Fertilizer shares slide on Mosaic, credit worries

By Euan Rocha and Matt Daily

NEW YORK (Reuters) - Shares of North American fertilizer companies plunged on Thursday, leading Wall Street lower after Merrill Lynch chopped its ratings on the sector in the wake of Mosaic Co's (MOS.N: Quote) disappointing quarterly earnings.

The sell-off in fertilizer stocks dragged other companies in the agricultural sector lower. Seed company Monsanto's (MON.N: Quote) shares fell more than 20 percent early in the day, but pared a bit of their losses after Monsanto raised its 2008 earnings-per-share forecast.

The agricultural sector sell-off comes amid worries that the credit crisis that has swept through financial markets could hamper farmers' ability to get cash for next year's planting season.

Investors fear that farmers will pull back on spending as grain prices have fallen from historic levels, but the cost of major farm inputs like fertilizers, seeds, farm equipment and fuels remain at relatively high levels.

"There are issues over tighter credit in both the U.S. and Brazil that could force farmers to cut back on spending and reduce fertilizer usage," said Goldman analyst Edlain Rodriguez in a note to clients.

Shares in Mosaic tumbled almost 40 percent late on Thursday on the New York Stock Exchange while peers CF Industries (CF.N: Quote) shed 37 percent; Intrepid Potash (IPI.N: Quote) dropped 14 percent and Terra Industries (TRA.N: Quote) tumbled 24 percent.

Canada's Potash Corp (POT.TO: Quote) fell 24 percent in late afternoon trading on the Toronto Stock Exchange, while Agrium's (AGU.TO: Quote) shares dropped 24 percent, despite the company announcing a share buyback late Wednesday.

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