Charles Neivert, for instance, turned from bear to bull on the fertilizer producers around about the end of June. Good timing, needless to say. He saw the improving fundamentals in the farm belt, and advised his firms' traders and clients to buy up. "Basically it was a very significant shift in the momentum on these stocks; the news flow started to turn more positive," he says of his shift.
Still, Neivert has some longer-term concerns. In a research note analyzing Potash's earnings last week, Neivert again raised those red flags once again. Although he agrees with many pundits that the autumn planting season in North America will be a strong one when it comes to fertilizer demand, given the strength in crop prices here, he believes that by the time next spring rolls around, demand for crop nutrients could be weaker than some expect.
Additionally, potash (both the product itself and the eponymous Saskatchewan corporation) could be hurt more than phosphate or nitrogen products and producers (like CF Industries, for example) simply because of capacity issues: potash volumes are on the rise, which could lead to oversupply.
Another agriculture stock specialist, the trader and research analyst Chris Damas, is more bullish on the fertilizer group -- with the exception of Mosaic (MOS - Get Report), which faces its own set of difficulties in Florida, where it mines most of its phosphate. Based on pollution concerns, a Florida judge recently ruled that Mosaic can't expand its Fort Meade mine in the central part of the state, pending further study. Because the present mine is tapped out of phosphate, Mosaic must find alternate sources.Damas especially likes CF Industries, which has yet to report is latest quarterly results. As for Agrium, the company surpassed analysts' expectations on both the bottom and top lines. Per share earnings of $2.90, which excludes 30-cents worth of one-time gains, easily beat the consensus target of $2.77, according to Thomson Reuters. Likewise, revenue of $4.37 billion compares to the forecast of $4.17 billion. The beat appear to have been driven by Agrium's retail business, which accounts for some three quarters of its revenue. The Calgary, Alberta, company runs a chain of huge farm-supply depots around North America. Together, the retail segment has grown by 32% even from the corresponding period of pre-bust 2008, which was an all-time record moment for the agricultural sector as a whole.