uploads///Agricultural Fertilizers versus Benchmark

What’s the Outlook for Fertilizer Companies?


Jun. 23 2016, Published 7:59 p.m. ET

Crop prices

Agricultural fertilizer stocks have withered over the past few years, with most major fertilizer producers trading below their 2007 levels. Over this time, the benchmark index S&P 500 has risen 39%, causing investors to look closely at their investments in the agricultural fertilizer sector.

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Stocks in the red

PotashCorp of Saskatchewan (POT) is one of the major producers of NPK (nitrogen, phosphorus, and potassium) fertilizers. It’s trading 36% below its 2007 level.[1. start date: June 25, 2007]

To date, Mosaic (MOS) is trading 32% below its 2007 level, and Terra Nitrogen (TNH) is trading 16% below its 2007 level.[2. start date: June 22, 2016] Israel Chemicals (ICL) has been the biggest loser among the above companies, trading 50% below its 2007 level.

Stocks listed after 2007 such as Intrepid Potash (IPI) and CVR Partners (UAN) have lost 95% and 51% of their values, respectively, since their IPOs (initial public offerings).[3. Intrepid Potash was priced on April 22, 2008, and CVR Partners was priced on April, 8 2011.]

Not all were losers

To avoid risk, you may be interested in investing in a broader portfolio such as the VanEck Vectors Agribusiness ETF (MOO). MOO has returned 19% since its inception on September 5, 2007.

Not all agricultural fertilizer companies were losers. Agrium (AGU) and CF Industries (CF) have performed significantly better over the past nine-year period. They returned 110% and 132%, respectively.

Series overview

In this series, we’ll look at what caused agricultural fertilizer stocks to perform poorly compared to the benchmark indexes. Fertilizer prices have a significant impact on the companies we mentioned above. Fertilizer prices have a strong correlation with crop prices, which we’ll look at next.


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