The Mosaic Co. (NYSE: MOS) is down by about 3.6% at $53.03 on close to 4 million shares, against a 52-week range of $44.86 to $89.24.  The larger rival and former takeover target of Potash Corp. of Saskatchewan Inc. (NYSE: POT) is down by 3.8% at $42.12 versus a 52-week range of $38.42 to $63.97.

CF Industries Holdings Inc. (NYSE: CF) is down by 3.7% at $161.00 and its 52-week trading range is $115.34 to $192.70.

Intrepid Potash Inc. (NYSE: IPI) is down the least with shares down “only 2.6%” on the day at $24.07 and against a 52-week range of $20.75 to $40.22.

Using an exchange traded fund can emphasize just how bad things are and the Market Vectors Agribusiness ETF (NYSE: MOO) is down 1.2% at $49.39 versus a 52-week range of $39.86 to $57.93.

With so much corn used in food for humans, ethanol, and animal feedstocks, corn unfortunately is a key driver for the fertilizer and potash markets. 

Sadly, things brings up the question… Just how much do the potash and fertilizer markets depend upon the taxpayer-funded farm subsidies in America?  Probably more than any of us care to think.

JON C. OGG

Acme Packet, Inc. (NASDAQ: APKT) Cut to Neutral at Wedbush; estimates and targets lowered after revenue warnings from Morgan Keegan and Wells Fargo.
Affymetrix Inc. (NASDAQ: AFFX) Raised to Neutral from Underweight at JPMorgan.
AK Steel Holding Corporation (NYSE: AKS) Raised to Neutral at Bank of America Merrill Lynch.
Apple Inc. (NASDAQ: AAPL) Reiterated Outperform with $500 target and raised estimates at Credit Suisse.
Crown Castle International Corp. (NYSE: CCI) Started as Buy at Stifel Nicolaus.
EMC Corporation (NYSE: EMC) added to the U.S. Focus List at Credit Suisse.
General Dynamics Corporation (NYSE: GD) Raised to Overweight at JPMorgan.
Green Mountain Coffee Roasters Inc. (NASDAQ: GMCR) Reiterated Buy with $94 target at Canaccord Genuity.
Lockheed Martin Corporation (NYSE: LMT) Cut to Underperform by RBC Capital Markets.
Mosaic Co. (NYSE: MOS) Cut to Neutral at Citigroup.
NetApp Inc. (NASDAQ: NTAP) Cut to Neutral from Outperform at Credit Suisse.
Potash Corp. of Saskatchewan, Inc. (NYSE: POT) Started as Underperform at National Bank.
Steel Dynamics Inc. (NASDAQ: STLD) Raised to Buy at Bank of America Merrill Lynch.
TiVo Inc. (NASDAQ: TIVO) Raised to Overweight at Evercore Partners.

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JON C. OGG

According to the company’s CEO,

Isolated phosphate market spot prices have become disconnected with the underlying agricultural fundamentals. As dealers and distributors focus on the macroeconomic uncertainty and delay purchases for the North American Spring Season, near term supply of phosphate barges on the Mississippi River has exceeded near-term demand. The current spot prices in this market do not reflect our outlook for the business, nor do we think they are sustainable.

The company continues to believe that believe that demand for phosphates and potash will be strong in 2012, following this period of “near-term cautious sentiment.”

The projected cuts total about 10% of Mosaic’s quarterly production.

Paul Ausick

The 17.9 million shares are worth close to $900 million, ad that is an exponentially larger stake that what Temasek owned at the end of the September quarter.  If Temasek wants an influential stake in one of the leading phosphate and potash suppliers, what does it mean for the valuations in Potash Corp. of Saskatchewan, Inc. (NYSE: POT) and Intrepid Potash, Inc. (NYSE: IPI)?

Temasek’s stake is now larger than Wellington’s 6.4% stake, but is still well under the Cargill Trusts that has been unloading shares.  We now know who likely absorbed more of the shares sales from those trusts.

Temasek’s effort to invest in resources and energy may be growing, particularly now that some of these shares have “gone on sale.”  Mosaic shares are down almost 45% from the 52-week high.  With a fund size of somewhere close to $150 billion, Temasek can afford to do deals of this size.  Effectively, this (in theory) gives the Singapore population some protection against rising potash and fertilizer prices in the future.  With a 0.4% dividend yield, the stake will not exactly be a high dividend for the sovereign wealth fund.

There is a tug of war taking place right now over the future of potash and other fertilizer prices in 2012 and beyond.  A slowing global growth story from India and China is meeting what had been solid pricing power from producers.  This news would be better received had it not been for Tuesday’s large rally followed by a post-Oracle concern about other areas deemed a bit more protected from a pending recession.

