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Potash: POT:TSE - Anyone buying on the dip?

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Deal Guru
Dec 11, 2008
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konfusion666 wrote: Surprised no one recognized that you were right on this, Mark...
How does that stuff affect POTASH prices? If a deal falls through, is there a reason why the commodity price falls and not increases?
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Apr 30, 2012
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emanon86 wrote: I can't decide what to do with this one....double up on my holdings of POT and add another 100 shares to bring down my average share price to $34.60. Stay put, or cut my losses and sell. hmmmm....

Is this just an over reaction and the stock will bounce back up 5%-10% in the coming days/weeks?
Wow, active trader?
As for me, I am in for the (very) long-term.
virtuman1980 wrote: Haha...pretty interesting fellow indeed...but it was this persistence/stubbornness of his that got him the positive result in the end
datako wrote: ... Although, I'm a little surprised you went against what everyone advised ,op. You've got balls and absolutely crazy at the same time to do this.
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Jun 27, 2007
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emanon86 wrote: I can't decide what to do with this one....double up on my holdings of POT and add another 100 shares to bring down my average share price to $34.60. Stay put, or cut my losses and sell. hmmmm....

Is this just an over reaction and the stock will bounce back up 5%-10% in the coming days/weeks?
It'll surely bounce, down 25% just today and I would expect some sort of half-back move up. But look at the chart, it's a mess. $35 is max it can go, this is solid prior support, it'll be fantastic short
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Anyone noticed the day's low for this is at opening? How do you catch this?
I tried to put an order at $29.00 but failed, it didn't reach that low.
You can't simply buy at market price at opening and expect to get it at $29.78 day's low, right?
virtuman1980 wrote: Haha...pretty interesting fellow indeed...but it was this persistence/stubbornness of his that got him the positive result in the end
datako wrote: ... Although, I'm a little surprised you went against what everyone advised ,op. You've got balls and absolutely crazy at the same time to do this.
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Jun 27, 2007
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dlhunter wrote: That's right, buy more=))
Selling 29 puts in POT expiring Aug2. Very cool pop in volatility!!!

PS> This is not a long-term play. Using weeklies and selling premium. POT will go lower at some point.
I'm OUT, BOT back my short puts for 80c profit. Thank you POT!
Tomorrow this thing will gap down lower to take out weak hands before reversing higher. Watch out :) I'll be selling puts again...
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Feb 15, 2008
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konfusion666 wrote: Surprised no one recognized that you were right on this, Mark...
Its only fun to write long diatribes on how "wrong" Mark77 is.
How does that stuff affect POTASH prices? If a deal falls through, is there a reason why the commodity price falls and not increases?
Well the allegation has been that the potash producers have acted through cartels. Conspiracies between national producers to drive up the price by allocating export supply to the usual suspects like India and China.

This may actually end up being a good thing for the industry if it drives BHP Billiton to shut down their uneconomic project at Jansen, Saskatchewan. At $300/ton, the payoff period is likely to be very long. While PotashCorp, while they obviously would suffer, won't die at $300/ton.

As usual, companies that don't have mines already built or at least in the construction phases, probably are dead. ie: WPX.
TodayHello wrote: ...The Banks are smarter than you - they have floors full of people whose job it is to read Mark77 posts...
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Sep 24, 2012
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Its a complete black swan event. I cant say anyone could have reasonably saw this coming except insiders and the board @ Uralkali. Little to do with actual fundamentals about the company or the general trend of potash prices leading up to this sharp sell off.

Basically OAO Uralkali broke away from a sales agreement via their joint venture with Belarus due to a political fallout between the parties (he said she said on breaking agreements), and the CEO of OAO Uralkali essentially ripped the deal apart and threatening to flood the market to drive down potash prices. The CEO was very specific with price targets for potash and mentioning their ease of accesss to the chinese market due to rail transport advantages etc.

