Mosaic Company (MOS)

Canpotex, the offshore marketing company owned by three Saskatchewan potash producing companies – Agrium, Mosaic and Potash Corp. – has concluded significant volumes for shipment to Southeast Asian spot markets in Q4/08 at US$1,000/tonne for standard grade potash (US$1,025/tonne for granular grade) on a delivered basis. The new pricing, which is 20% higher, will apply to all new sales for shipment through the balance of 2008 in Latin America and Southeast Asia.

In related news, the Belarussian Potash Company (BPC) said it sold 40,000 tonnes of potash to Sri Lanka at a record price of $1,050 per tonne.

For companies like Potash Corp., Agrium and Mosaic, Canaccord Adams Agricultural Analyst Keith Carpenter expects earnings to increase in the long run, given that potash stands to have the strongest outlook over the near, medium and long term.

Economics says: crop demand will rise in the LR, amount of land available for farming will fall. That means people will buy more fertilizer, which will boost Mosaic's stock price.

Some numbers: USA citizens consume 24+ barrels of oil per year. Chinese/Indian citizens consume less than 2 barrels per year. When China and India fully industrialize, gas prices will shoot through the roof due to demand. At the same time, people there will start demanding higher protein foods. It takes 16 pounds of grain to produce 1 pound of meat. That means more fertilizer. Higher gas prices will also mean more demand for bio-fuel. It takes 26 pounds of corn to make a gallon of ethanol. I'm not sure if I have eaten 26 pounds of corn in the past 5 years.

Price target: $81.00 within 2 years. I'm picking it up while it's oversold due to the false Vale buyout rumors.

Despite recent fluctuations across the agricultural market, the increasing world population will provide a long-term consumer base for companies such as Mosaic. As the world economic downturn slowly starts to recede, demand for fertilizer returns as emerging markets and growing world populations are in need of raw materials, especially phosphate and potash. The populations of emerging markets have increased in number by approximately 60-70% since the mid-90's; agricultural cycles also necessitate the purchase of fertilizer in coming years to meet the demand of these growing populations.

China has raised its exporting duty for Nitrogen and Urea to 130%, given the fact that China is one of the largest sources of these two item globally, the prices fo these fertilizer related items should shoot up sharpely.