With Mosaic shares trading under 10-times expected forward earnings, even considering the international growth market risks, is it fair to ask if Mosaic is a value stock?

JON C. OGG

The unofficial closing bells put the DJIA up more than 25 points to 11,796.23 (0.22%), the NASDAQ fell more than 15 points (-0.60%) to 2,572.50, and the S&P 500 fell 0.04% or about 0.48 points to 1,215.65.

There were several analyst upgrades and downgrades today, including Hewlett-Packard Co. (NYSE: HPQ), which was raised to ‘buy’ at Sterne Agee. Other action included The Coca-Cola Co. (NYSE: KO) started as ‘buy’ at Jefferies; Lennar Corp. (NYSE: LEN) cut to ‘neutral’ at Citigroup; Pepsico Inc. (NYSE: PEP) started as ‘hold’ at Jefferies; and Cree Inc. (NASDAQ: CREE) started as ‘buy’ at Goldman Sachs.

Here are today’s big post-earnings news reactions with prices during the last half-hour of trading: Ann Inc. (NYSE: ANN) is down more than -6.6%, at $23.63; Cost Plus Inc. (NASDAQ: CPWM) is up more than 3%, at $7.88; H.J. Heinz Co. (NYSE: HNZ) is down more than -3%, at $51.06; America’s Car Mart, Inc. (NASDAQ: CRMT) is up more than 10%, at $35.84; Salesforce.com (NYSE: CRM) is down more than -10.5%, at $112.67; and The Bon-Ton Stores, Inc. (NASDAQ: BONT) is down more than -8%, at $2.84, after posting a new 52-week low of $2.70 earlier today.

Several other standouts from today are as follows…

CF Industries Holdings, Inc. (NYSE: CF) is up about 2.9%, at $152.46. The company’s stock got pounded yesterday on news that the corn prices fell, but are recovering a bit today as investors remember that falling corn prices don’t necessarily mean that less corn will be planted and, thus, less fertilizer will be used.

The Mosaic Co. (NYSE: MOS) is up more than 4.6%, at $53.12. Another fertilizer maker that got slammed yesterday and is recovering somewhat today.

Fisher Communications Inc. (NASDAQ: FSCI) is up about 12.7%, at $29.20. The broadcast TV station operator has sold its Fisher Plaza building in Seattle for $160 million in cash to Hines Global REIT, Inc.

Clearwire Corp. (NASDAQ: CLWR) is down nearly -21%, at $1.47. The company is reported to be considering skipping a $237 million debt payment due in two weeks, raising fears that the wireless broadband provider could end up in bankruptcy.

Meritor, Inc. (NYSE: MTOR) is down about -9.7%, at $5.12, after posting a new 52-week low of $5.11 earlier in the day. Shares lost -17% earlier this week when the company lowered its guidance for 2012 and the stock was downgraded today from ‘buy’ to ‘hold’ at KeyBanc.

Marvell Technology Group Ltd. (NASDAQ: MRVL) is up more than ;6.8%, at $14.70. The chip maker reported so-so earnings yesterday, but strong positive statements by analysts at FBR and Citi have turned broken eggs into an omelette.

Stay tuned for Monday. Atlanta Federal Reserve Bank president Dennis Lockhart is speaking in Brazil. Here’s a list of other noteworthy events (all times Eastern):

• 8:30 a.m. – Chicago Federal Reserve Bank national activity index
• 10:00 a.m. – National Association of Retailers existing home sales report

Have a great weekend.

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Paul Ausick

Mosaic has a market value of roughly $24.4 billion, so another 5% of the potential float will now not be hitting the market.  Certainly not a traditional buyback, but shares are responding positively.

The trusts were selling 18 million shares of Mosaic upon its entrance into the S&P 500 Index in September and that effectively killed the gains that would have been seen from normal index buying. It was also during a time when the market was sliding lower. The sale earlier in the year was roughly $6 billion.

On last look, Mosaic shares are up 4.5% at $57.02 in active pre-market trading and the 52-week range is $44.86 to $89.24.

JON C. OGG

Fertilizer maker Potash Corp. of Saskatchewan, Inc. (NYSE: POT) reported third-quarter earnings this morning that were more than double earnings for the same period a year ago. But in this case, a hit may be as good as a miss. Analysts expected EPS of $0.94 on revenue of $2.17 billion. Potash Corp. delivered diluted EPS of $0.94 on revenue of $2.32 billion. Gross margin rose from 35% in the same period last year to 49% this year. The company also noted that its EPS outlook for the full fiscal year is $3.40-$3.80. The consensus estimate is $3.75. In other words, no upside surprises from Potash Corp.

