Makhteshim is a top pick among crop protection chemical firms.
Israel Chemicals Ltd. (TASE: ICL) is UBS's top stock pick of fertilizer companies, and Makhteshim Agan Industries Ltd. (TASE: MAIN) is a top pick among crop protection companies. The UBS report focuses on the question whether the sharp correction in commodities prices in recent months will reduce demand for fertilizers, seeds, and crop protection chemicals.
UBS notes the latest US Department of Agriculture Farm Sector Income Forecast predicts $95.7 billion in net farm income this year, 10.3% more than in 2007 and 57% above the ten-year average. Over ten years 2008 crop margins look to be the strongest yet. On a relative basis wheat looks the weakest near term and some significant switching out of this crop in the coming third quarter planting is likely. Corn and soybeans on a per hectare basis look equally robust.
UBS notes that wheat consumes 20% of global phosphate and nitrogen fertilizers. In the near term, relative wheat economics could impact demand for these nutrients. In the longer term, it expects fundamentals to remain unchanged. Potash will continue to be the most profitable both near and longer term.
Published by Globes [online], Israel business news - www.globes-online.com - on September 1, 2008
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