Price Increase for CMP

On October 26th, CMP announced a $35 increase per short ton of Sulfate of Potash. This increase is important for several reasons. The first, and most important, is the ability to increase prices in an environment that has been deflationary. Look for the company to continually increase pricing in the long term. The second reason, is how price increases affect the PE ratio of the stock. Like with gold or copper miners, price increases are generally better at the producer level. In a time of low growth and short money supply, it generally causes great problems to push prices on to the consumer, so companies selling retail will have to absorb the cost although producers continue to make more money. It also signals an increase in demand as it is generally tough to increase pricing as demand wanes. This type of fertilizer is used on crops with higher margins than corn or soybeans and will also allow for further increases even if prices cant be increased in supermarkets or with respect to the fruit grown.
CMP has had a nice run over the past year as the stock has increased from $64 per share to $81. As stocks pull back over the next couple of weeks watch support around $79, although long term this stock can be bought anytime in the near future.