Mosaic ( NYSE: MOS ) on Friday was downgraded to Neutral from an investment rating of Buy by analysts at Citigroup because of weakness in demand for potash, which is used to make fertilizer. They recommend what’s known as a pair trade in underweighting Mosaic ( MOS ) while overweighting Corteva ( NYSE: CTVA ), a supplier of agricultural chemicals and seeds.
“The grain market has held up so far with corn and soy prices staying at elevated levels, but fertilizer prices have declined significantly, particularly for P&K [phosphorus and potassium],” P.J. Juvekar, analyst at Citigroup, said in a January 20 report. “While prices could be down due to seasonality in the winter, there appears to be some overcapacity, particularly in potash, as Mosaic ( MOS ) has curtailed its Colonsay mine.”
Citigroup revised its earnings estimates and price targets for suppliers of agricultural chemicals and fertilizer.
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Mosaic downgraded to Neutral at Citigroup on potash weakness