Brazil’s Fertilizer Demand Growth Continues to Rise
The agricultural activity in Brazil has been rising in the past few years, which has been a catalyst for fertilizer demand growth in the country.
India is another major market for NPK (nitrogen, phosphate, and potash) fertilizers. The country is partly self-sufficient in nitrogen fertilizers.
Recently, China has been moving towards a zero growth policy. The country aims to reach zero growth in using agricultural chemicals by 2020.
Among the three NPK (nitrogen, phosphate, and potash) fertilizers, phosphate fertilizers have had the worst recovery.
Nitrogen prices have been subdued for most of this year—compared to a few years ago. The global market continues to experience excess capacity.
Potash prices have bounced back stronger this year. Granular potash prices in Brazil have risen as much as 17% YoY to $274 as of the week ending October 6.
So far, agricultural fertilizer stocks haven’t delivered impressive returns this year. Most of the stocks have been in negative territory in 2017.
The Fertilizer Affordability Index kept trending lower last week, continuing its two-week streak.
Potash prices remained firm last week, which was a trend we’ve seen in potash prices for the most part of this year.
Lately, we’ve seen an uptick in MAP (monoammonium phosphate) prices in Brazil.
DAP (diammonium phosphate) prices have been lackluster this year.
So far this year, Henry Hub natural gas prices have hovered around $3 per MMBtu (million British thermal units).
After an impressive runup in the past four months, urea prices appear to be cooling off.
In the week ending October 6, the VanEck Vectors Agribusiness ETF (MOO) fell by seven basis points from the beginning of the week.
Not everyone believes that Trump’s plan to cut the corporate tax rate from 35% to 20% would have a desirable effect.
The Trump administration’s latest tax plan was announced on September 27 and has drawn criticism as well as support.
So far, there have been no wild movements among agribusiness stocks after the announcement of the Trump administration’s latest tax proposal.
Bayer recently filed for an extension with European Union regulators, which pushed back the merger with Monsanto to early 2018.
Monsanto’s (MON) management has provided updates for the coming year on new products and market penetration that are expected to help the company drive growth in 2018.
Monsanto’s (MON) EBITDA margins appear to have slightly contracted year-over-year from 7.3% in 4Q16 to 7.0% in 4Q17.