Essentially its a political fallout with one side single handedly taking a strongarm measure to drive down potash prices to squeeze out the competition; but one with global effect on the agri space.
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Ecourn wrote: Its a complete black swan event. I cant say anyone could have reasonably saw this coming except insiders and the board
If you go back, I pretty clearly saw the overcapacity coming.

After all, with so much idled capacity, how long can individual players continue to starve?

At least this way, with the prices going down, they might be able to stop the insane amounts of new capacity coming to the industry (on top of what already exists!!!). Which might keep the price more viable over the long term.

Potash doesn't really have a 'reserve' problem (potash reserves are nearly infinite in Saskatchewan), so its entirely an issue of extractive capacity and the cost to build/maintain that capacity. Unlike, say, gold mining, where reserves are relatively limited and ore grades declining.
TodayHello wrote: ...The Banks are smarter than you - they have floors full of people whose job it is to read Mark77 posts...
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Sep 24, 2012
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Mark77 wrote: If you go back, I pretty clearly saw the overcapacity coming.

After all, with so much idled capacity, how long can individual players continue to starve?

At least this way, with the prices going down, they might be able to stop the insane amounts of new capacity coming to the industry (on top of what already exists!!!). Which might keep the price more viable over the long term.

Potash doesn't really have a 'reserve' problem (potash reserves are nearly infinite in Saskatchewan), so its entirely an issue of extractive capacity and the cost to build/maintain that capacity. Unlike, say, gold mining, where reserves are relatively limited and ore grades declining.
This selloff in the agri space today is not directly related to over supply of potash as you were aluding to. This space operates like an oligopoly anyway. They will control supply like they always have to control prices.

Today's sell off has more of a direct link to one of those parties in the oligopoly going rogue, and deciding to screw the oligopoly over by threatening to flood the world market with cheap potash.

The system has been in place for a long time. Nobody is worried about a supply shortage or over capacity of potash. Potash supply has been engineered the entire time like a cartel anyway, no different to OPEC with oil, DeBeer with diamonds, and I hope also PM miners with PMs too in the future. This selloff today is almost entirely because one party decided to go rogue by using strongarm tactics to squeeze out competition due to political fallout.
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Ecourn wrote: This selloff in the agri space today is not directly related to over supply of potash as you were aluding to.
Yes it is. That's exactly the reason for the selloff.

Today's sell off has more of a direct link to one of those parties in the oligopoly going rogue, and deciding to screw the oligopoly over by threatening to flood the world market with cheap potash.
Because of overcapacity. Which exists today, and will exist even worse when/if the new mines come on-stream.

Oligolopys, or whatever you want to call them can only exist if there's a shortage of capacity. Otherwise, there's no pricing power.
The system has been in place for a long time. Nobody is worried about a supply shortage or over capacity of potash. Potash supply has been engineered the entire time like a cartel anyway, no different to OPEC with oil, DeBeer with diamonds, and I hope also PM miners with PMs too in the future. This selloff today is almost entirely because one party decided to go rogue by using strongarm tactics to squeeze out competition.
I disagree with the whole idea that those other commodities have been deliberately manipulated. OPEC spent the better part of 2 decades receiving very poor prices for their product. Something which certainly wasn't in their interest. Same with the PM miners, most of them went bankrupt despite your alleged 'cartels'.
TodayHello wrote: ...The Banks are smarter than you - they have floors full of people whose job it is to read Mark77 posts...
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Sep 24, 2012
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Mark77 wrote: Yes it is. That's exactly the reason for the selloff.




Because of overcapacity. Which exists today, and will exist even worse when/if the new mines come on-stream.

Oligolopys, or whatever you want to call them can only exist if there's a shortage of capacity. Otherwise, there's no pricing power.



