A surprisingly high price for Indian potash pushed stocks of the fertilizer producers up in Monday’s trading.
The Belarusian Potash Co. will supply India with potash at a price of US$290 per tonne, a US$50 increase.
The company added that the price represents a $50 increase, and that the new price is “fair, represents the current situation and the current market prospects.”
BMO Nesbitt Burns Inc. analyst Joel Jackson said the price was US$20 per ton above his expectations, and about US$10 per ton above consensus. He said his 2019 earnings estimates seem 10 per cent to 15 per cent too low for The Mosaic Co., Israel Chemicals Ltd. and K+S AG and 5 per cent to 10 per cent too low for Nutrien Ltd.
That depends on what China does, he notes, with it unusual that the India contract settles before China. The Indian contract is usually about US$10 per tonne above the Chinese price, but that’s “not a given” since the China discount was US$15 to US$20 from 2012 to 2014.
Assuming China comes in at US$280 per tonne, he says, and global spot prices stay flat, his earnings estimates will rise. Mr. Jackson has “market perform” ratings on the stocks of all four major potash producers.
Nutrien shares were about about 2 per cent in midday trading, while Mosaic was up 5 per cent and Israel Chemicals was up just under 4 per cent. Nutrien, which owns the retail agricultural supply chain that was part of predecessor company Agrium Inc., is less of a pure fertilizer play than the other public companies.