Monday, December 6, 2010

Agrium (NYSE:AGU) Should Benefit from Higher Phosphate, Urea Prices

With urea and phosphate markets looking tight in 2011, UBS (NYSE:UBS) raised their price estimates on the two, and see Agrium (NYSE:AGU) benefiting from those expected changes.

UBS said, "Last week China confirmed a much expected increase in the time period during which it will levy high export taxes on urea and phosphate. This is part of a longer term trend to protect strategic resources, and UBS does not expect large fertilizer exports from China moving forward. UBS believes the global phosphate and urea markets are looking very tight into 2011 as rising costs could drive China to be a net importer of urea by 2012 and as phosphate markets see tightness despite the addition of new Saudi capacity...UBS has increased its 2010/2011/2012 prices for urea from $280/300/300 per mt to $310/340/345 per mt...We revised our 2011/2012 EPS estimates from $7.10/6.58 to $7.46/8.03 to reflect the price increases."

Agrium closed Friday at $84.31, up by $0.93, or 1.12 percent. UBS maintains a "Buy" rating on them, and raised their price target from $96 to $100.

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