I disagree with the whole idea that those other commodities have been deliberately manipulated. OPEC spent the better part of 2 decades receiving very poor prices for their product. Something which certainly wasn't in their interest. Same with the PM miners, most of them went bankrupt despite your alleged 'cartels'.
Overcapcity of potash is not a problem. Potash has always been plentiful and easy to mine, and at best cyclical in demand. The potash cartel operates just fine. Just like how there are plenty of natural diamonds, plenty of oil and plenty of gold/silver. The potash market has been operating under an oligopoly and they had a good system running. Supply side issues were never the issue here.

One has pricing power of any commodity in demand with the power to control supply.

Today's sell off is entirely related to the threat from the CEO of Uralkali to actively try to drive down potash prices. He mentioned a specific price target of under $300 and above $200. He mentioned he intends to _RAMP_UP_ production of potash to make this happen. He mentioned he had strategic advantages being easy rail access to china. This was a ***** -for-tat against a former soviet block nation and the usual heavy handedness of the response.

I never mentioned there are cartels in PM space. I mentioned this is the ideal goal, hence they are not in existence. Anyone who thinks the market is not manipulated is naive. Recent reports regarding GS with Al and JPM with the energy space should be a good reminder. OPEC and DeBeers is obvious.
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Ecourn wrote: Overcapcity of potash is not a problem. Potash has always been plentiful and easy to mine, and at best cyclical in demand. The potash cartel operates just fine.
Does it? Why did the prices spike so badly in 2004-2005 that there was a hoarde of other miners looking to get into the industry? I'd say that the "cartel" actually failed when they couldn't keep the prices under control for that brief period, causing, among others, BHP and K+S to get into the industry.

Just like how there are plenty of natural diamonds, plenty of oil and plenty of gold/silver. The potash market has been operating under an oligopoly and they had a good system running. Supply side issues were never the issue here.
Not a very good system if you're a consumer of the product though.
Today's sell off is entirely related to the threat from the CEO of Uralkali to actively try to drive down potash prices. He mentioned a specific price target of under $300 and above $200. He mentioned he intends to _RAMP_UP_ production of potash to make this happen. He mentioned he had strategic advantages being easy rail access to china. This was a ***** -for-tat against a former soviet block nation and the usual heavy handedness of the response.
Of course, because there's overcapacity in the industry, going back to my original point. Whenever there's overcapacity, the ability of a cartel to maintain prices is extremely limited as the customers simply won't pay them (in an effort to drive the cartel out of business).
Anyone who thinks the market is not manipulated is naive. Recent reports regarding GS with Al and JPM with the energy space should be a good reminder. OPEC and DeBeers is obvious.
Except it hasn't been really working with OPEC (why was there $10-$20/barrel oil in the 80s, and 90s), and the energy stuff is just minor with GS/JPM. I don't believe the market has been 'manipulated' at all, and I like to think of myself as being a pretty smart guy.
TodayHello wrote: ...The Banks are smarter than you - they have floors full of people whose job it is to read Mark77 posts...
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Mark77 wrote: Does it? Why did the prices spike so badly in 2004-2005 that there was a hoarde of other miners looking to get into the industry? I'd say that the "cartel" actually failed when they couldn't keep the prices under control for that brief period, causing, among others, BHP and K+S to get into the industry.




Not a very good system if you're a consumer of the product though.



Of course, because there's overcapacity in the industry, going back to my original point. Whenever there's overcapacity, the ability of a cartel to maintain prices is extremely limited as the customers simply won't pay them (in an effort to drive the cartel out of business).



Except it hasn't been really working with OPEC (why was there $10-$20/barrel oil in the 80s, and 90s), and the energy stuff is just minor with GS/JPM. I don't believe the market has been 'manipulated' at all, and I like to think of myself as being a pretty smart guy.
This is more a story relating to the failure of keeping the cartel in check. Of course when any one member decides to break off from the group and take unilateral actions to benefit themselves, they break the system thats in place and works for the group. No different to selfish survivors stealing all the food ration for himself in an attempt to edge others out, rather than spread ration evenly and prolong life as a group.

