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Canpotex’s New Methodology in 2017

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Canpotex members

PotashCorp, or Potash Corporation of Saskatchewan (POT), Agrium (AGU), and Mosaic (MOS) produce agricultural fertilizers like potash, phosphates, and nitrogen. These fertilizers are key to increasing the crop yield, and products from these companies are distributed around the globe.

A large share of the world’s potash products is distributed through Canpotex, which is a potash exporter owned by the above three companies. Each company contributes a share of their potash production to Canpotex, which is then distributed around the global markets.

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Performance so far

The new year has been positive for the above three companies, with PotashCorp rising 3.8%, Mosaic rising 2.3%, and Agrium rising 1.6% YTD (year-to-date) in 2017. However, Intrepid Potash (IPI) has fallen 2.4% YTD. Notably, in 2016, the market environment was turbulent for agricultural fertilizer companies.

Despite that, Agrium managed to beat the S&P 500 (SPY) with a return of 12.6% in 2016, as compared to the S&P 500’s 9.6%. The VanEck Vectors Agribusiness (MOO) returned 10.4% last year.

Series overview

On January 4, 2017, PotashCorp and Mosaic released a press statement indicating a change in the methodology for how the production capacity was measured by Canpotex for mine expansion. This is important for companies as they expand their production capacity for potash fertilizers.

In this series, we’ll discuss this development in details. We’ll begin with some background on Canpotex.

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