NEW YORK (AP) — Shares of fertilizer companies fell Wednesday after an analyst lowered ratings of some on expectations of a big corn crop this summer. That could mean lower corn prices and uncertainty about future plantings.
Charles Neivert, managing director at Dahlman Rose & Co., downgraded CF Industries Holdings Inc. to "Sell" from "Hold." CVR Partners LP was lowered to "Sell" from "Hold" and Rentech Nitrogen Partners LP was revised to "Hold" from "Buy."
The Agriculture Department has estimated that farmers are planting 95.9 million acres of corn this year. If the estimate proves true, it will be the highest number of corn acres planted in the U.S. since 1937.
Farmers got an early start on planting because of mild spring weather. About 71 percent of the crop had been planted as of Sunday, compared with just 32 percent at the same time a year ago.
In a research note to clients, Neivert said the big crop could pressure corn futures prices and shares of fertilizer companies. "We are struck by the range of scenarios with outcomes that could not only drive corn below $5/bushel but even $4/bushel in the more bearish cases," he wrote in a research note to clients.
Neivert said that fall fertilizer applications may be less robust if farmers are less certain about what they will plant next spring.
In early trading, shares of CF Industries fell $4.06, or 2.2 percent, to $178.84; CVR Partners dropped 76 cents, or 3 percent, to $24.63 and Rentech Nitrogen was down $1.53, or 5.8 percent, to $24.97.
Shares of CF Industries fell $3.81, or 2.1 percent, to $179.09 in midday trading. CVR Partners lost 72 cents, or 2.8 percent, at $24.71. Rentech Nitrogen dropped $1.55, or 5.9 percent, to $24.95. Agrium Inc. fell $1.95, or 2.3 percent, to $82.62 and The Mosaic Company declined by 75 cents to $49.97.