The agricultural chemical sector experienced significant buying interest during Monday's trading. The positive sentiment came as Potash Corp. of Saskatchewan Inc. (POT) was upgraded by Citi Investment Research.
Mosaic Co. (MOS) shares were among the biggest winners in the sector, climbing nearly 6%. Other significant gainers were shares of Agrium Inc. (AGU), CF Industries Holdings Inc. (CF) and Potash Corp., with each advancing about 3%.
Around 1:05 pm Eastern Time, Mosaic stock was up $5.71 to $103.23 a share, while Agrium shares were up $2.69 to $81.10 and Potash Corp. stock was up $3.61 to $173.42.
Meanwhile, Monsanto Co. (MON) and Syngenta AG (SYT) shares were also on the upside.
On Monday, Citi analyst Brian Yu added Potash Corp. stock to his "Top Picks Live" list while also maintaining his "buy" rating and $265 price target on the stock.
The analyst said that after the release of data showing a fall in North American potash inventories, a tighter supply of fertilizer should equate to higher prices.
Yu stated that shares of Potash Corp. have suffered amid worries of global economic growth along with materials and energy stocks. However, he noted that fertilizer prices are climbing and grain production isn't cyclical like industrial metals.
Last week, Monsanto said Tuesday that it expects gross profit in the corn seeds and traits business to grow by approximately 25%. The company expects corn gross profit to grow another 25%-30% in fiscal year 2009 due to the value being delivered to farmers through high-yielding hybrids. The gross profit expectation reflects an assumption of 90 million planted acres in the key U.S. corn market for 2009.
Monsanto expects to extend its eight-straight years of corn share gains as farmers continue to switch to higher yielding seeds. Monsanto recently increased its 2009 share expectation for its national seed brand, DEKALB, to 2 or more points, up from its previous range of 1-2 share points.
Also last week, Agrium entered into an agreement with MISR Oil Processing Company, S.A.E., or MOPCO, of Egypt, under which MOPCO would acquire Agrium's EAgrium project through a share swap in which EAgrium will become a wholly owned subsidiary of MOPCO.
As per the deal, Agrium would own a 26% stake in the combined entity, which includes the recently completed 675,000 tonne urea MOPCO facility, which is expected to commence commercial production by the start of the fourth quarter of 2008.
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