Potash (POT), Agrium (AGU), Mosaic (MOS) Shares Soaring on Rising Grain Prices

Shares of fertilizer companies like Potash (NYSE: POT), Agrium (NYSE:AGU) and Mosaic (NYSE: MOS) have been soaring since the early part of June, as a drought has been devastating the corn crop, and the resultant rising prices have pulled up price of soybeans and wheat with them.

The reason for the rise in share price for the fertilizer companies is that farmers will be able to pay more for inputs because of the boost in grain prices.

Yields for corn is already being downwardly adjusted in a significant manner, with about 1 percent of of the condition of the corn added daily as to being rated poor or very poor. It's dropping - as measured by percentages - a little over 1 percent a day, or about 8 percent a week nationally.

Corn prices have led the push in grain prices, soaring close to 35 percent over the last month, reaching $7.86 on a key futures contract.

Soybeans have been moving up in unison, climbing to an all-time high of $16.79 a bushel, even though they haven't had the damage the corn has endured, as they pollinate later and could be salvaged as far as to depth of losses if rains come soon enough.

The other side of this is those farmers who get a good crop could generate a lot of money this year, which is what the markets are looking at, and why the fertilizer companies have had their prices soar along with the crop prices.

The longer the drought lasts the better for the fertilizer companies, as every day that goes by some of the corn crop reaches a state of unrecoverability no matter if the rains come or not.

Shares of fertilizer companies like Potash (NYSE: POT), Agrium (NYSE:AGU) and Mosaic (NYSE: MOS) have been soaring since the early part of June, as a drought has been devastating the corn crop, and the resultant rising prices have pulled up price of soybeans and wheat with them.

The reason for the rise in share price for the fertilizer companies is that farmers will be able to pay more for inputs because of the boost in grain prices.

Yields for corn is already being downwardly adjusted in a significant manner, with about 1 percent of of the condition of the corn added daily as to being rated poor or very poor. It's dropping - as measured by percentages - a little over 1 percent a day, or about 8 percent a week nationally.

Corn prices have led the push in grain prices, soaring close to 35 percent over the last month, reaching $7.86 on a key futures contract.

Soybeans have been moving up in unison, climbing to an all-time high of $16.79 a bushel, even though they haven't had the damage the corn has endured, as they pollinate later and could be salvaged as far as to depth of losses if rains come soon enough.

The other side of this is those farmers who get a good crop could generate a lot of money this year, which is what the markets are looking at, and why the fertilizer companies have had their prices soar along with the crop prices.

The longer the drought lasts the better for the fertilizer companies, as every day that goes by some of the corn crop reaches a state of being unrecoverable no matter if the rains come or not.

One other factor is the health of corn in South America. The price dynamics of corn and fertilizers could change if there is a large crop there. Brazil has already been reputed to have sold up to 1 million tons of corn for delivery in October to December; although that has yet to be confirmed.