Matt, thank you - some very interesting observations here. Presumably one can apply the same logic to China, Africa (where SXX have been active signing off-take contracts, subject to PP etc) and plenty of other parts of the world that suffer droughts on a regular basis. All good for the medium and long term share price, and something the banks should have at the at the forefront of their minds when considering funding. If I were the CFO at SXX I'd be camped out at the Chinese policy banks as this type of investment is the very reason they exist.
What a very interesting angle that is, and logical if you think about it. In the financial world people who are in hard times allays seem to trigger a business opportunity somewhere, and in this respect it was a reaction I had not considered before.. Looks like the good times are a coming…ATB
Thanks for that Matt! Very interesting...Shylock/Troops - I would expect SP to rise immediately to about 15/16p or even 20p after successful PP and then a gradual climb until financing is confirmed - then through 50 to about 80p, but what do I or any fule kno..it's why we are called speculators! I'm getting some more in when my pension gets paid tho'...!
Droughts, while not so good for farmers, are good for fertilizer prices. Because as Himmel puts it, “the farmers who aren’t suffering from the drought are economically incentivized to use more fertilizer. It tends to increase the price of the fertilizer.” Muriate of potash (MOP) prices tend to go higher when droughts affect crops like corn. Meanwhile, when fruits and vegetable crops experience droughts, it’s sulfate of potash (SOP) that sees the prices rise. Himmel did note, however, that SOP prices are at all time highs of around $750 per metric tonne; a $300 premium above MOP prices, which are at just $450 per mt. What has supported SOP prices, Himmel explained is not only the fact that SOP is a premium fertilizer. SOP is actually in shortage and has been for the last two years. That should be a key consideration for investors looking at the potash market, especially in light of this year’s drought in California. On the whole, a drought in the southwest and western United States can be a cause for concern, particularly if you enjoy fruits and vegetables. As Bloomberg noted, California alone provides half of all fruits, vegetables and nuts consumed in the United States, yet water providers at both state and federal levels have cut supplies to agricultural areas, forcing farmers to leave thousands of acres of land unplanted. The state has experienced record low rainfall for the past three years, leaving 82 percent of the state under extreme drought conditions – and leaving farmers with a water bill ten times higher than it was before supply cuts. To be sure, farmers will be looking for any measures that might help them through the drought, and fertilizer is, of course, one of them. The 2014 drought is severe, but unfortunately, it is not an isolated occurrence. Droughts happen all the time, and the idea that investors could profit from the situation is nothing new either. Last June, the Motely Fool put out an article noting the importance of potassium, potash and phosphate for resource investors, while Forbes covered the case for investing in fertilizer back in 2012. Certainly, investors with a stake in the potash space will want to keep an eye on drought conditions as well as the stockpiles of key fertilizer ingredients. With agricultural states more often facing these dry times, fertilizer demand in the United States alone can only grow.
Evening Shylock. Good analysis and well thought out prediction..........apart from the RI bit, IMO! Rights? Us lot? U R 'avin a L1/2 M8. :-) I recon that $500m odd will come from a strategic partner who will get their chunk by the usual dilutive placing. If at 30p that will take the total issue with other dilutions to ~3.1bn (getting like REM territory). I'm a bit more conservative with the spiking to 100p on full financing. My est: Mcap to 50% of the sum of phase1 NPV + 1/2 phase2 NPV is ~65p. Over to Mr France and the Committee. Weekend's here. GLA. GK.
RE : addendum
Your right , troopermerlin , all buys and all at full ask it seems , it does seem staggering that mm's wouldn't raise at least a tiny bit !!! Don't understand it at all , they do better if they sell at a higher price no ? And there are people buying !!? Strong resistance at 11.5 , or what !
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