Has Potash Lost its Momentum?

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"Stocks lack clear catalysts, but people are still running out of food."

Financial services firm Citigroup believes that the recent rally in stock prices of major potash producers are about to lose steam.

"Lacking well-defined near-term catalysts, we see growing risk that the stocks could trade sideways into the summer," Juvekar wrote. Juvekar is still bullish on fertilizer fundamentals, but thinks that the momentum generated by improving farm commodity prices could slow. "When corn moved from $3.50/bushel to $7/bushel, there was ample incentive to invest in more fertilizers to improve yields. At current corn prices, growers are incentivized to apply all the fertilizer they need to boost yields. If corn prices rose from $7/bushel to $8/bushel, farmers may not apply even more fertilizer. The incremental dollar may be invested elsewhere, such as in new machinery or land."

However, optimism still reigns over the potash market. Last night, in his Mad Money Lightning Round, Jim Cramer voiced his opinion in regards to the recent sell-off of Potash Corp. stock. "Everyone is selling everything, but it's not the end of the world. People are still running out of food. Potash needs to be bought," said Cramer.

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