K+S AG (SDF) rose to a seven-week high in Frankfurt trading in a third consecutive day of gains after analysts at Sberbank CIB predicted that a potash price war may be averted.
K+S gained as much as 4.9 percent to 23.70 euros and was trading up 2.5 percent at 23.15 euros at 11:33 a.m., the highest based on closing prices since July 29. Volume was 58 percent of the three-month daily average after two hours of trading. A 45 percent jump from a five-year low on Aug. 6 means that short-sellers of the stock are being squeezed to close their positions.
New owners of Russia’s OAO Uralkali (URKA), the world’s biggest producer of the crop nutrient, will probably restore a relationship with Belarus’s Belaruskali and return to a previous strategy that propped up prices, Irina Lapshina and Alexander Levinskiy, analysts at Sberbank CIB, said today in a report to investors.
Shares of potash producers around the world fell on July 29 after Uralkali’s Chief Executive Officer Vladislav Baumgertner said he would exit a joint marketing venture with Belaruskali and predicted that potash prices may tumble 25 percent. Kassel, Germany-based K+S’s stock lost 40 percent in the six days following the Russian competitor’s comment, reaching 15.92 euros on Aug. 6, the lowest since October 2006.
Russian entrepreneur Vladimir Kogan, a longtime ally of President Vladimir Putin, is the leading bidder for Berezniki-based Uralkali, seeking to buy out its three main shareholders, people familiar with the situation said earlier this month. Such a transaction would give him a stake that’s enough to maintain operational control.
Talks on a change of ownership at Uralkali began after Belarus arrested CEO Baumgertner on Aug. 26, saying he abused his office as president of the Belarusian Potash Co. joint trading venture, the people said.
Investors have been betting on K+S’s decline since Uralkali’s announcement at the end of July. The biggest and most recent short position is held by hedge fund Viking Global Investors LP, which has a down bet on 4.1 percent of the German potash producer’s shares, according to data compiled by Bloomberg.
Viking increased its bet that K+S’s shares will fall, in a Sept. 13 filing, the data shows. In contrast ZBI Equities LLC and VTB Capital have been purchasing stock, reducing their short positions.
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