U.S. markets lose steam during Aug. 22-26 trading week

The Dow Jones Industrial Average fell 1,423.34 points or 4.22% to 32,283.40, and the S&P 500 closed the trading week at 170.82 points or 4.04% lower at 4,057.66.

The week’s top US-based value gainers were three potash companies, highlighting an intensifying supply squeeze brought on by Russia’s war in Ukraine.

Intrepid Potash was the trading week’s top value gainer, adding US$12.73 to close at US$55.92. Underpinned by acute supply chain issues squeeze, global potash prices, an essential crop input, have recovered to multi-year highs. As a result, the company posted robust financials earlier in August, mainly owing to potash segment sales in the second quarter increased 30% year-on-year to US$48.8 million. The higher revenue was driven primarily by a 131% increase in the average net realized sales price per ton to US$738, despite potash sales volumes decreasing 39% year-over-year to 56,000 tons in the quarter.

The second top value gainer in the week was Nutrien, which added US$10.00 to close at US$100.41. Like Intrepid, the company has recently reported record interim profits. Nutrien recently said that its realized potash price levels recovered to multi-year highs pushing up Nutrien’s net profit for the June quarter by 224% year-on-year to US$3.6 billion. The company said its earnings for the second quarter were affected by a non-cash impairment reversal related to its phosphate operations of US$450 million. CEO Ken Seitz told an analyst conference call the ripple effects of the conflict in eastern Europe will continue to drive demand for Nutrien products for many years. Nutrien’s operating income was US$4,463 million in Q2, up 169.3% year-over-year, prompting the board to declare a quarterly dividend of US48¢ per share.

The Mosaic Company posted the third-best value gain in the trading week, adding US$8.25 to close at US$61.77. On Aug. 18, Mosaic announced a US$1 million investment in the Morris Interactive potash digital skills training program for indigenous students in Saskatchewan. The training program is said to be rooted in reconciliation and targeted toward First Nations, Metis and Inuit individuals. The five-year investment follows in-kind support of on-site practicums, student mentoring and training content. Like its peers, second-quarter revenues were up 92% year-over-year to US$5.4 billion. The gross margin rate in the quarter was 34%, up from 27% in the second quarter of 2021. The adjusted EBITDA totalled US$2 billion, up from the prior year’s total of US$829 million. The company generated cash flow from operations of US$1.6 billion and a free cash flow of US$794 million. It has declared a quarterly dividend of US15¢ per share.