20 July 2012 14:40 [Source: ICIS news]
HOUSTON (ICIS)--North American fertilizer companies such as Agrium have seen their shares on an upswing recently as the current heat wave and drought hitting the US midwest has sent corn prices higher, an investment analyst said on Friday.
"We think North American fertilizer producers are poised to benefit from higher grain prices and the growing likelihood that the US will need to plant another large corn and soybean crop in 2013," wrote Citi Investment Research analyst PJ Juvekar.
The current drought plaguing farmers across the US is the worst in 25 years, US Agriculture Secretary Tom Vilsack said on Wednesday.
"This will result in significant increases in prices for corn. We've seen a 38% increase since June 1 in the price of a bushel of corn -- it's now $7.88. A bushel of beans has risen 24%," Vilsack said.
According to Vilsack, the government has the number of territories designated as drought disaster zones standing at 1,297 in 29 states.
Shares of Agrium surged on Wednesday after the company increased their estimates for the second quarter. Second quarter earnings are now expected to be in the range of $5.40 to $5.50 diluted earnings per share.
"The increase in expected earnings is due to excellent results across our entire crop input business, resulting from the continuation of robust demand through June," said Mike Wilson, Agrium president and CEO.
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