24/7 Wall St.

If you thought European stock news from companies doesn’t matter, this morning is proof against that notion.  A German company called K+S warned of weak potash demand and announced price cuts and a drop in sales expectations.  It is calling Q2 demand very weak ahead of the fall fertilization.  This news has not yet been issued by US and Canadian fertilizer and potash players, but shares of Mosaic Co. (NYSE: MOS), Potash Corp. of Saskatchewan, Inc. (NYSE: POT), Monsanto Co. (NYSE: MON), Agrium Inc. (NYSE: AGU), CF Industries Holdings, Inc. (NYSE: CF), and Intrepid Potash, Inc. (NYSE: IPI) are getting hammered.  Even the agriculture ETF  such as the Market Vectors Agribusiness ETF (NYSE: MOO) is getting hit along with Syngenta AG (NYSE: SYT).

K+S has cut its targets for all of 2009 down to 4.0 to 4.5 million tonnes.  That figure was expected to be about 6 million not that long ago.  The company also noted severe price weakness and unsustainability for large quantity pricing that was being seen earlier on.  Imagine what that does to dash the hopes of a fertilizer recovery in the U.S. and Canada if we start seeing 25% to 33% of the forecasts suddenly cut.  Most analysts are already not expecting a massive price recovery in the sector as is.

The Market Vectors Agribusiness ETF (MOO) is down 2% in early trading and Syngenta AG (SYT) is down 2% at $46.81.  Monsanto Co. (MON) is down 1% at $80.75.  This would have been worse except it is more diversified. Potash Corp. of Saskatchewan, Inc. (POT) is down almost 8% at $98.81 and Mosaic Co. (MOS) is down almost 7.5% at $47.41 in early trading.  Agrium Inc. (AGU) is down 5.5% at $43.71 and CF Industries Holdings, Inc. (CF) is down 4% at $75.50 in early trading.

If this trend is as wide reaching as the fears could lead to, you can kiss your potash sector goodbye for a while.

Jon C. Ogg