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Perky potash prices have prompted more investor interest in the moribund sector this year, but Nutrien Ltd. is not poised to benefit as much as its international peers, because it has ceded its status as the best pure-play choice for fertilizer investors.
The news over the weekend that an Indian potash-supply contract came in US$50 a tonne higher than before and roughly US$10 a tonne above expectations, caused a pop in Nutrien shares this week. They’ve risen just more than 2.9 per cent through Thursday’s trading.
Mosaic Co. Inc. however, has jumped 5.7 per cent this week on the news. That underscores that Nutrien, formed by the merger of Potash Corp. of Saskatchewan Inc. and Agrium Inc., no longer offers the best upside when prices are rising, as they are today.
In a way, that was by design. One of the rationales for the merger was to use Agrium’s agricultural-retail business, which sells supplies to farmers across North America, as a natural hedge against slow times in the fertilizer business.
“The retail exposure for Agrium was a shield for them as things were going south,” analyst Jonas Oxgaard of Sanford C. Bernstein & Co. said in an interview. “Whereas for Nutrien, it’s a little bit of an anchor because if you want to have exposure to the fertilizers, that are all rising, the retail actually reduces your torque there.”
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