how do you see the fertilizer stocks doing in the short/medium term after this recent brief run up?
I am interested in the fertilizer issues....Pot, Mos, Mon.....are these in bullish or bearish mode? They seem to have shown a come back of late...is this for real?
Answers
102 points
JimM answered one year ago …
It seems logical that that fertilizer costs should go back up again, due to the increased need to feed the growing population of the world. I find it puzzling that he prices have dropped while the need has increased. The stock "POT" may have been overvalued and is falling more in line with its competitors, but I don't understand why the other stock have fallen as well. It doesn't seem much different for coal. Why have coal and fertilizer prices gone down when oil prices started to fall? Is there a logical relationship between the commodities? I sure don't see it. World demand for coal and fertilizer has not decreased. Can someone with more knowledge of commodities explain these strange relationships to this rookie?
Jim M
103 points
ladymarge answered one year ago …
Institutions & hedge funds have tosell positions with any gains, thus the continuing pressure on those stks.
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4062 points
MNSL answered one year ago …
Most of the commodities including coal and fertilizer stocks are overvalued now.
Fundementals also very weak for the above stocks. Sentiments also not that good.
104 points
technomt answered one year ago …
The Best answer was provided in an article a month ago linking fertilizer profitability tyo the price of natural gas.
Here's part of it:
The fertilizer indu uses a lot of natl gas… and I mean a lot. Fertilizer can’t be mfrd without gobs of it. Accordg to the GAO, “Natl gas is a key feedstock in the mfg of nitrogen for which there is no practical substitute.”
We can see the impact of soaring natural gas prices on fertilizer costs. In the chart below, the National Agriculture Statistics Service shows us how natural gas prices can destroy profits of fertilizer producers.
In 2001, natl gas prices spiked from $4 to $10 in 3 mons. Meanwhile, nitrogen fertilizer prices only rose from about $200/ton to about $325/ ton.
A lot of factors play a part in a 150% move (the amount by which natgas prices rose). What’s perfectly clear is that fertilizer cos paid the price. While they had to pay 150% more for 1 of their major inputs (natl gas), they were only able to charge about 60% more for their product. When cos are unable to pass incrd costs onto consumers, their shares can exper drastic sell-offs.
Mort T
trachtyjr@aol.com
148 points
cherry answered one year ago …
lookfor fertiliser companies that operate in lower natural gas areas of the world to control cost China??
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SallyG answered one year ago …
If the movement toward more natural and organic food builds strength, that might also have an impact, but that would be a long-term effect, if at all. Monsanto just sold one division, I believe, though I'm not sure which. The company has a bad rep for what might be considered extortive (maybe too harsh? extraordinarily hard-sell?) practices, such as selling seeds that can only be activated by their proprietary fertilizer, and don't reseed the next year. With increased concern about chemicals in the environment, I would look for fertilizer comanies that take that issue into account.
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249 points
engcomp answered one year ago …
The answer by ladymarge makes the most sense to me, although the other answers also make sense, particularly the one from technomt.
With the current meltdown in financials, anything that has value like fertilizer is a godsend to the speculators who lost their shirt in derivatives. So they sell off when the demand is rising. Seems like a good time to buy.
216 points
jrj90620 answered one year ago …
Buy Agrium today and you will be rewarded over the next 5 years.Incredible growth company in a business hard to enter and compete.Selling at great price today.
Read more from jrj906204062 points
MNSL answered one year ago …
Now intelligent investors are accumulating undervalued fertilizer stocks, grain elevators etc .through out the world.
Some fertilizer stocks and similar sectors have great potential.. Moreover, value wise they are very attractive now.
I think fertilizer stocks and related sectors will outperform the market in the next 12 months and next 05 years.
678 points
BoxCar answered one year ago …
Sept 1976 issue of Scientific American on Energy states "Fertilizer is derived from
HABER chemical process wherein Natural Gas is combined with Air (N2) to make
Anhydrous Ammonia or Ammonium Nitrate", what we call fertilizer. So we are literally
"living on borrowed time"- the time it took to store solar energy in fossile fuels. If our
natural gas supply were to be eliminated we'd all be dead within one growing season.
So therein lies the value of Natural Gas supplies and why LNG has a future too. As
long as we continue to replicate like so many human lemmings, all else will pale as
compared to the looming Food Crises no one talks about. We saw this in 1974 oil
embargo, where shortage of diesel fuels limited deliveries to grocery stores. They
blamed it on Nixon's price control policy when it was simply a matter of no deliveries
