Potash Investing News

By Daniella D’Alimonte - Exclusive to Potash Investing News

Brokerages UBS and Scotia Capital have both recently cut their price targets on fertilizer giants Potash Corp. of Saskatchewan (TSX: POT) and Agrium Inc. (TSX: AGU). These cuts are based on the reduced price tags on potash, diammonium phosphate, and urea fertilizers.

USB cut its price on Potash Corp. to US$152 from US$260, while Scotia lowered its price to US$127 from US$200. Both dropped their price on Agrium to US$68 from US$114 and US$96, respectively.

Potash Corp. stocks have risen slightly since the $95 per share low on Monday and are now up over US$85. Agrium shares fell to just over US$36 on Tuesday, fluctuated throughout the week, and have returned to just over US$36 per share going into the weekend.

As far as junior exploration companies go, it is a difficult time to be working off borrowed money. According to a recent Canadian Mining Journal report, due to the state of the American economy, there is a decrease in potential funding for those seeking it, as well as fears of a slow-down from foreign buyers. This could lead to the slowdown and decrease of drilling programs.

Crosshair (TSX: CXX) for example, the Vancouver-based uranium exploration company, has decided not to continue with its winter drilling program. This is “due to the climate of uncertainty created by the current state of the financial markets,” according to the company.

Bankruptcies and mergers could also be in the future if the situation doesn’t improve, suggested Jack Maris, president of Geodex Minerals (TSX: GXM) in a report by The Northern Miner.

Potash One Inc. (TSX: KCL) announced this week that despite the difficulties and uncertainties facing the current market, the company remains committed to developing its Legacy project. The fundamentals for a new potash mine in Saskatchewan continue to be strong, said Paul Matysek, CEO of the company.

Potash One says its solution mining approach is more cost and time efficient, involves lower technical risks, and the company has the funds to meet its goals for 2008 and 2009.

A recent press release stated that, in addition to developing its technical team, environmental studies are “on track” and resource drilling is “in progress”, as the company previously announced.

After taking a US$0.10 hit on Monday, Potash One shares continue to go down to the lowest they has been all year. They have fallen to under a dollar going into the weekend.

K+S, a German-based fertilizer supplier, has noted changes in the buying patterns of farmers as a reflection of current market concerns. “We have seen more cautious order patterns in the last few weeks,” said Christian Herrmann, the company’s head of investor relations, in a Reuters report.

Grain and soft commodity prices are falling amid the fearful sell-offs of these previously desirable shares. Farmers who had held on with the high demands for biofuel and food are now starting to slip as their crops slowly lose value.

However, according to K+S, grain inventories are historically low in relation to demand. This could be a positive for future demand, said Herrmann.