Potash Corp says stock plunge an "overreaction"

Thu Oct 2, 2008 12:49pm EDT
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WINNIPEG, Manitoba (Reuters) - Potash Corp (POT.TO: Quote), the world's largest fertilizer company, continues to believe the sector is well-positioned for the long term, despite plunging stock prices on Thursday, a company spokeswoman said.

"In these tough financial market conditions, good companies and good business can certainly get caught up in overreactions, and we really believe that's what's happening here," Rhonda Speiss said.

Potash Corp was down 19 percent at C$111.09 on the Toronto Stock Exchange on Thursday and down 26 percent at $102.18 in New York.

The stock has plunged 55 percent from its June peak as commodity stocks fell out of favor with investors.

Executives in the sector have complained of record-low valuations at a time when they are reaping record profits because of high fertilizer prices amid tight supplies.

Prices for potash have tripled during the past year as farmers, buoyed by historically strong grain prices, push to maximize yields by applying crop nutrients.

But falling grain prices and disappointing results from fertilizer maker Mosaic Co (MOS.N: Quote) prompted Merrill Lynch on Thursday to downgrade the farm sector, including Potash Corp, and Agrium Inc (AGU.TO: Quote) to "underperform," and stocks across the sector tumbled.

Agrium shares were down 21 percent at C$46.15 in Toronto shortly after midday.

"We do take a long-term view of our business and our industry, and we believe that despite today ... the fertilizer industry is still very well-positioned going forward," Speiss said.   Continued...