By Ruhi Soni

(Reuters) – Analysts believe fertilizer manufacturers will report their highest quarterly profit in many years due to a lack of crop nutrients and a tight supply.

Top fertilizer makers Nutrien (NYSE.) Ltd., Mosaic Co. (NYSE.:) and CF Industries. (NYSE.:) will all be able to take advantage of sanctions against Russia and Belarus. Potash prices rose to new highs after sanctions were placed on Belarus and Russia, which are the two largest producers.

Nutrien will, without a doubt, raise (earnings). Joel Jackson, senior analyst with BMO Capital Markets Equity Research, said that he would be surprised if they didn’t.

THE CONTEXT

Last year, potash prices rose due to tight supplies. This was in part because of international sanctions on Belarus’ state producer Belaruskali.

But, the events in Ukraine are pushing prices to new heights. Russia is the largest supplier of potash, as well as other crop nutrients like nitrogen, phosphate and ammonia.

Nutrien, world’s largest fertilizer producer, announced that in March, it would increase its annual potash output to almost 15 million tonnes, in response to supply uncertainty from Eastern Europe.

Jackson said that Nutrien might have difficulty finding workers to increase its capabilities.

Seth Goldstein of Morningstar Equity said that rising fertilizer costs could be partly offset in the end, especially by soaring nitrogen-based fertilizer maker CF Industries.

Mosaic and Nutrien, which are vertically integrated and mine their own potash should feel less inflation than a CF that still requires to buy U.S. gas for nitrogen.

Analysts will be looking out for any comments about higher demand. Already, farmers are reacting to higher prices by reducing fertilizer usage, stockpiling over a period of time, and switching to manure.

European fertilizer makers this month wowed investors, with Germany’s K+S AG raising its full-year core profit forecast by 40%, while Norway’s Yara International (OTC:) ASA posted a stronger-than-expected core profit even as it flagged higher natural gas costs.

FUNDAMENTALS

Company

RefinitivQ1 RefinitivQ1 EPS

revenue estimate estimate

Nutrien Ltd $7.62 billion $2.56

(up 64% YoY)

Mosaic Co 4.08 Billion $2.38

(up 77% YoY)

CF Industries $2.59 billion $4.21

Holdings Inc (up 147% YoY)

WALL STREET SENTIMENT

Companies Recommendation Median

Pricing Target (NYSE:)

Stock rated C$120 by Nutrien 15, 21 analysts

6 “Buy” or Higher; “Hold”

Stock rated by Mosaic 10/20 analysts

“Buy” and higher, 10 “Hold”

CF Industries 8. Of 19 analysts, the stock is rated “buy” $110

or higher; 11 “hold”