Potash: Should you invest in it?

Should You Invest in Agrium and PotashCorp?

One year ago the global potash market was rocked by the announcement that Russia-based Uralkali and Belarus-based Belaruskali were terminating their joint marketing agreement. The breakdown of the cartel sent shares of PotashCorp (NYSE: POT) and Mosaic (NYSE: MOS) down 23% in two days. Agrium (NYSE: AGU) fell nearly 10% over the next five trading days. Spot prices for potash fell from $400 per tonne down to about $300. The three North American companies sell potash to offshore markets through their joint ownership of Canpotex, which competes with global potash producers, including the ones from Russia and Belarus. The producers reacted by reducing costs and PotashCorp announced in December 2013 that it was cutting 18% of its workforce. In January, Uralkali’s deal to sell potash to China for $305 per tonne confirmed the new global rate and put a floor under the price. In April, both Uralkali and Canpotex sealed deals with India for $322 per tonne. PotashCorp’s stock price has slowly battled back and currently trades close to where it was before the big announcement. Mosaic still trades lower and Agrium has managed to rebound and climb higher over the course of the past 12 months. So, should investors buy PotashCorp and Agrium now?
Comment: Mosaic is based in my city - Plymouth. I have not invested in it. I have a holding in POT and am investing in AGU. Both pay nice dividends. Image source from Wiki article

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