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More Tariffs on China, Fertilizer Stocks Are in the Red

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Nov. 20 2020, Updated 2:56 p.m. ET

Markets decline

On July 11, major fertilizer stocks declined following a broader market sell-off. The S&P 500 Index fell by almost 71 basis points, while the VanEck Vectors Agribusiness ETF (MOO) declined almost 1.9% on July 11. The global market was shellshocked by the news of the US assessing a 10% tariff on an additional $200 billion in Chinese goods. China immediately reacted and vowed to take retaliatory measures.

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Fertilizer stocks

In the above chart, all of the fertilizer stocks declined on July 11 except for CVR Partners (UAN), which gained 3.2% and closed at $3.8 per share.

Among the companies that lost, Nutrien (NTR) emerged as the biggest loss. Nutrien declined as much as 3.4%, while Mosaic (MOS) lost ~3.2%. Intrepid Potash (IPI) declined ~2.9% during the day. Digging deeper, all of these three stocks have exposure to potash fertilizers, especially Nutrien and Intrepid Potash.

China is one of the largest fertilizer consumers in the world. Investors are concerned that retaliatory measures might hurt fertilizer companies. In the quarter ending in March, Nutrien’s Canpotex sales to China accounted for ~32% of the quarterly sales volume.

Other fertilizer companies were also in the red—FMC (FMC) fell 2.7%, CF Industries (CF) fell 2.5%, Sociedad Química y Minera de Chile S.A. (SQM) fell 1.3%, and Israel Chemical (ICL) fell by 65 basis points.

To learn more, visit Market Realists’ Fertilizers page.

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