Some discussion and summary of various fertilizer plays here https://www.reddit.com/r/stocks/comments/u5ql81/fertilizers_are_still_cheap_ntr_mos_and_cf_with/
Seems like fertilizers will continue to do well but they’re already at ATH. I am not sure how best to play them.
Fertilizer names pulled back a fair bit today.
Perhaps triggered by the general malaise in the markets today, but also perhaps a recognition that earnings are coming up, and hard numbers might fall short in justifying 100%-250% increase in prices we saw over the last year.
Busy this morning, short update.
Earning are out for NTR, MOS and FMC(ag-chemicals) I’m linking and article that gives a pretty good overview of those results.
NTR crushed it, and announced a share buyback throughout the remainder of '22.
MOS did well but not as well as “expected”.
IPI is not listed in the above article, they beat as well.
CF reports earnings 05/04 AH, honestly I expect similar results as NTR but it’s earnings so you never know what the market reaction will be.
I mentioned this in TF earlier today. NTR is pretty diversified outside of fertilizer production and sale. They have a retail side of the business through local facilities that offer seed, chemicals, and custom application. In addition to this they offer farmer financing of inputs, basically I can get an account through them, order prior to the growing season and then pay off the bill in the fall after I harvest. Seems to be a pretty solid company.
In terms of price action we saw pretty strong resistance above $115 a few weeks ago for both CF and NTR. MOS failed to break $80 and IPI topped out at $121. The fertilizer stocks’ momentum was probably effected by the general market downturn more so than anything to do with these companies but there is no doubt that a pullback was overdue. With that sell-off NTR was down 19%, CF down 21%, MOS lost 23% and IPI fell 40%!
So far we have seen a rally following earnings releases. I will also say that these stocks have rebounded pretty well following the sell-off. NTR’s planned share buy back should provide a pretty decent level of support. If we see a break above $110 for both CF and NTR there could be another bullish run, both tickers received price upgrades to around the $120 level.
MOS and IPI are also rebounding. The last time MOS was at this level it had a slow push to almost $80. For IPI was a bit more volatile but it did run to $121 in a month.
The bearish case to my mind is the question on how NTR and CF will handle the higher NatGas prices and at what point do we see “demand destruction”? The math on planting corn for CY 2022 is pretty well set but what about '23? The US farmer loves to plant and harvest corn but if the price of corn cannot maintain a positive margin compared to planting soybeans then acres for '23 will shift. Corn is more expensive to plant on a per acre basis, it is also more expensive to haul from the field because of the yield difference between the two crops. 50-70 bushel soybean yields are pretty common across the corn belt, 180-250 bushel corn yields are common. At $5 diesel you are looking at 3-4x hauling expense. Corn also usually needs to be dried after harvest which takes either natural gas or propane depending on the producers drying set-up.
Hope that’s helpful, be safe playing these tickers and the market in general. It’s always interesting.
Side note, I made a trip from NE OH to SD and IA last week to grab some farm equipment. Planting is way behind schedule for a huge amount of US farmland. Normally this time of year a good portion of the western and central corn belt has all of the corn planted and they are starting on soybeans. I saw some field operations taking place but there is an increasing chance that some corn acres will not be planted this year. If that becomes a widespread problem god only knows how it will all end up.
Good luck Valhalla!
Link to CF’s earnings release. Seems pretty bullish but take a look. It’s probably about a 5 minute read.
Editor’s note; semicolons will stand in for commas until I can replace this blasted keyboard
Canadian fertilizer ban?
So apparently the geniuses who run America’s Attic have decided to unilaterally mandate a 30% decrease in nitrogen emissions for 2023. Yes; in the midst of global worries over the price and affordability of grain they have decided to mandate a cut in the domestic use of nitrogen fertilizer. While that may turn into support for grain prices further down the road it might actually be bearish for CF and UAN and maybe NTR.
CF and UAN’s production facilites are loacted in the US; NTR has facilities in both the US and Cananda. It may end up with NTR continuing processing in Canada and shipping the extra south which may put pressure on CF and UAN to compete.
This is still developing; if this mandate also applies to nitrogen production then it’s going to hurt NTR at least in the short term.
Oh and fertilizer companies report earnings next week.
Good luck Valhalla.
Interestingly enough our favorite fertilizer companies did not partake in the market-wide bloodshed today to the extent that other Ag stocks did. Whereas DE(-2.87%) CNHI (-4.14%) and AGCO (5.49%) sold off pretty well CF, MOS, and IPI were actually green. UAN was down only .21% and NTR was down 1.45%.
If these tickers decide to follow the rest of the market puts might pay, but before you take any positions look at grain futures. If the equity market and the commodity markets are both selling off there’s a decent chance these will as well. I don’t think MOS and IPI will fall much, but if you look at charts from the end of May into June you can see what CF, NTR and UAN did.
