This column originally appeared on Real Money Pro at 1:55 p.m. EDT on April 25.
NEW YORK (TheStreet) -- Over the last few days we've heard from a number of agricultural-related plays. It's something I've kept my eyes and ears on ever since the drought we encountered last summer that sent the prices of certain commodities -- corn, wheat and soybeans -- substantially higher.
Sweetening the pot along the way, the U.S. Department of Agriculture shared that supplies of these commodities were challenged exiting 2012.
Worse yet, the National Oceanic and Atmospheric Administration called for a warm, dry spring, which it saw as leading to persistent drought conditions. At the time NOAS issued the view just several weeks ago, 51% of the continental U.S. was in moderate to exceptional drought, with key areas the central and western regions especially so.With that as a backdrop, strong demand for seed and fertilizer was more than likely, and that's what we've heard this week from DuPont (DD), Dow Chemical (DOW) and Potash (POT). To be fair, the first confirming signs were when Monsanto (MON) reported better-than-expected results a few weeks back. As I mentioned yesterday, DuPont's better-than-expected March results were largely due to strong sales at its agricultural business. This morning, both Dow and Potash reported better-than-expected March quarter results -- Dow due to strong demand among U.S. farmers for its seeds and pesticides, while Potash experienced a 78% increase year over year in sales volume due to improved global potash demand and record first-quarter nitrogen contributions. Adding fuel to the fertilizer fire, Potash's earnings release shared that "(f)irst-quarter domestic shipments from North American potash producers rose 56 percent above those of the same period last year and dealers' need to secure additional product remained high as the quarter closed." One potential upside in the coming quarters was the removal of industry capacity owing to the fertilizer plant explosion in Texas last week. Demand drivers look good, and that bodes well not only for the businesses and shares of those companies mentioned above, but also for Agrium (AGU), CF Industries (CF), Mosaic (MOS) and Terra Nitrogen (TNH).
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