NA fertilizer company shares have peaked -- analyst

15 June 2012 17:20  [Source: ICIS news]

HOUSTON (ICIS)--The financial performance of North American fertilizer companies have peaked and will weaken further later in 2012, an investment analyst said on Friday.

Lower fertilizer prices resulting from an expected large US corn crop has prompted New York-based investment research firm Dahlman Rose and Company to decrease its earnings estimates for fertilizer companies.

"It is our belief that 2011-2012 (crop year 1 September 2011-31 August 2012) represented a high point for the agricultural market with all of the hallmarks of a peaking situation for nutrients present," said Dahlman Rose analyst Charles Neivert.

"Grain prices were very strong, grain inventories were falling, and farmers were responding with acreage increases where available, creating a very positive environment for agricultural products as well as stock performance," Neivert said.

US farmers this spring planted an estimated 75.9m acres (30.7m hectares) of corn, the largest crop since 1937.

However, Neivert said, "the prices of the nutrients and, most importantly, the prices of shares began to stall even as incremental news flow remained positive and earnings estimates were being revised upward."

Dahlman Rose is maintaining a cautious rating on the fertilizer sector pending the results of an expected strong corn harvest and its effects on nutrient prices.

Dahlman Rose currently has sell ratings on CF Industries, Intrepid Potash and CVR Partners. The firm has hold ratings on Agrium, Mosaic and Rentech Nitrogen.

By: Frank Zaworski
+1 713 525 2653

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