Shares of Potash Corp. and other leading fertilizer makers jumped on Friday after the U.S. government estimated a smaller-than-expected U.S. corn harvest, driving up prices of the nutrient-intensive crop.
Shares of Agrium, Mosaic Co. and CF Industries also rose on the data.
Higher corn prices give farmers more money to spend on fertilizer and encourage more planting of the crop, said Edlain Rodriguez, an analyst who follows Potash Corp for Broadpoint Gleacher.
Agrium and Mosaic shares jumped nearly 6 percent, with CF stock up 8 percent and Potash trading about 2 percent higher in New York and Toronto,
The U.S. Department of Agriculture shocked the grain trade on Friday by pegging the corn crop 4 percent smaller than last month’s forecast and estimating the smallest inventories at the end of the crop year in 15 years.
“Corn is extremely tight, much tighter than expected and I think that’s what’s driving (fertilizer stocks) more than anything else,” Rodriguez said.
In early trading on the Chicago Board of Trade, corn prices hit the maximum daily increase of 30 cents a bushel, or about 6 percent.
Higher corn prices bode well for all three major crop nutrients of potash, phosphate and nitrogen, he said.
