Shares in Israel Chemicals Ltd. (TASE: ICL) rose in heavy trading on the TASE this morning. Rival potash producer and shareholder, Potash Corporation of Saskatchewan Inc. (NYSE; TSX: POT) published a strong financial report for the second quarter of 2010 on Thursday, Israel Chemicals' share rose 1.3% yesterday, and continued the momentum today.
Israel Chemicals' share price rose 2.1% on a turnover of NIS 102 million in morning trading today to NIS 48.50, giving a market cap of NIS 60.17 billion. The share was up around 3.5% in early trading. Potash Corporation owns 13.9% of the company, and Israel Corporation (TASE: ILCO) owns 52.4%.
In an update on Israel Chemicals today, Meitav Investment House analyst Gilad Alper pointed to speculation about the strengthening of the potash cartel as well as the hot summer weather, which are driving prices for grains upwards, maintaining the boost in Israel Chemicals' share price.
Alper said that Potash Corporation's its conference call mainly come from two factors: first, the company sees developing pressure on potash producers in terms of their ability to meet demand; and second, Potash Corporation CEO William Doyle expects that corn prices will rise to $5 per bushel.
Potash Corporation's potash production projection contradicts the updated forecast of International Fertilizer Industry Association (IFA). It is not clear why investors should prefer one forecast over the other.
Alper says that the latest forecast by the US Department of Agriculture, made in mid-July, predicts a price of $3.45-4.05 per bushel of corn. It may be that Doyle's corn prediction is, for now at least, on more solid ground.
Potash Corporation's share price rose 7% on Thursday and Friday. Grain prices are also rising. September corn futures rose 7.2% to $3.92, fanned by the heat wave in Eastern Europe, which has seared the wheat harvest. The US Department of Agriculture's next forecast, on August 12, could be critical for continued momentum in gain prices.
Published by Globes [online], Israel business news - www.globes-online.com - on August 2, 2010
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