Almost all markets are 'manipulated' or artificial. This is pretty much a given. Trading or investing with this understanding of reality is better than being naive about it. The world is not perfect and fair. Those who are naive to this reality often fathom why some 'low quality' stocks overperform while supposedly 'high quality' stocks underperform.
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Aug 14, 2010
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The stock is currently up over 9% from todays low....and still climbing. I should of doubled down on my position @ $30.00 this morning. Ah well.
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Sep 24, 2012
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Could have gone south too so you never know. The MMs priced down all the NYSE listed agri stocks since early a.m. in the PM due to the news. Almost all of them began down at least 15% across the board except CF. Almost everyone recovered a bit today.
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Dec 11, 2008
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Yeah you could have seen it as a buying opp. For me, I'm just not going to add anymore, Im sure there are other opp to invest elsewhere.
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Aug 14, 2010
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Good article from the financial post about what's going on.

http://business.financialpost.com/2013/ ... li-prices/

Everything is just speculation/threats/bluffs right now. "The losses moderated in the afternoon amid speculation that Uralkali may pull back on its plan" - lol.

"On the other hand, many experts suggested that Uralkali is bluffing to force Belaruskali into a settlement that would keep the oligopoly structure intact."
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Mar 19, 2010
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Mark77 wrote: Yes it is. That's exactly the reason for the selloff.




Because of overcapacity. Which exists today, and will exist even worse when/if the new mines come on-stream.

Oligolopys, or whatever you want to call them can only exist if there's a shortage of capacity. Otherwise, there's no pricing power.



I disagree with the whole idea that those other commodities have been deliberately manipulated. OPEC spent the better part of 2 decades receiving very poor prices for their product. Something which certainly wasn't in their interest. Same with the PM miners, most of them went bankrupt despite your alleged 'cartels'.
Not for much longer, Mark. Oil will be next on the hit list.

President Obama just gave out another hint today. The Keystone Pipeline will never get approved. Why? because U.S. does not need Canada's Oil. They produce enough on their own. Stay tuned...
“Benign neglect, bordering on sloth, remains the hallmark of our investment process." —Warren Buffett
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angelok wrote: Not for much longer, Mark. Oil will be next on the hit list.
Except there's no surplus of capacity in oil.
President Obama just gave out another hint today. The Keystone Pipeline will never get approved. Why? because U.S. does not need Canada's Oil. They produce enough on their own. Stay tuned...
Yeah right.... US is still a very large oil importer from offshore production. They are nowhere near closing the gap. The Keystone pipeline would also be needed as part of the USA's domestic infrastructure if North Dakota does end up producing enough to displace Canadian production. Either way..
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Feb 11, 2013
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I sold POT at 37.14, I think at about a 30 cent loss per share. Not sweating it at all considering it went down to $28-29 when markets opened today. I decided to sell because their oversupply is going to take quite a bit of effort to manage before they can get prices back up to where they want to be. There's also a Russian company that has decided to do business with Belarus which apparently won't include doing much business with POT Corp as much. My memory is a little fuzzy as it's been an extremely long day. I think there is this tacit belief that since it's a type of commodity it's bound to bounce back up, and while that might be true in the long run once they fix their oversupply, I'm looking for more short-term gains than waiting up to a year to start making profit on this again. POT didn't wow with their earnings, they acknowledged their competitors are beating them, now this oversupply issue, it sounds like they have a lot on their hands to deal with to make investors happy, and I just don't see myself cracking a smile at this stock anytime soon.

I also pulled out of POT as I felt like I need to learn more about their operations as I wasn't entirely clear on it. Yes, there are different types of fertilizers but they are used depending on what crops are planted. What crops are planted depends on crop price, what the biggest profit margin is at the time. Obviously crops that require more nitrogen for example would use a n-based fertilizer. My point in saying this is to not fall for the generalist idea that "okay it's fertilizer, we'll always need that, let's buy it!" as there's a little more to it than that. Just a word of caution, as I admit I don't know everything about POT and this whole fertilizer industry.
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