Goldman Sachs Reinstates Potash and Agrium At Neutral

Goldman Sachs has published a research report on Potash Corporation POT and Agrium Inc. AGU and reinstate the two companies with a Neutral rating. In the report, Goldman Sachs writes "We remain constructive on the fertilizer outlook based on several positive fundamental drivers: (1) tight global supply-demand crop balances should support prices and consequently farmer returns and nutrient demand, (2) limited near-term excess capacity in Nitrogen (N), Phosphate (P), and Potash (K) should continue to bolster fertilizer prices into the next planting season, and (3) the input cost backdrop remains relatively benign. We note two recent policy decisions from China supportive of fertilizer fundamentals. First, a more onerous export tax on N and P should limit Chinese supply to the global trade, further tightening the balance. Second, efforts to curb food price inflation may prompt government purchases of key ag commodities in order to ensure sufficient supply to the domestic market. For K, while nutrient prices have lagged the improvement in N and P, we expect accelerating momentum as the supply-demand balance tightens, with limited incremental capacity coming on line until 2012." Potash Corporation closed yesterday at $140.20 and Agrium Inc. closed at $80.33.