INTREPID POTASH INC (IPI) had very impressive performance yesterday (+58.28%) and after VISA (V), this one is on my radar screen due to “Potash” play which is currently in shortage worldwide (POT and AGU have been having great time, just check out their charts and you’ll know what I am talking about). The fertilizer maker went public at $32 a share, 14% above the midpoint of its proposed range. Intrepid had raised its price target from $24 to $26 in April and expanded the offering size to 30 million shares from 24 million.

One, however, needs to have guts to play these names. But those who do, I suggest keeping an eye on IPI. Potash releases quarterly results Thursday so expect similar move in parallel companies as well. According to company profile on Google finance:

Intrepid Potash, Inc, is a wholly owned subsidiary of Intrepid Mining, engaged in the production of muriate of potash (MOP, or potassium chloride) in the United States. The Company focuses on the production and marketing of potash and langbeinite, another mineral containing potassium. In addition, it produces three valuable byproducts: Solar Salt, Magnesium Chloride brine and Sulfate of Potash Magnesia. It owns five active potash production facilities, three in New Mexico and two in Utah and it has the nameplate capacity to produce 1,100,000 tons of potash and 250,000 tons of langbeinite annually. Intrepid Potash, Inc owns two development assets in New Mexico the HB Mine, which is an idled potash mine that is in the process of reopening as a solution mine, and the North Mine. It also produces salt, magnesium chloride and metal recovery salts from its potash mining processes.

This is in one of my favorite sectors, agriculture, I have been mentioning time and time again (POT is up nearly $40 since then) but it really needs iron muscles and not easy to play, check out POT’s chart, dips and highs that may tell you the story..why?…

According to various information sources, The reason for the high expectations is the record demand for crop fertilizers amid the agricultural boom. China’s Sinofert ordered 1 million tons of potash from Canada for $576 a ton — up 227% from last year’s pact. There are only 20 commercial potash deposits in the world, and just seven firms control 83% of production. Intrepid Potash produces just 1.5% of global potash but it’s the largest player in the U.S., smack in the middle of the world’s biggest market. It’s competitive advantage seems to be lower transport costs which may give it an edge over the dominant Canadian producers, including Potash Corp. of Saskatchewan and Agrium.

If you are looking for ETFs, MOO and DBA may present a less riskier way to play agricultural boom. As of this writing, all the fertilizer stocks were down for the day.

Profitable trading, OP