At the other end of the food chain, food processor Bunge Ltd. (NYSE: BG) reported third-quarter adjusted EPS of $0.86 on revenue of $15.62 billion. The consensus estimates called for EPS of $1.62 on revenue of $14.32. Only Bunge’s fertilizer operations posted a quarterly gain over the same period last year, and that a scant $9 million. The company’s outlook did not include any specific forecasts for EPS or revenue, but Bunge does expect to fall short of its original estimate of sugar refining and sees continuing pressure on oilseed prices. The company expects its fertilizer business to improve, but that is historically its smallest revenue producer.

Ag company Archer Daniels Midland Co. (NYSE: ADM) reports earnings next Tuesday, and the consensus estimates are looking for EPS of $0.67 on $18.93 billion in revenue. The company posted EPS of $1.01 in the second quarter, and the estimate has fallen by 13% over the past three months.

Fertilizer makers Monsanto Co. (NYSE: MON) and Mosaic Co. (NYSE: MOS) recently reported earnings for the first quarter of their 2012 fiscal years, and the results were not particularly thrilling. Monsanto posted an EPS loss of -$0.22, though that was better than an expected loss of -$0.27. For the current quarter Monsanto is expected to post EPS of $0.12. Mosaic posted EPS of $1.17 in its quarter ended in August and analysts are expecting EPS of $1.39 for the current quarter. In its quarter ending in August 2010, Mosaic posted EPS of $1.85.

All the fertilizer makers expect to see a price hike for their products both in the current quarter and next year. The reasoning is that the global economic slowdown notwithstanding, people want and need to eat. Rising economic conditions in the developing world, especially in China and India, support food prices and because it is cheaper to increase yields by applying fertilizer than it is to bring new land into food production, the companies foresee continuing growth.

Potash Corp. noted in its earnings release that shipments of potash to China and India are set for the fourth quarter and the company expects volumes to increase and prices to rise beginning in the first quarter of 2012. Potash Corp. said that contract potash prices to India will rise by $60/metric ton beginning in January.

While the general trend of the news is positive, volatility in the food and fertilizer markets seems to have been discounted in the outlooks for the coming year. The other big problem is the unreliability of information from China regarding stockpiles and demand. One trader has said that 80% of the information out of China is misleading, and that finding the 10%-20% that is accurate and useful is more difficult than it should be. That means that counting on China for growth can be risky, at best.

Shares in Potash Corp. are trading up about 2.4% in the pre-market this morning, at $50.70, in a 52-week range of $39.54-$63.97. Bunge stock is trading up less than 1%, at $60.00, in a 52-week range of $54.03-$76.12. The Market Vectors Agribusiness ETF (NYSE: MOO) is up about 1.67%, at $50.55, in a 52-week range of $39.86-$57.93.

Paul Ausick

Copper prices peaked in February, about a month behind copper miners Freeport-McMoran Copper & Gold Co. (NYSE: FCX), Southern Copper Corp. (NYSE: SCCO) and a little earlier than BHP Billiton plc (NYSE: BHP) and Rio Tinto plc (NYSE: RIO). The decline in share prices was gradual from about April through July, but beginning in August shares turned more sharply down, as did the price of copper itself.

Corn prices hit a peak in June, and are still about 20% higher than they were in October 2010. None of the big ag stocks are near that high except fertilizer maker Monsanto Co. (NYSE: MON), up 31% in the past 12 months. Archer Daniels Midland Co. (NYSE: ADM) shares are off -23% in the past year, Bunge Ltd. shares are off about -3%, Potash Corp. of Saskatchewan shares are down about -11%, and Mosaic Co. is off nearly -18%. Ethanol producers Valero Energy Corp. (NYSE: VLO) is up about 2%, while Pacific Ethanol Inc. (NASDAQ: PEIX) is barely breathing, off -96%.

The decline in the copper price began when orders from China began to cool off as a result of the country’s efforts to slow down its GDP growth. By some reports the country has an over-supply of housing that tops 65 million units. If the number is even half that, demand for copper in China could fall dramatically. And it’s possible to argue that a housing glut in China drove the copper price to new heights because construction in the US and other developed countries has stalled.

But the current global economic malaise is not entirely attributable to China. Eurozone sovereign debt and questions about the zone’s banks have pushed markets down hard and could be just as responsible for the falling price of copper as softer demand from China. In other words, copper could be following, not leading, a macroeconomic decline.

The falling price of corn can be attributed to better crop forecasts and the recent ‘discovery’ of more than 200 million bushels in US stocks has put even more pressure on corn prices. Unlike copper, though, corn prices get some demand help from a large alternative market. If corn is a leading indicator, then the effect of ethanol production, which consumes about 40% of the US corn crop, distorts its influence.

