A flood of US corn threatens to wash away all bullish arguments in the fertilizer sector, says Dahlman Rose as it downgrades nitrogen-fertilizer companies CF and CVR Partners (UAN) to sell and Rentech (RNF) to hold amid the potential for an "exceptional" US corn crop.

That would send corn prices lower and possibly discourage more planting, and hence fertilizer demand. Dahlman Rose expects tomorrow's USDA crop report to be the catalyst for investors to rethink the fertilizer sector.

"We are struck by the range of scenarios with outcomes that could not only drive corn below $5/bushel, but even $4/bushel in the more bearish cases." CF and CVR fall 4% while RNF slides 7%. (ian.berry@dowjones.com; Twitter: @enberry)

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(END) Dow Jones Newswires
May 09, 2012 15:58 ET (19:58 GMT)
DJ MARKET TALK: USDA Report Could Turn Fortunes For Fertilizer->copyright