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The more time I spend with it, the more it looks like both crop prices and NPK prices are too high to sustain unless some catastrophe hits corn, wheat and soy beans. All of these are at high prices and lower demand with adequate supply creating the likelihood of a drop in price and volume for fertilizer companies.

wheat metric ton price

http://www.mongabay.com/images/commodities/charts/wheat.html...

soy beans metric ton

http://www.mongabay.com/images/commodities/charts/chart-soy....

and corn is off the charts high

http://www.mongabay.com/images/commodities/charts/maize.html...

conclusion? We have been quietly bubbleized by grain prices--who knew they were all at such historic highs--except farmers. I should have been talking to farmers. Fertilizer recovered from 2008-2009 and while not at the highs seen in the superbubblicious 2008, they are high compared to historical prices pre-2008.

I have the uneasy feeling it's all going to pop rather painfully but of course cannot predict when. The article from SA I linked says the best time to buy is when farmers and fertilizer co CEOs are jumping off their grain silos and starting to convert corn to alcohol to drown their sorrows. We aren't there.

2012 may not be a terrible year if there are some crop failures and demand rises, but i would not count on it and would not be buying big positions in anybody right now. The prices of the fert. cos are going down almost daily. I am pretty sure the market knows all about record storage and high prices and probably knows exactly what the growing seasons are going to do worldwide at least 18 months ahead of time. So I am inclined to watch and wait a bit longer

These are good companies and they produce cash flow and at least for potash do have something of a moat. Not everyone can have a potash mine that produces good product. The ore is found in limited geographies and development is hugely expensive. At present potash producers are doing brownfield expansion [existing mines] and the key is for a company to have the reserves to increase capacity without having to dig new mines.

Intrepid is good. Mosaic a little less so. Right now finishing Potash Corp of Saskatchewan and they look like the one to go with for investment in potash.

Nitrogen anyone can do and it has zero moat. Phosphate is in the middle. You can dragline mine it if you can find it. Its mostly in the southern US FLA and a few other surrounding states. Its drawback is the sulphur feedstock that kills margins when sulphur is high. Potash IMO is the most attractive fertilizer commodity to go after

more later when i finish POT--not smoking it--writing it up
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Legitimate:

OT: Another wonderful morning reading your research and analysis. In reading this post I thought it provided greater insight than just farms:

I have the uneasy feeling it's all going to pop rather painfully but of course cannot predict when.
...
We have been quietly bubbleized by grain prices--who knew they were all at such historic highs--except farmers. I should have been talking to farmers. Fertilizer recovered from 2008-2009 and while not at the highs seen in the superbubblicious 2008, they are high compared to historical prices pre-2008
....
2012 may not be a terrible year if there are some crop failures and demand rises, but i would not count on it and would not be buying big positions in anybody right now.

I think the term "bubbleized" is appropriate for my analysis of the present market for stocks. Margins are at near record highs caused in part by a lack of hiring by corporations that have raised cash to again near record levels. This rise in profits comes during a time of very low increases in GDP. Disasters in the Eurozone, China or others are possible. How long can selling increase to unemployed workers, or without massive governmental intervention. Bubbleized indeed.

I agree more broadly: "[I] would not be buying big positions in anybody right now." Sorry for the OT. I just thought it was too perfect.

Hockeypop
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I assume you think that the same would apply to MON, no?
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We have been quietly bubbleized by grain prices--who knew they were all at such historic highs--except farmers. I should have been talking to farmers. Fertilizer recovered from 2008-2009 and while not at the highs seen in the superbubblicious 2008, they are high compared to historical prices pre-2008.

I have the uneasy feeling it's all going to pop rather painfully but of course cannot predict when. The article from SA I linked says the best time to buy is when farmers and fertilizer co CEOs are jumping off their grain silos and starting to convert corn to alcohol to drown their sorrows. We aren't there.


Any possibility the price of corn is being kept artificially high by the government's insistence that we use corn to fuel our cars, rather than for food? If that program dries up we would immediately have a lot more inventory.
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Any possibility the price of corn is being kept artificially high by the government's insistence that we use corn to fuel our cars, rather than for food?

For anyone who believes that America is a "free market economy" I have a bridge for sale! LOL

Denny Schlesinger
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For anyone who believes that America is a "free market economy" I have a bridge for sale!


Well, for your sake, I hope you have the proper permits to sell that bridge or even advertise that is is for sale!

;-)

-Ryan
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Well, for your sake, I hope you have the proper permits to sell that bridge or even advertise that is is for sale!

LOL

Denny Schlesinger
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and probably knows exactly what the growing seasons are going to do worldwide at least 18 months ahead of time.

Hi KitKat,

I have nothing but respect for you, but you may want to re-think this one. :<)

B
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hi B

You didn't get the memo? Wall Street knows everything that has ever happened will ever happen and every stock is priced accurately and efficiently.



:)
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