SOURCE: Five Star Equities
NEW YORK, NY--(Marketwire - Jul 20, 2012) - Shares of fertilizer companies have been on the upswing recently as the recent heat wave and drought hitting the Midwest has seen corn prices sky rocket. "We think North American fertilizer producers are poised to benefit from higher grain prices and the growing likelihood that the U.S. will need to plant another large corn and soybean crop in 2013," wrote Citi Investment Research analyst P.J. Juvekar. Five Star Equities examines the outlook for companies in the Agricultural Chemicals Industry and provides equity research on Agrium Inc. (NYSE: AGU) (TSX: AGU) and Potash Corp./Saskatchewan (NYSE: POT) (TSX: POT).
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The current drought plaguing farmers across the U.S. is the worst in 25 years Agriculture Secretary Tom Vilsack said Wednesday. "This will result in significant increases in prices for corn. We've seen a 38 percent increase since June 1 in the price of a bushel of corn -- it's now $7.88. A bushel of beans has risen 24 percent," Vilsack said.
According to Vilsack the government has the number of territories designated as drought disaster zones standing at 1,297 in 29 states.
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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, in their recent release.
PotashCorp is the world's largest fertilizer company by capacity, producing the three primary crop nutrients -- potash, phosphate and nitrogen. As the world's leading potash producer, the company is responsible for about 20 percent of global capacity. The company is scheduled to release their second quarter 2012 earnings on Thursday, July 26 at 6 am ET.
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