Word came from Saskatchewan this week that PotashCorp (POT) is planning more production shutdowns for the winter of 2012-13. The company announced expectations that earnings will continue to fall in the near future as much needed contracts from India and China have not been filled.
This leaves PotashCorp stuck holding the bag as inventories swelled in anticipation of the contracts from India and China. Eight week shutdowns had already been announced for November and December at two POT production complexes. PotashCorp added shutdowns at the Allan and the New Brunswick locations this week, each for a period of eight weeks, beginning December 16 at Allan.
PotashCorp is one of the three Canadian fertilizer giants that comprise Canpotex and partner Mosaic has also announced cutbacks in potash production. Third Canpotex member Agrium focuses more on nitrogen based fertilizer and is less affected by the falloff in potash demand.
POT is doing its best to make the most of a bad situation here as much needed revenue didn't come through this fall. The company still expects to hear from its customers in India and China this spring and the pressure that exerts on the inventory could drive pricing action at that time.
As of now (10am CT)...
News of the shutdowns has POT shares falling off this week. POT dove to the downside on Wednesday when the news broke and the downward trend continues into today. Fundamentals suggest POT will continue to struggle until these inventory and production issues are resolved.
POT 0.44 lower so far today to $37.15.
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