. Mosaic (NYSE: MOS) just had a blow out 4 Qtr, primarily due to higher potash prices. Take that away and the 4th Qtr of last year was higher in total sales, 2.5 compared to 2.4 million tonnes this year. Last year at the start of their 2008 fiscal year they had more inventory than heading into the 2009 FY and their top line growth will be less than 6% for 2009. The only thing that can drive the PPS higher is higher potash prices. 4 Qtr prices for potash were 754 per tonnes and to start the year prices on potash will be at the top 1050 per tonnes. I don’t believe potash prices will go to much higher due to the fact that 4 more potash suppliers have just come on-line to help feed demand and if all the other are all ramping up production this could put weakness on potash prices.
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I have been long on MOS, my first buys were in the 17 dollar range and I have been I buyer all the way up but after this 4 Qtr report I sold half of my shares. I don’t believe they will hit a 52 week high any time soon and I am taking a wait and see approach.
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The real problem is with the company already being at full capacity in potash for 2008 and now going into 2009 they cannot sell any more potash than 2008. Only higher potash prices can raise PPS. What I am looking for is their new trading range and after I find it I”ll become a trader in the company again. It could have 15 to 30 point swings in the next 6-9 months and it will take at least 1-½ months to be able to play it right. One other factor is that they are spending over $1 billion to ramp up production on potash in 2009 which will hurt earning and they will not see any rewards of this till 2010.
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Last year they had a problem with their plant and shut it down for 2 weeks to fix. It is only feasible to believe it will happen in 2009 the machines are another year older. I still love MOS but I only invest heavy into companies that I believe will grow 100% a year in PPS and this is why I reduced ½ of my exposures to MOS.
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Posted buy Richie

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