KANSAS CITY (B)--Two of North America's largest fertilizer makers saw their shares climb Jan. 13 amid analyst upgrades linked to expected gains in corn prices and fertilizer production cutbacks that have begun to address worldwide over capacity concerns.

Shares of IMC Global and Potash Corp. of Saskatchewan both gained more than 5% in early trading after J.P. Morgan analyst Don Carson upgraded both fertilizer makers.

IMC Global traded as high as 19 3/8 in early activity while Potash shares moved as high as 59 11/16. With his upgrades, Carson set IMC Global's target price at 25 and Potash's at 65.

The upgrades, which moved IMC Global to a buy rating and Potash to a long-term buy rating, come one day after a U.S. Department of Agriculture crop production report projected a corn stocks-to-use ratio of 18%, down from 21.3% a month ago. The USDA report sent corn prices higher Wednesday and Carson said he expects the market to sustain the emerging rally in prices. In his upgrade notes, the analyst said he expects further tightening of the corn supply-demand balance in the 2000-01 crop year.

"We expect the emerging improvement in corn prices to drive fertilizer share prices even higher as spring planting season approaches," Carson said.

"We note that the primary catalyst for higher fertilizer share prices is higher prices for corn, the key fertilizer consuming crop."

Carson also notes that farm equipment maker Deere & Co., a company seen as a good indicator for fertilizer stocks, has been strong over the last few months. Over the last several days, the equipment maker's shares have continued to trade near a recently set 52-week high of 47 7/16.

Production cutbacks across the fertilizer sector have also helped address oversupply concerns and improve fundamentals for all three primary fertilizer nutrients: nitrogen, phosphates, and potash, Carson said. Among plants shut down recently were two of Potash's ammonia plants in Trinidad that went off-line after Potash was unsuccessful in gas supply negotiations with the National Gas Co. of Trinidad. Carson said that he expects the plants will be operational within the next few months.

Although the fertilizer industry was sluggish through last year, both IMC Global and Potash have seen their share prices climb steadily since late December.

Both also received a boost recently when Deutsche Banc Alex Brown upgraded two competing fertilizer makers, Mississippi Chemical Co. and Terra Industries.

However, while Mississippi Chemical and Terra both have moved lower since the one-day rally on Jan. 3, IMC Global and Potash continued to climb. Jan. 13, Potash shares were nearly $10 per share above their Jan. 3 levels, while IMC Global's stock was about $2 per share higher.

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