Mosaic Sets Positive Ag-Potash-Fertilizer Tone for 2011 (MOS, VALE, POT, IPI, MOO)

The Mosaic Co. (NYSE: MOS) just set the tone for a positive reception for the potash and fertilizer market stocks. The company was the first real earnings report after the start of 2011.  Mosaic’s second-quarter earnings looked much higher when you consider a $570 million gain on a stake sale and its revenues were higher as well, which may not wreck that 20%+ gain over the last year.

The stake sale was to Vale S.A. (NYSE: VALE) earlier this year.  Tonight’s news sets a solid tone for the merger that failed to merge in Potash Corp. of Saskatchewan (NYSE: POT), which we noted a positive research call in this morning.  Shares of Intrepid Potash, Inc. (NYSE: IPI) are indicated higher as well and we’ll be keeping an eye on Market Vectors Agribusiness ETF (NYSE: MOO) along with this one.

Mosaic reported a $1.03 billion profit of $2.29 EPS after a $1.28 gain; and revenues rose more than 50% to $2.67 billion.  Thomson Reuters had estimates of $0.91 EPS on $2.42 billion in revenue.  Gross margin rose to almost 29% from 18% a year ago.

The company gave a strong global phosphate and potash demand picture and the CEO called conditions excellent with prospects for even higher demand with profitable farm economics and with farming products commanding record highs in many instances.

Phosphate sales were up almost 50% and average selling prices were up about 60%, while potash sales rose almost 70% despite average selling prices being 11% lower.

Mosaic shares were up about 3% at $77.30 in the after-hours session after a 1.6% drop to $75.00 in regular trading.  Keep in mind that the 52-week range is $35.68 to 78.18.

The stake sale was to Vale S.A. (NYSE: VALE) closed up 1.9% at $35.82 and shares are not really active in the after-hours.

Elsewhere, Potash Corp. of Saskatchewan (NYSE: POT) closed up 0.5% at $156.65 and is up 1.75% at $159.41 in the after hours against a 52-week range of $83.85 to $160.00.  Intrepid Potash, Inc. (NYSE: IPI) closed down 2.35% at $35.25 and shares are up 2% at $36.00 in the after-hours against a 52-week range of $19.08 to $37.78.

In the world of ETFs, the Market Vectors Agribusiness ETF (NYSE: MOO) closed down 0.7% at $53.54 but shares are indicated up 1% at $54.07 in the after-hours.  Keep in mind that this ETF is right at year highs considering its 52-week trading range is $35.56 to $54.40.

The only real caveat after reading through the report was to watch out that these are all on or close to year-highs.  These are far south of the 2008 peaks, but finding anyone who won’t admit that the 2008 prices were a bubble is getting harder and harder.

JON C. OGG