If Monday saw Agrium (AGU) and Potash Corp. (POT) drop sharply following a cut in their outlook by analysts, they were up around 6.5 and 5.5% a day after. However, Intrepid Potash (IPI) shines brighter with a gain of 7.77% intraday.Agriculture stocks have been lashed severely since Mosaic (MOS) reported a mixed Q1 earnings on October 2. The company's worrisome production outlook did not help matters either, and Mosaic had fallen around 41% on that day. Taking the cue, Potash had slid by around 35% till yesterday. "POT" Free Stock Analysis: Buy? Sell? Hold?"IPI" Free Stock Analysis: Buy? Sell? Hold?"MOS" Free Stock Analysis: Buy? Sell? Hold?"AGU" Free Stock Analysis: Buy? Sell? Hold?Zacks Investment Research

Key Points: Urea prices fell by more than $70 in late September A strike is helping to support potash prices Some analysts are raising 2009 earnings forecasts Highlighted stocks include AGU, CF, MOS, POT and TRA

Fears that fertilizer companies could be losing pricing power sent their shares tumbling late last week.

The primary cause was a sharp drop in urea prices. A report published last Thursday on Farm Futures revealed a $70 decline in Black Sea prices over the previous 2 weeks. (Ammonia prices were weaker as well.)

Urea is a key ingredient used in fertilizer. Traders are concerned that the recent drop is an early signal of slipping demand for fertilizer. Any weakness would call into question fourth-quarter and 2009 profit forecasts for Agrium (AGU), CF Industries (CF), Mosaic (MOS), Potash of Saskatchewan (POT) and Terra Industries (TRA).

It is possible that some farmers are choosing

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The fertilizer industry is heading for the dumps today. The double blow of being downgraded by Citigroup (C) and RBC Capital is taking its toll, as Agrium (AGU) has lost 12.73% to trade at $65.32 in the morning. However, the greater impact has been on CF Industries (CF), which has tumbled by 19.62% while tremors are also being felt at Terra Industries (TRA), down by 22%.

According to an AP report, a recent drop in urea prices has sent shivers down the ranks of the fertilizer industry. Analysts predict the price weakness could spill into next year. With the broader market in a bear hug over the bailout package turmoil, other agricultural stocks like Monsanto (MON), Intrepid Potash (IPI) and Mosaic (MOS) have absorbed losses the range of 8-10% this morning.

"AGU" Free Stock Analysis: Buy? Sell? Hold?"IPI" Free Stock ...

For the week, the Dow gained 1.8% (down 13.9% y-t-d) and the S&P500 increased 0.8% (down 14.8%). The Utilities rose 2.6% (down 14.8%), and the Morgan Stanley Consumer index gained 2.2% (down 5.1%). The Transports jumped 3.8% (up 11%), and the Morgan Stanley Cyclical index advanced 3.3% (down 13.2%). The small cap Russell 2000 added 0.2% (down 5.1%), and the S&P400 Mid-Caps increased 0.4% (down 8.1%). The NASDAQ100 was about unchanged (down 15.2%), while the Morgan Stanley High Tech index slipped 0.4% (down 15.6%). The Semiconductors lost 2.9% (down 21.2%). The Street.com Internet Index declined 0.3% (down 11%), while the NASDAQ Telecommunications index gained 1.7% (down 10.2%). The Biotechs gained 1.0% (up 3%). The financial stocks were mixed. With Lehman collapsing, the Broker/Dealers sank 11.6% (down 35.9%). Meanwhile, the Banks gained 3.2% (down 19.9%). With Bullion sinking $37, the ...

While the negative tone has righfully gotten traders nervous, we believe the 300 plus point decline yesterday and the initial 100 plus point decline today, presages a bounce to the upside within days. Quite frankly we were looking for it today but then the unemployment numbers tripped up the market. However, early next week should see a bounce.

Traders with the fortitude to go long this market, should look at call options in stocks like Amazon (AMZN), Potash (POT), Agrium (AGU) Bucyrus (BUCY), Apache (APA) and Devon (DVN). 

We are still preaching however that this is a bear market, so take early profits and play it safe and go with the October options.

 Tags: AMZN  AGU  BUCY  APA  DVN

Morgan Stanley is out with a very positive Fertilizer call saying they think the business model meltdown implied in fertilizer equities’ recent ~35% decline will prove unfounded. Firm believes that peak earnings are likely to come in 2011 (rather than in 2008, as implied by the equity market) and be substantially higher than the market discounts. Finally, they expect profits ultimately to trough above 2008 levels.Fertilizer prices will stay higher for longer: i) A global economic slowdown is unlikely to affect fertilizer demand; ii) US farmers are still earning a ~60% ROIC on fertilizer purchases and are thus unlikely to reduce fertilizer application; iii) Emerging market farmers are very low on the yield response curve (i.e., increased application pays for itself); iv) NPK prices have yet to catch up to commodity prices (i.e., record US farmer profits despite higher NPK prices); and v) They believe capacity increases will ...

The title says it all. Global economy is on the rise with never-before-seen demand for natural resources and their applications.