Agrium Sees Q3 Profit Plunging Up to 95%

CALGARY, Alberta (TheStreet) -- A day after Potash reported another difficult quarter, its agricultural cousin, Agrium(AGU Quote), warned investors that its earnings for the most recent period will likely crater by some 95%.

In a press release issued before the opening bell Friday, the distributor of agricultural products hastened to add that the severe decline would be "in line with results previously reported from industry peers for the third quarter," which somehow brings to mind that old parental admonition: If everyone else was jumping off the bridge, would you?

It's true, however, that the problems afflicting the fertilizer industry are well known. Worldwide, the recession has compelled farmers to put who knows how many millions of arable acres into fallow, with obvious results for both makers and sellers of nutrients.

And yet, despite the horrendous short-term fundamentals, some ag stocks have steadily climbed with the broader markets throughout the summer and fall -- Agrium among them. As of Thursday's close, the stock had gained nearly 42% since mid July.

Has a pullback begun? On Friday, in the immediate wake of the profit warning, Agrium shares lost more than 5% of their value. They were trading midday at $56.50, down $3.24, or 5.4%. Volume reached nearly 2 million shares; the average daily turnover in the name is 2.4 million.

Agrium, which will release full third-quarter results on Nov. 4, blamed the profit destruction on "significantly lower prices and margins for all three crop nutrients, and particularly for phosphate and potash."