Agricultural inputs such as fertilizer and related products have been rising sharpy on tight supply, their own cost inputs (natural gas) as well as trade dislocations caused by the Ukraine invasion. It’s a vital sector and while farmers may attempt to cut back, there food product prices are rising as well and for the most part it’s the end consume that pays i.e. inflation. Can the world have food demand destruction?
I looked at a few key companies in the sector and was generally surprised by the low valuations and not full updated commodity prices used by the consensus. As in the case with many raw materials and intermediary products the market has a difficult time to input perceived spikes into long term estimates. The result could lead to further and sustained higher share prices across this sector. Stock are cheap and a great inflation hedge despite the price gains so far.
I added $OCI.NV (OCI NV) , $CF (CF Industries Holdings Inc) , $MOS (Mosaic Co) and $YAR.OL (Yara International) . $WHEAT Note that I did not include $SQM (Sociedad Quimica y Minera de Chile SA) in this despite its fertilizer segment, Lithium si still the key share value driver