Fertilizer producers surge on POTASH takeover bid. They bid 39 Billion dollars for this company and later got turned down, it was not enough.
Why would some big company want a fertilizer company?
The answer is in U.S. supply and demand food, and how much Food we can deliver.
Join me over the jump for discussion:
One hundred and thrity dollars a share, out of nowhere, demand! And here is the story! So much so, that Goldman Sachs this morning, hours before this deal was announcd, Upgraded the sector because of food demand. Their is that phrase again.
First the Population growth for the world, projected By year(IMF DATA):
- 6b
- 6.8b
- 7.5b
- 9.1b
Now, We take the fertilizer works for the food being grown:
Rice yield (bushels/acre)
US
----------------------------------------------------------120
World
--------------------------55
India
----------------------45
As you can see by the graph, our farm land yields more than twice the total consumption of the rest of the world. And we have lots of fertilizer to produce the food. Hence, tada, major growth in food sector for US.
Which is why POTASH wants to get more than 130 a share...
Could FOOD be a way out of this messy economy. My grandmother told me that in the green belt during the great depression, their was a black cloud that dried up our food. This was referred to as the dust bowl. And made the depression that much longer and deep(no food, imported at higher prices).
In todays, recession, maybe food will have an opposite effect and help us out. Also, with Russia having massive problems with Wild-Fire, the need is going to be there(hopefully at a discount rate).
I say, the food situation is welcome news, and a bit of a surprise...
Her is the article from bloomberg:
http://www.bloomberg.com/...
What say you?