Previously in this series, we saw that the Indian monsoon forecast predicts rainfall will be better than normal this year. This is positive news for fertilizer companies that have exposure to the Indian market. Let’s look at how some fertilizer companies reacted to the news.
In the positive territory
Following the monsoon report, most fertilizer stocks reacted positively, with Mosaic’s (MOS) shares jumping 2.7% on April 12. PotashCorp (POT) rose 2%, while Israel Chemicals (ICL) rose 1.6%. Agrium (AGU) and CF Industries (CF) rose 1.6% and 1.3%, respectively.
The expectations of a better monsoon season in India have lifted investor sentiment about the above companies, which you can invest in through the VanEck Vectors Agribusiness ETF (MOO). This desperately needed report comes as good news given the lackluster price environment for agricultural fertilizers. To read more about fertilizer prices, read our latest weekly report, titled A Look at Fertilizer Price and Input Cost Movements as of April 8.
Top line is a function of fertilizer prices and shipments. While there hasn’t been much price movement, the better-than-expected monsoon forecast in India lifts the expectations for an increase in demand and thus the top line of fertilizer companies.
For an overview of Mosaic, which has exposure to India, read An Investor’s Guide to The Mosaic Company.