Cover page of their 15 July Chemicals and Fertilizers report. GLTA



C+F Weekly - Grain Stocks Cut, Urea Prices Give Back

? Projected U.S. corn ending stocks for 2012/13 fell to 1.183 bln bushels (stock-to-use ~9%), as the USDA cut yields by 20 bu./ac. to 146 bu./ac. Baring a deterioration in demand, it will take at least two good corn crops to get inventories back to historical norms (stock-to-use ratio ~15%-20%).

? Canpotex concluded contracts for H2/12 shipments with its Japanese customers at an average price equivalent of US$550/t cfr Japan, a roll-over from H1/12. Chinese discussions for H2 contracts have started and a similar price roll-over is expected in China at $470/t fob.

? The urea price rebound stalled as latest sales out of Yuzhny were concluded at $385-$390/t fob versus highs of $436/t fob earlier in the week (Indian tender price offer was at $406/t). Similarly in the U.S. Gulf, urea prices ran up to $468/st fob Nola, but retreated to $435/st by the end of the week.

? Among the large caps, our top pick under coverage are Mosaic (MOS-SO) and Potash Corp. (POT-SO) given valuation. For our small caps and commodity chemicals under coverage, our top pick remains Canexus (CUS-SO).