Clal Finance Batucha Ltd. today published a new review of the potash market. Analyst Aviran Revivo noted that shares of US potash producers have fallen 12-20%. Mosaic Company (NYSE:MOS) fell 17% yesterday after publishing its financial report for the first fiscal quarter. Although its net profit soared, it missed forecasts.
Israel Chemicals Ltd. (TASE: ICL) fell 9.4% by midday today, climbing off its 17% drop to NIS 44.40 at the opening. Clal Finance gives the share a "Market perform" recommendation with a target price of $21 (NIS 72).
Revivo cites several possible reasons for the plunge in stock prices. They include Tuesday's publication of the US Department of Agriculture commodities inventory report for the quarter beginning in September, which showed an unexpected increase in corn and soy beans, which has resulted in a 5% drop in corn prices. Revivo says that investors are worried by weak global demand for corn. At the same time, US soy bean inventory rose to 205 million bushels from 145 million bushels, which has sent prices to a year-long low of $10.53 per bushel.
Secretary of Agriculture Edward Schafer said, "Farmers are likely to face cash flow problems because of financing difficulties."
Revivo said, "Under the current circumstances, it's hard to see the potash market avoiding weak demand and low prices."
Published by Globes [online], Israel business news - www.globes-online.com - on October 2, 2008
© Copyright of Globes Publisher Itonut (1983) Ltd. 2008