Potash Corp./Saskatchewan (USA) (POT) Gets Pulverized But It’s Not as Bad as It Looks

In comparison, Uralkali has costs per ton of around $62 meaning it can withstand longer the effects of a price war. Fortunately for Agrium Inc. (USA) (NYSE:AGU) it is far more diversified than other Potash Corp./Saskatchewan (USA) (NYSE:POT) producers so its stock only dropped 5% yesterday. The potash stocks continued to fall today, though, again, Agrium’s decline was minimal.

Yet the falling prices engendered by Uralkali maxing out production and willingness to sell its output at spot may very well boost demand again. By limiting the amount of competition coming into the market, spurring demand for potash through lower prices, and allowing the strongest producers to survive, the Potash Corp./Saskatchewan (USA) (NYSE:POT) industry will be a much healthier space going forward.

That doesn’t mean Uralkali won’t patch up its differences with Belarus — it could be a negotiating ploy after all — but the upheaval caused by the announcement let investors see which of the players were swimming naked, as Warren Buffett might say, allowing them to identify the weak links that will get pulverized again during the next tumult.

The article Potash Gets Pulverized But It’s Not as Bad as It Looks originally appeared on Fool.com is written by Rich Duprey.

Fool contributor Rich Duprey has no position in any stocks mentioned. The Motley Fool owns shares of Companhia Vale Ads.

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