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NTR the best inflation stock

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Jul 30, 2012
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FarmerHarv wrote: The upcoming drought this year is potentially going to make last year look like an agricultural utopian oasis in comparison. Being that there was no crop to speak of last year, and no rain to leach anything away, a significant percentage of the fertilizer put down a year ago is still waiting patiently in the soil for a crop to take it up.

Farmers, ever optimistic, are starting seeding into some of the driest conditions since the prairies were first broke, and they are dutifully putting down roughly the same amount of fertilizer because nobody can remember 2 drought years in a row.

They're just not old enough is all.

So when next year rolls around with 2 years worth of applied product sitting in the soil, I wonder if fertilizer prices and sales projections will continue to increase at these rates?
For now, it has "everything to do with" and "nothing to do with" N. American conditions/outcomes simultaneously. Large operators will always use necessary inputs (necessity for continuous cropping cycles). "Inputs In" and hope for the best is usually the method. Geo-political and world-wide crop conditions/grain prices have set the stage for N. American producers to "hold the balance of power" for global food supply this year.

If one's crystal ball can predict Russia will no longer destroy & plunder one of the richest agricultural regions in the World, if Sanctions will be lifted off Belarus & Russia, and if crop growing conditions globally will be superb for Spring/Fall '22/Spring '23, then I think we can "predict" NTR pricing trajectory.

Unlike some others, I didn't see the Russian war on Ukraine as short-term or easily resolved (or the de-globalization results) which simply overlaid the inflation backdrop. Being in that camp, my Macro on NTR has/still remains unchanged.

Global food constraints/control (IMO) remains one of the most underestimated crisis(es) this year (perhaps going forward as well). Affordable food may become the most precious item, not the new smartphone or EV on order.
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Jul 30, 2012
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BernBern21 wrote: Earnings are in. Beat expectations in most categories, but missed on EPS expectations.

https://www.stocktitan.net/news/NTR/nut ... 21xgl.html
Really not much of an EPS miss... Adjusted was $2.70 per share vs recent estimates of $2.72... Guiding way above mean consensus ($16.20 to $18.70 vs $14.73) on a FY basis. 10X's higher vs Q1 '21 with strongest Q2 to come...

Company did it's job but market reaction will be another with recent equity market action.
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Jan 18, 2022
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DealRNothing wrote: Really not much of an EPS miss... Adjusted was $2.70 per share vs recent estimates of $2.72... Guiding way above mean consensus ($16.20 to $18.70 vs $14.73) on a FY basis. 10X's higher vs Q1 '21 with strongest Q2 to come...

Company did it's job but market reaction will be another with recent equity market action.
For better or worse, I have a very tech-oriented mindset when it comes to earnings so anything less than a smash on earnings is seen as bearish.
But you're right, overall the numbers look very good for the 2022 calendar year of earnings for the company.

My only regret is not buying more when it was in the $80's and $90's.
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Sep 28, 2011
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FarmerHarv wrote: The upcoming drought this year...

Farmers, ever optimistic, are starting seeding into some of the driest conditions since the prairies were first broke, and they are dutifully putting down roughly the same amount of fertilizer because nobody can remember 2 drought years in a row.
Unless you are a farmer in Southern Manitoba. They were worried about drought last year like all of Western Canada, but in true farming fashion, one extreme to another. Not to mention all of the rain and snow this spring messed up calving season as well.

This story was written before we got about 30-40mm of rain in two days. Southern MB got hit by three Colorado lows in a row over three weeks.

Farmers fear serious seeding setback - Producers worry as rain, snow keep fields soaked

“The water has nowhere to go right now,” he said, adding the soil is still frozen a few inches below the surface. Rains last fall provided a bit of relief after a summer of drought, Tenuta said. But, the current above ground water is too much, he said. “If the soil does become saturated, which it likely will, then it’s going to… delay planting because the farmers can’t get onto the soil.” He predicts the soil will warm this week, allowing more water to enter. So, while producers can’t trek their fields, weeds can flourish, absorb nitrogen and take space. Additionally, a mix of warm and wet soil could reduce already distributed fertilizer, Tenuta said. “Right now, nitrogen is extremely, extremely expensive,” he said. Hamblin from Morris said he’d pay $60 to $70 per acre for fertilizer; now, he’s looking at $200 for the same area."
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bigblue1ca wrote: Unless you are a farmer in Southern Manitoba. They were worried about drought last year like all of Western Canada, but in true farming fashion, one extreme to another. Not to mention all of the rain and snow this spring messed up calving season as well.

This story was written before we got about 30-40mm of rain in two days. Southern MB got hit by three Colorado lows in a row over three weeks.

