Terra Industries, Inc. (TRA) is a manufacturer of nitrogen products serving the agricultural and industrial markets in the US, United Kingdom, and Canada. Despite the long-term success of this stock, some are still shocked to find it's still cheap despite just hitting a new 52-week high. First let’s go over the fundamentals of a company that is repurchasing an additional 10 million shares of its outstanding common stock.

A few months ago I wrote several articles about the relationship between Terra Nitrogen L.P. (TNH) and Terra Industries (TRA) concerning the earnings and dividends of Terra Nitrogen. You can see the articles here, here and here. For background, until the last quarterly dividend, TNH had a deficit of accumulated minimum dividends to work off. As of the last dividend, the deficit had been repaid and TRA was then entitled to about 44% of TNH’s earnings before dividends were paid to shareholders.

The soaring prices of agricultural commodities have hit the covers of both The Economist and Barron's. According to contrarian wisdom,<!--more--> the story concerning "the silent tsunami" on the cover of the former should signal a peak in prices, while the negative cover story in the latter should be proof of just the opposite. Certainly, many are talking about the boom in agricultural commodities (with rice as the latest hot topic) and this could be taken as a bearish sign.

I have been hounding on the impact gas prices would have on companies like Terra Industry. Terra Industry recently said that Natural Gas Prices won't impact margins THIS QUARTER, but if fertilizer prices don't rise next quarter will see a squeeze.

The truth is Terra Industry bought 28% of it's gas on the futures market. 28% of ther gas needs were bought under $8. This was ment to meet the purchase of fertilizer that was secured by farmers for the spring.

The trade report is out. Just as expected with the USA paying 3 times more for natural gas, the USA cannot compete with the world when it comes to fertilizer sales.

Imports of fertilizer iINCREASED by $98 million last month

Exports of fertilizer DECREASED by  $9 million last month

The industry is getting squeezed on both ends. When 90% of the cost to produce fertilizer is 3 times cheaper in many parts of the world this is what is expected. NET SSALES IN 2009 will SLIDE inot the tolitio. By 2010 the industry may very will be dead!!!!

Still dreaming about the ASIA factor?

Today it was announced that an India distributor is buying 1 million tons of fertilzer from the USA. BUT THEY ARE BUYING A PHOSPHATE  BASE FERTILIZER. All fertilizer companies rallied on the news. But not all will paticpate in the growth overseas.

HERE IS WHY!!!!!

http://www.uneptie.org/pc/apell/disasters/korea.htm

Ammonium Nitrate Explosion in Ryongchon Train Station, North Korea - 22 April 2004
161 people killed and 1,300 people injured

Brief Description

In 2000 the Country saw a credit crunch that was instantiated by World Comm, Enron, Global Crossing defrauding banks out of billions with lies about profits and sales in order to borrow cheap money. No matter how many times and how deep Greenspan cut the rates. The banks refused to loan new money to the telecoms. Instead they dumped the cheap money on to the consumer.

Market moving, may swing up, if the market returns to the bull. Good time to buy those great stocks, which were hurt during the down turn. The rest of this week will show if there is strength to keep this going till the beginning of the year. Some great earning reports and projection will sustain an upward trend.

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Regards,

Purely Technical aka TheMarketMessenger