Wednesday, December 11, 2013

Dennis Gartman doesnt like crops, fertilizer and the loonie

It's been a devastating year for fertilizer bulls and anyone who owns shares of Potash Corporation of Saskatchewan (POT-T).

In October, PotashCorp cut its 2013 profit outlook after the breakup of the Eastern European potash cartel sparked a drop in fertilizer prices. On Tuesday, the other shoe dropped when PotashCorp announced it was firing 18 percent of its workforce amid low prices and weak demand.

Dennis Gartman, editor and publisher of the widely followed Gartman Letter, tells BNN agriculture is "not a pretty business to be in." During a recent trip to Iowa, Gartman says he was stunned at the amount of grain and corn that's been produced.

"There's a huge crop out there and it's getting larger as they take it in," Gartman says. "And with the almost certain decrease in the mandate for ethanol usage in the United States, corn is in oversupply."

Gartman isn't calling a bottom and warns there could be more downside in agricultural commodities and fertilizer stocks. PotashCorp shares have rallied since hitting a 52-week low in early August and currently provide a dividend of more than 4 percent.

Several currency strategists have told BNN the recent slide in the Canadian dollar is an overreaction. But Gartman sees a major problem with the Canadian dollar, which is trading near a three-year low ahead of the Bank of Canada meeting tomorrow.

"The reserve banks of Australia and New Zealand are both talking down their dollars without equivocation. It's very hard for the Canadian dollar to rally," Gartman tells BNN, adding he's lost money buying the Canadian dollar against the Japanese yen.

Gartman says he is bullish on the U.S. dollar. "Relative to all other currencies that's probably the better place to be right now."