Ethanol production is highly profitable at the current price of around $6/bushel. Corn prices would have to rise to unprecedented heights over $9.50/bushel before demand from ethanol makers would start to decline. Even without the $0.45/gallon federal subsidy, corn prices would need to top $8/bushel before they would pinch the ethanol makers.

Something similar to the ethanol prop to corn prices doesn’t exist for copper. Some 70% of copper demand comes from construction and electrical/electronic industries. Of the remaining 30%, about 12% comes from the transportation industry and 9% comes from makers of industrial machinery. None of those sectors is large enough to prop up copper prices as ethanol props up corn prices.

The iPath Dow Jones-UBS Copper Subindex Total Return ETF (NYSE: JJC) is down more than -1.5% in the first half hour of trading this morning at $39.46, barely above its 52-week low of $39.08. The 52-week high is $61.69. The First Trust ISE Global Copper Index Fund (NASDAQ: CU) is up about 2.25%, at $26.37, in a 52-week range of $23.60-$46.85.

Agricultural ETFs are up slightly this morning. The Teucrium Corn Fund (NYSE: CORN) is up about 0.5%, at $40.09, in a 52-week range of $31.37-$50.69. The PowerShares DB Agriculture Fund (NYSE: DBA) is up about 0.6%, at $29.90, in a 52-week range of $26.60-$35.58. The Market Vectors Agribusiness ETF (NYSE: MOO) is up about 0.9%, at $42.30, in a 52-week range of $39.86-$57.93.

Paul Ausick

Mosaic gives the first indication of overall strength among the other fertilizer makers. Potash Corp. of Saskatchewan, Inc. (NYSE: POT) is expected to post EPS of $0.93 for the quarter ending this month, more than double its EPS of $0.44 in the same period a year ago. Agrium Inc. (NYSE: AGU) is expected to show EPS of $1.85 in same period, up from EPS of $0.37 a year ago. Analysts expect CF Industries Holdings, Inc. (NYSE: CF) to post EPS of $4.56 in the September quarter, up from $1.10 a year ago. Only Monsanto Co. (NYSE: MON) is expected to post an EPS loss of -$0.27 for the current quarter, largely due to weakness in sales and margins of its Roundup herbicide.

The demand for fertilizer, particularly potash, reflects an effort among the world’s farmers to increase yields as crop prices remain relatively high. Expectations for crop plantings in the 2012-2013 crop year indicate that global wheat acreage could rise to about 563 million acres in 2012, up 4% from last year, while corn plantings could rise to 94.3 million acres world-wide.

But even if acres planted don’t increase much, farmers everywhere are looking to increase yields. China, for example, plants nearly as many acres of corn as the US, but yields are just half as large. If the country’s farmers could increase their yields, the amount of corn China must import to feed its people would fall.  The country has also restricted consumption of corn for industrial purposes like sweeteners and ethanol.

In what could be a boost to seed makers like Monsanto and Syngenta AG (NYSE: SYT), China is also considering allowing the import of genetically modified seed even as it tests a domestically developed strain of corn seed. The country does allow import of genetically modified strains of corn for consumption.

Farmers chasing yield improvements are expected to be the driving force behind fertilizer makers’ growth. Mosaic received an average of $446/metric ton of potash in its first quarter, up from $331 in the same period a year ago. The company guided potash prices for the second quarter at $440-$465/metric ton. For its phosphate products, Mosaic received $576/metric ton in the first quarter, compared with $431 in the same period a year ago. Phosphate prices for the second quarter were guided at $600-$625/metric ton.

While farm prices remain high, fertilizer makers can raise prices and still maintain volume. Mosaic guided shipment levels for potash at 1.7-2.1 million metric tons for the second quarter, compared with shipments of 1.8 million metric tons in the first quarter. Shipments of phosphates are expected to rise to 3.1-3.5 million metric tons in the second quarter, compared with 3.2 million metric tons shipped in the first quarter.

The fertilizer business is strong now and looks to remain that way for the coming year.  Market Vectors Agribusiness ETF (NYSE: MOO) is also up by more than 1% at $45.01 and its 52-week range is $43.00 to $57.93.

Paul Ausick

Standard & Poor’s will add Mosaic’s common stock to the S&P 500 index after the close of trading on September 23, 2011. The S&P 500 requires that companies have a public float of more than 50% of the company and it was the prior share sale of 115 million shares that accomplished this.

J.P. Morgan Securities and UBS Securities are the joint book-runners for the offering and the trust will also allow for up to 2.7 million more shares as the underwriter’s overallotment option.

The nature of expanding the float is often considered dilutive, although these shares already exist.  Technically it is not dilutive, but it does effectively create more public shares in the float that the public and that institutions have to absorb.

Mosaic shares are indicated down 3.1% at $61.60 this morning on the news and the 52-week trading range is $55.70 to $89.24.

JON C. OGG