Table of contents
Investment Summary 4
Initiating Coverage on Four North American Fertilizer Stocks 5
Fertilizer Sector Performance 7
Valuation 9
North American Fertilizer Multiples 10
International Fertilizer Multiples 10
Fertilizer Demand Drivers 11
Limitations to Fertilizer Growth 14
Fertilizer Value Drivers 16
Pricing Drivers and Supply-Side Discipline 16
Understanding the Cost Drivers 17
Capital Growth Investments and Acquisitions 19
Credit Suisse Global Supply/Demand Outlook 22
Demand Summary 22
Supply Summary 24
Credit Suisse Price Forecasts 25
Risks to Our Forecasts 26
Nitrogen 28
Recent Trends 28
Near and Midterm Outlook 29
Long-Term Outlook 29
Credit Suisse Price Forecasts 30
Phosphate 32
Recent Trends 32
Near and Midterm Outlook 33
Long-Term Outlook 34
Credit Suisse Price Forecasts 34
Potash 36
Recent Trends 36
Near and Midterm Outlook 37
Long-Term Outlook: Potash Prices Higher for Longer 38
Credit Suisse Price Forecasts 41
Agrium Inc. (AGU) 42
Investment Thesis 43
Valuation 50
Agrium Business Overview 54
Retail 54
Wholesale 56
Advanced Technologies 61
Accounting Matters 63
Legal Matters 65
AGU Management 66
Intrepid Potash Inc. (IPI) 72
Investment Summary 74
Valuation 78
IPI Business Overview 81
Potash Facilities 83
Accounting and Legal Matters 85
Management 86
Mosaic Co (MOS) 90
Shares Fairly Valued for the Business Mix 90
Investment Summary 91
Valuation 95
MOS Business Overview 99
Phosphates 100
Potash 103
Offshore Segment 106
Accounting and Legal Matters 108
Management 109
Potash Corporation of Saskatchewan (POT) 113
Downside Risks to Potash Volumes and Pricing Keeps Us on the Sidelines for Now 113
Investment Thesis 114
Valuation 118
POT’s Business Overview 121
Potash 122
Phosphate 125
Nitrogen 126
Accounting Matters 128
Legal Matters 129
POT Management 130
Appendix 1: Agricultural Demand Drivers 134
Increasing Demand for Food 134
Increasing Demand for Fuel 136
Income Growth and Increased Demand for Feed 138
Appendix 2: The Crop Nutrients 139
Nitrogen (N) 139
Phosphate (P) 140
Potash (K) 142
Appendix 3: Prices Bottoming—Volumes Returning 144
Demand Is the Starting Point 144
Grain Prices 144
What Does This Mean for Global Fertilizer Demand? 146
Near-Term Demand Growth Above Trend 146
Demand Estimates 147
Pricing Outlook 149
Downside Risk—Limited for Nitrogen and Phosphorus 149
Potash Still Looking Expensive 149
Upside Potential? 150
Nitrogen—Bounce in Fourth Quarter of 2009, Margins Set to Improve 2010-11 151
Supply/Demand Balance Looks Favorable in 2011 151
Changing Dynamics in Natural Gas Markets 153
Implications from Changing Gas Dynamics 154
DAP—Picking Up but Keep an Eye on Supply 155
Supply/Demand Balance Improving through 2011 155
Potash—Still Falling; Pick Up in 2011 157
Supply/Demand Balance Improving through 2011 158