Wednesday, March 23, 2011 11:42:27 AM
Fertilizer Stocks Sprout
While the markets are slightly lower on the day, the fertilizer stocks have started to make a move higher. Earlier today, stocks like Potash Corp.Saskatchewan (NYSE:POT), The Mosaic Company (NYSE:MOS) and Monsanto Company (NYSE:MON) were all lower. However, in the last hour they have turned around and moved to the positive side.
The key to understanding this move is two fold. First, the global population, especially in emerging markets continues to climb. As emerging market economies gain wealth, their people demand more food and higher quality. This increases the need for an acre of land to yield more produce. That has been the case for the strength in Potash, Mosaic and Monsanto over the last few years. However, just in the last few weeks a new front has emerged. The Japanese earthquake, tsunami and disastrous nuclear meltdown created a toxic mess. Not only is food full of radiation but their water supply has been contaminated as well. Japan, the third largest economy in the world is now in a position of having to import massive amounts of food. In the short term this could be a bullish case for these fertilizer plays.
These stocks may continue to remain strong unless one scenario occurs. Should the global economy slip back into recession, these stocks would suffer. In all other cases, these stocks should continue to remain strong, especially in the wake of the Japanese nuclear crisis.
Gareth Soloway
Chief Market Strategist
www.InTheMoneyStocks.com
While the markets are slightly lower on the day, the fertilizer stocks have started to make a move higher. Earlier today, stocks like Potash Corp.Saskatchewan (NYSE:POT), The Mosaic Company (NYSE:MOS) and Monsanto Company (NYSE:MON) were all lower. However, in the last hour they have turned around and moved to the positive side.
The key to understanding this move is two fold. First, the global population, especially in emerging markets continues to climb. As emerging market economies gain wealth, their people demand more food and higher quality. This increases the need for an acre of land to yield more produce. That has been the case for the strength in Potash, Mosaic and Monsanto over the last few years. However, just in the last few weeks a new front has emerged. The Japanese earthquake, tsunami and disastrous nuclear meltdown created a toxic mess. Not only is food full of radiation but their water supply has been contaminated as well. Japan, the third largest economy in the world is now in a position of having to import massive amounts of food. In the short term this could be a bullish case for these fertilizer plays.
These stocks may continue to remain strong unless one scenario occurs. Should the global economy slip back into recession, these stocks would suffer. In all other cases, these stocks should continue to remain strong, especially in the wake of the Japanese nuclear crisis.
Gareth Soloway
Chief Market Strategist
www.InTheMoneyStocks.com
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