Back from NE and WI Agri Expo Tradeshows
What a cold trip to Omaha and Madison this past week! Fertilizer prices are confirmed HOT HOT HOT! I talked with many salesmen from the majors. Potash is all being sold north of $400/ton. Dap and Map in the $675-$700+ range. Ammonia north of $650/ton. These prices are 100-300% higher than last year. Sulfur has gone from $112/ton to $252/ton in the past 30 days! Sulfuric acid is now firmly in the $300/ton on a spot basis, the contract market has frozen up and everyone is holding their breath to see where prices shake out longer term.
New observations:
In past fertilizer shortages, producers did not make as much money as brokers/re-sellers. Today, there are 90% fewer broker/re-sellers and the producers are making the high margins from higher prices.
There are not many ways to benefit from the sulfur/sulfuric acid spike. Most companies produce sulfur as a by-product and have typically viewed it as such. Chemtrade is the only good sulfur play I have found. The smelters and oil/gas companies will make a lot of money on their sulfur sales but it will only be a small contributor to their total income. Buying Conoco-Phillips as a sulfur play will not pay.
The shortage of sulfuric acid is getting so serious, it may shut some companies down. Be sure you are not invested in companies that do not have secure acid supplies!
I believe this pull back in fertilizer stocks should be bought. Maybe a dollar cost average approach will be best?? The one segment of the economy that will blow the doors off all others is the FARM economy! I think everyone here knows grain inventories are at all time lows, never before have farmers been able to contract high prices so far into the future, inflation is here, fertilizer mining is like all other mining....huge investment/permitting/environmental/etc..
I still like KCL.V best as a potash spec play. CF, MOS, YARA.OL, AGU, for N-P-K. CHEMTRADE LOGISTICS (CGIFF.PK) for Sulfur.
Good Luck Guys!
