POT, update

pot b oct 2012pot s oct 2012

Nothing has changed. The company reported earnings that were down by 21% and guided down again. Of course sales to and India were not up to snuff.

We continue to believe that this stock is heading (a lot) lower. From the Big chart it is clear that the Chinese (and Indians) fasted from 1996 to 2004, the stock did not budge. Then it starts to move slowly and then faster and faster in a parabolic fashion normal for bubbles. Bubbles almost always retrace entirely, in that regard our $10 target is perhaps too high.

BHP, the worlds largest miner is looking to get into this business that has , for years now been run as an oligopoly. Their Jansen  project, the world’s biggest, is progressing slowly but relentlessly. It will take another $12 bln. or so to get it done but then it will be the biggest mine on the block. The natives are worried that these foreigners might not play by the good old supply management rules. This at a time when pressure is already mounting due to oversupply.

The best times for Potash may have been when it came out of obscurity as a collection of provincial crown corporations to enter into the limelight of the agricultural theatre (07,08). Everything thereafter is downhill.

According to Profitimes this is what a “classic” bubble looks like;

bubble from Profitimes