Investors cautious over the tumultuous fertilizer sector, fear not.

The wave of tie-ups being digested, such as CF Industries' takeover of Terra Industries, in the making, such as BHP Billiton's bid for PotashCorp, and on the menu, such as the anticipated merger of Russia's Silvinit and Uralkali, may make the sector appear a hotbed of volatility.

But in fact, its shares demonstrate patterns nearly as predictable as the seasons – and, indeed, probably caused by them.

Investors have already identified a so-called Santa Rally, with shares often rising into Christmas, while UK shareholders are advised by an overused adage to take a summer break from May until the day of the St Leger, a horse race run in mid-September.

Now analysts at Salman Partners have revealed what might be called the Potash Pattern, which features twice-a-year rallies, interrupted by summer dip.

'Striking gap'

"Fertilizer share prices have shown strong seasonality over the years, with some significant and consistent outperformance in the spring (April-May) and fall (November-December), and significant underperformance in June," Salman Partners analyst Jaret Anderson said.

"The performance gap between the sector's strongest month, December, and its weakest month, June, is striking."

Indeed, between 1996 and 2009, the period analysed, shares in PotashCorp, the world's top potash producer, and smaller Canadian peer Agrium rose by an average of 6.5% in December, with a positive return in three years out of four. In June, they fell by average of 2.6%.

"A strategy of being long these names in December and short in June would have generated an annual return of 8.9%," Mr Anderson added.

While that may not appear huge at first glance, remember this was just for two months' work, with no capital commitments assumed for the other 10 months of the year.

Great expectations

Mr Anderson offered some explanation for the June dip, at least, saying that it is often a result of "strong expectations of a good corn and spring wheat planting season" in the US, where the crops are planted around April-May.

"Anything less than a large number of acres and high fertilizer application rates acting to drag down equity prices once data is available in June," he said.

Unfortunately, no sooner has the trend been identified than it may need to be reworked, with PotashCorp potentially being taken over by BHP Billiton, and Agrium reducing its fertilizer credentials with the takeover of AWB, the Australian grain handler and farm retailer.

Investors might want to do homework on potash alternatives such as Intrepid Potash or Mosaic, or groups in other fertilizer sectors such as Yara, as candidates for December gains this year.