How to play the ag game Posted: January 14, 2008, 1:24 PM by Jonathan Ratner Market Call, Industry
The market seems to be in love with everything ag these days. Ag being agriculture – a trend that is only growing on expectations for a global grain shortage driven by surging economies in China and India, as well as the push for grain-consuming alternative fuels.
Take Potash Corp. of Saskatchewan Inc. The world’s biggest maker of fertilizer has seen its shares climb 29% in the past three months and 62% in the past six.
The United States Department of Agriculture predicts that global grain inventories will remain near 35 year-plus lows in 2008, while it also raised its price deck for grain, according to Wellington West Robert Winslow.
“We argue chronic grain shortages will support robust grain prices, buoying farm income, grain volumes, and thus fertilizer and Ag equipment demand,” he told clients in a note.
Among the ag-related equities the analyst expects will continue to benefit from the up-cycle are Ag Growth Income Fund, Cervus LP, Hemisphere GPS Inc., PhosCan Chemical Corp. and Viterra. However, Athasbasca Potash Inc., Hanfeng Evergreen Inc. Alliance Green Traders Income Fund are also expected to benefit.