Be careful, don’t fight the trend and don’t just look at the price movements of the individual tickers. We may see funds move into commodities as a hedge against more selling pressure in the equity markets and this could provide some support for fertilizer companies.
Good luck Valhalla!
Bullish day for nitrogen fertilizer companies UAN, CF, and NRT over russian situation pumping grains. MOS and IPI also took part to a lesser extent.
I will caution that bullish movement in grains most likely will NOT spare these companies from the market’s reaction to the Fed rate hike/ JPOW’s presser. If you look back to May/June these stocks suffered along with everything else.
Play safe and good luck.
So, fertilizer companies fell along with the rest of the market. Interesting to note is that grain commodities were also down.
As was basically everything else.
CF, NTR, and UAN have not fallen back to their recent lows however, which lagged the broader market by almost a month (6-17 vs 7-14). However they found their bottoms on days that coincided with sell-offs on grains, natural gas (and oil in general) AND the rest of the market…
CF (NTR and UAN are basically the same chart)
DIA
SPY
It was also a red day for Natural Gas…
Natural Gas Futures
And while not the bottom, CORN was also down
CORN
OK, and?
Well, it’s going to be pretty interesting to see what happens this week, and why. Will NatGas/LP rebound? Will corn, soybeans and wheat rebound? Will the S&P, DJI, ect all rebound? Can we use these other factors to tell us when and how to trade these tickers?
I am watching these tickers to see how they behave in relation to not just the rest of the stock market but also natural gas(and oil) and grains. As of right now I don’t believe they have found the bottom of the current sell-off so I would not just start buying calls if I’m bullish for the rest of the market in the short term (which does make sense).
It’s also difficult to be overly bearish on the nitrogen stocks at least. We know that there are shortages in grains, or at least there is not the crop in the field that would send the grain markets into free-fall any time soon. I do expect a short term slight sell-off on corn and soybeans as we test the “harvest lows” but that is more of a seasonal cycle than a fundamental move. This kind of a move may help these stocks find the short term bottom and hopefully provide an opportunity to establish a long position.
Factors to watch:
natural gas and oil (winter is coming)
grains; specifically corn (but runs in soybeans or wheat can set corn off on its own)
general market movements (if everything else is pumping these probably will as well)
weather, specifically hurricanes (one of the factors that caused CF to start it’s bullish movements last fall was damage to the Gulf Coast that effected the oil and gas industry and nitrogen export facilities)
Oh, and if you have read this far here is a bonus… DE is still $50 above where it found bottom early in July. You can bet I’m watching THAT!
Good Luck Valhalla!
MOS is headquartered in Tampa Fl and has mines in Florida. We may see price movements based on fear over Hurricane Ian damaging both mining and shipping facilities. I have no position in either MOS or IPI at this time. Be careful as the APPL news may overshadow the market today.
Play safe, and especially to our members in Florida be safe!
So, you learn something new everyday. Today I learned of CIV and SIV which are volatility indexes for corn and soybeans respectively. I will start watching these and advocate that if you are playing any agriculture stocks you should as well.
I cannot stress enough that if you are profitable playing fertilizer stocks please consider securing profits as we run into today’s close. Tomorrow is another day. Play safe!
IPI and MOS seem to be on a trendline. The hurricane might result in supply disruptions that could spike fertilized prices. On the other hand, if MOS facilities stay closed and it even loses product, it might take a hit. Perhaps worth keeping an eye on.
Hurricane Ian is barreling toward Florida, threatening production of phosphate used to make fertilizer. The disruption may add to the record costs of growing food in the U.S., Bloomberg reported.
Mosaic’s (NYSE:MOS) phosphate rock mines and factories that convert raw materials into diammonium phosphate (DAP) and monoammonium phosphate (MAP) are in Florida.
The company’s New Wales facility may be offline for weeks depending on how damaging the storm is, according to Enki Research forecasts cited by Bloomberg.
Good morning. CF received an upgrade to its price target from RBC capital, $135 from $110. Watching this and NTR as they tend to trade together.
MOS received a downgrade, also from RBC. New price target is at $65 from $85.
USDA released a report last Friday for grain in storage. Highlights: less corn on hand, less wheat on hand, more soybeans on hand.
On Friday both CF and NTR sold off at open and had a really good bullish run up until 11-11:30 est. They were probably up because of the run in the corn market but bumper their heads when the rest of the market soured.
Be very careful if you decide to play them. There is a lot going on in the entire financial complex, not just the equities markets.
Good luck!
One more thing, watch the US dollar. Part of the recent pull back on grain prices can be attributed to the relative strength of the dollar, and really grains have performed pretty well all things considered.
