Fertilizer Stocks Wither as Corn Breaks Support Level, Soleil Expects 'Heavy' Crops

Fertilizer stocks are lower today, as corn prices have dropped to $7.11 per bushel, breaking below near-term support of $7.20 per bushel.

Additionally, a note from Soleil Securities today has the analyst looking at a "heavy" corn crop for 2010 - 2011. Specifically, the analyst said that:

• 2010-11 yield corn under-estimated. Based on recent anecdotal evidence from a number of farm belt contacts, both test weights and corn crop quality is running surprisingly high from the 2010-11 crop;
  
  
• Trend reversal. This means that corn carryover stocks could be actually higher than reflected in the latest WASDE report, that corn consumption estimates in future WASDE's could be lower than expected, increasing corn carryover estimates going forward.
  
  
• Priced for perfection. These data should be negative for corn prices and for ag equities. The near-month corn price of around $7.26/bu reached its mid-June 2008 peak last week before backing off. Many ag equities, especially fertilizer equities, trade in lock-step with the corn price, and could trade off going into the March grain stocks report.

Bloomberg cites catalysts looking ahead as:

1. Credit Suisse Global Ag Productivity two-day conf. in London today;
   
2. USDA WASDE on Thurs. @ 8:30am; and
   
3. Prospective Plantings Report March 31.

Ag stocks down on the day include:

• Potash Corp. (NYSE: POT) down 2.3%;
  
  
• Mosaic Co. (NYSE: MOS) down 2.0%;
  
  
• CF Industries Holdings, Inc. (NYSE: CF) off about 1.3%; and
  
  
• Agrium Inc. (NYSE: AGU) down