industries and CF Industries and to deeply cut its target prices for the shares.

 

The share prices of the three producers plunged sharply in early Friday afternoon trading in New York as markets were hit by more US financial and banking troubles.

 

Agrium was down 13% at $65.31, Terra was down 22% to $29.44, and CF lost 20%, dropping to $88.23.

 

Citigroup downgraded the three stocks to "hold", from "buy" as the shares would struggle until nitrogen prices stabilised, it said.

 

It also cut its share price targets for Agrium by $33 to $86, for Terra by $22 to $44, and for CF by $87 to $128.

 

“The risk is that urea prices continue to decline as buyers delay their purchases and draw down inventories deeper than usual in anticipation of even lower prices,” the analysts said.

 

“The timing and extent of this feedback loop is nearly impossible to predict or quantify, but could take weeks or months to play out.

 

“In the current equity market environment where equities seem to sell-off on the slightest negative, regardless of valuation, we would like to see stabilisation in nitrogen prices first before becoming constructive on these names again.”

 

($1 = €0.68)

 

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By: Stefan Baumgarten
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