Is Your Favorite Stock About to Fizzle? – Potash Corp./Saskatchewan (USA) (POT), Mosaic Co (MOS), Agrium Inc. (USA) (AGU)

An added agony

Let me also quickly touch upon the situation in phosphates, the other important nutrient each of these companies, except Intrepid, deals in. The situation isn’t too good here as key customer India is yet to place orders for the year. Phosphate prices seem to be stabilizing though after witnessing some pressure last year. Average MAP January-February prices stood at around $565 per tonne compared to $551 same period last year. This bodes well for every phosphate company. That includes CF Industries Holdings, Inc. (NYSE:CF), which gets a little under 20% revenue from phosphates. The rest comes from nitrogen.

CF is banking on the U.S. spring in near months while expecting India and Latin America to push up sales during the latter half. But if India doesn’t order soon, these companies might have to cut down production as inventory has consistently risen since October 2012 and is well above the five-year average. Comparatively, demand has softened over the period. Prices might find it hard to sustain unless demand picks up.

The Foolish bottom line

Those who still remember the days of 2008 when these companies were reaping in huge profits as potash prices skyrocketed to nearly $900 per ton might as well wipe off those memories. It might be too short-sighted to say that Potash Corp./Saskatchewan (USA) (NYSE:POT) may never see those prices again, but it is likely to take years.

Nevertheless, 2013 will be a recovery year for potash companies if spring planting turns out as good as last year’s. Higher sales volumes coupled with better prices should be the probable scene that plays out. And if positive news from India hits headlines, you’ll know what’s behind the good-looking numbers from fertilizer companies this year. Stay tuned as I keep you updated on news and developments about each of these companies.

The article Is Your Favorite Stock About to Fizzle? originally appeared on Fool.com and is written by Neha Chamaria.

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