Are Agrium Earnings in Big Trouble?

Agrium will release its quarterly report on Wednesday, and until last week, the company had done a reasonably good job taking advantage of the need for fertilizers from farmers and other agricultural producers. Yet leaving aside the expected drop in the company's net income when it announces its second-quarter results, the big question for the long-term prospects for Agrium earnings is how much the destruction of a key fertilizer industry cartel will affect its results well into the future. 

Agrium differs somewhat from most of its fertilizer competitors, as it has a fairly large retail business that gives it a more vertically integrated operation that companies that concentrate only on fertilizer production. Nevertheless, Agrium is sensitive to the same trends in the fertilizer markets as its rivals. Let's take an early look at what's been happening with Agrium over the past quarter and what we're likely to see in its quarterly report. 

Analysts have been nervous about Agrium earnings for months, cutting back on their June-quarter estimates by $0.35 per share and cutting full-year 2013 and 2014 estimates by about $0.55 per share each. The stock has dropped about 7% since early May in response to those deteriorating conditions. 

Agrium actually came into the second quarter on a positive note, as investors looked past a drop in first-quarter sales compared to 2012 and focused instead on the expected recovery in planting conditions during the June quarter. With weather having played a big role in both last year's and this year's results, year-over-year comparisons didn't truly reflect Agrium's positive prospects for a strong year in 2013. 

But the big hit to shares came in the past week, when Russia's Uralkali pulled out of the Belarus Potash Company cartel. The move threatens the stranglehold that it and fellow cartel Canpotex had over the potash fertilizer market, as potash prices are now expected to drop 25% or more from current levels. Yet while Agrium is part of the Canpotex cartel, rivals PotashCorp and Mosaic have far greater exposure to the potash market, as Agrium's share in Canpotex is only 9%. As a result, Agrium shares haven't fallen to nearly the extent of the declines that PotashCorp and Mosaic have seen. 

Still, even though Agrium has benefited from its greater diversification, it has also faced headwinds from higher natural-gas prices. Agrium recently decided to suspend development on expansion projects that would have boosted nitrogen-fertilizer production by more than 30%, with moves from rival CF Industries and other players in the nitrogen business prompting concerns about competition. With nat-gas prices so volatile, making long-range future plans is tough for Agrium. 

In the Agrium earnings report, watch to see what the company says about its ongoing Saskatchewan potash-expansion project, which is slated to boost production by 50%. With potash now in decline, it'll be interesting to see if Agrium goes back toward emphasizing nitrogen over mined fertilizer products. Either way, Agrium earnings could be in trouble in the long run if poor conditions result from recent news. 

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Scientists have been eager for a peek of Mount Sharp since Curiosity, the size of a small SUV, touched down in an ancient crater near the Martian equator on the night of Aug. 5, 2012.The world wondered whether Curiosity would nail its landing, which involved an acrobatic plunge through the thin atmosphere that ended with it being gently lowered to the ground with cables. 

Engineers had to invent new tricks since Curiosity was too massive to bounce to a landing cocooned in airbags the preferred choice for previous rovers Spirit and Opportunity.After seven terrifying minutes, a voice echoed through mission control at the NASA Jet Propulsion Laboratory. "Touchdown confirmed," said engineer Allen Chen. "We're safe on Mars."Scientists and engineers clad in matching sky-blue polo shirts erupted in cheers. Some were so excited that they overshot their high-fives. 

The technical prowess required to pull off such a landing has "captured the imagination of a whole new generation of prospective explorers," said American University space policy professor Howard McCurdy,An bestgemstonebeads is a device which removes contaminants from the air. who has closely followed the $2.5 billion mission.Mission scientist Sushil Atreya of the University of Michigan remained calm until the last ten seconds.Here's a complete list of granitecountertops for the beginning oil painter. "Then it hit me it's crazy! It was an unbelievable feeling of relief when the first picture from the rover came down," Atreya said. 

Mike Malin, who operates Curiosity's cameras, ticked off two of his favorite pictures from the mission so far: A view of the rover's heat shield falling away right before landing and a color portrait of Mount Sharp."That looks so much like Utah that it felt very familiar," said Malin, who heads Malin Space Science Systems. 

Once the euphoria of landing wore off, the six-wheel, nuclear-powered rover went to work, spending two months testing its instruments and systems. The health checks took longer than expected because Curiosity was a complex machine.To celebrate the landing anniversary, engineers commanded one of Curiosity's instruments to play "Happy Birthday" as the rover took a break from driving. 
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