Dahlamn Rose, a boutique investment research firm has upgraded its view of three fertilizer companies because of the current Corn Belt drought. The firm upgraded the sector to “attractive” from “cautious,” according to Reuters, because the firm sees farmers spending more on crop nutrients for the 2013 harvest.
“This call is not simply a weather call,” Reuters quotes Dahlman Rose as saying. “Scenario of a crop reduced by weather issues is likely to result in even greater share outperformance,” the firm wrote to its clients. The firm indicated it believes share prices would not trend lower even if a large corn crop is eventually harvested, which would result in pressure on corn prices and fertilizer demand. The firm sees demand for fall-applied fertilizer re-asserting itself by late summer, lifting fertilizer prices once again.
“The probability of hitting the current USDA estimate of 166 bu. per acre has been reduced while the probability of lower yields has increased. We have adjusted our weighted average yield to 160 bu. per acre from 164 bu. for acre,” Reuters quotes Dahlman Rose as saying.
The companies upgraded by the firm are Mosaic., Potash Corp. and Agrium Inc.