Farmers fear serious seeding setback - Producers worry as rain, snow keep fields soaked

“The water has nowhere to go right now,” he said, adding the soil is still frozen a few inches below the surface. Rains last fall provided a bit of relief after a summer of drought, Tenuta said. But, the current above ground water is too much, he said. “If the soil does become saturated, which it likely will, then it’s going to… delay planting because the farmers can’t get onto the soil.” He predicts the soil will warm this week, allowing more water to enter. So, while producers can’t trek their fields, weeds can flourish, absorb nitrogen and take space. Additionally, a mix of warm and wet soil could reduce already distributed fertilizer, Tenuta said. “Right now, nitrogen is extremely, extremely expensive,” he said. Hamblin from Morris said he’d pay $60 to $70 per acre for fertilizer; now, he’s looking at $200 for the same area."
Yeah, father just drove to Headingly and he said it was being in the everglades. Crazy amount of water, and that soil is more prone to leaching alright.

The people that are on the edge of the drought/flood zones are going to make off like bandits again this year. Even in the epic droughts of '88, '98 and '02 there were isolated pockets and the fringe areas that had almost perfect conditions and bumper crops.They saw crazy profits from the elevated crop prices while actually having product to sell. The moisture lottery will probably have more losers than winners again this year, but the winners are going to win Big.
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FarmerHarv wrote: The people that are on the edge of the drought/flood zones are going to make off like bandits again this year. Even in the epic droughts of '88, '98 and '02 there were isolated pockets and the fringe areas that had almost perfect conditions and bumper crops.They saw crazy profits from the elevated crop prices while actually having product to sell. The moisture lottery will probably have more losers than winners again this year, but the winners are going to win Big.
As someone (a city boy) who has no clue what you're talking about, how do I profit off of this?
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BernBern21 wrote: As someone (a city boy) who has no clue what you're talking about, how do I profit off of this?
You need one of these membership cards, lol.

https://capitalistcard.com/
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will888 wrote: You need one of these membership cards, lol.

https://capitalistcard.com/
Smiling Face With Open Mouth And Smiling Eyes I love that idea! I never heard about that before. I don't think I have enough BRK-B shares to qualify but maybe. I'd carry it proudly. 150% agree with him that capitalism has done overwhelmingly amount of good versus the downsides. And compared to socialism which has historically done far more damage than whatever good it may have produced. But I'm getting off topic now..

I assume from FarmerHarv's post that the disparity between the 2 land types - flooded and non flooded, will mean a high demand for fertilizer and soil supplements for which NTR can supply.
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BernBern21 wrote: Smiling Face With Open Mouth And Smiling Eyes I love that idea! I never heard about that before. I don't think I have enough BRK-B shares to qualify but maybe. I'd carry it proudly. 150% agree with him that capitalism has done overwhelmingly amount of good versus the downsides. And compared to socialism which has historically done far more damage than whatever good it may have produced. But I'm getting off topic now..

I assume from FarmerHarv's post that the disparity between the 2 land types - flooded and non flooded, will mean a high demand for fertilizer and soil supplements for which NTR can supply.
You don't have to have any Berkshire shares to qualify, just pay $10USD for the plastic card. This card sale represents capitalism at its best/worst? Getting back on topic, food insecurity in the coming year should in general drive farmers all around the world to do whatever it takes to increase harvest. Canada is not affected by the Ukraine agribusiness, but I feel for the countries that are. High oil prices can shape its usage somewhat, but it is a lot harder to cut back on food.
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BernBern21 wrote:
I assume from FarmerHarv's post that the disparity between the 2 land types - flooded and non flooded, will mean a high demand for fertilizer and soil supplements for which NTR can supply.
It can mean that. Always keep in mind though that if the land is dry enough to seed by the middle/end of June or so, it will get seeded regardless of how wet it may have been or any news headlines about unseeded acres. And fertility and the need for fertilizers is a combination of actual agronomy, psychology and marketing. So being that given the right conditions the amount of applied fertilizer can mean the difference between a meh and a fantastic crop, land will get seeded in spite of a wet (or dry) spring, and most farmers will be adding fertilizer in the hopes of a higher yield.

It gets complicated and I'll explain it poorly, but here goes.

In the fall we'll do soil tests which show the fertility levels in the top 12" of dirt. The usual macronutrients measured are phosphate, nitrogen, sulphur and potassium. Then you decide what crop you're going to seed there, and consult a chart which will show the recommended fertility levels required for a given target yield. The difference between what you have and what the chart shows you will need is what NTR and other suppliers want to sell you.

Of course the target yield is a pure guess that is based on historical averages, hoped for rainfall, potential disease problems, time of seeding/harvest, insect pressure and more. In any case, because farmers are optimists by nature they'll shoot for the upper end of the yield and buy and apply the fertilizer required to meet that target.

As an aside, here's the part that many people fail to understand...a higher yield does not necessarily mean higher profits. Occasionally, a combination of high input prices, low yields and/or poor crop returns will cause farmers to actually do some math, and when they realize they're not actually making money they will start to question the relatively insane prices they're paying and think about spending less. This matters less than you'd think though, because the suppliers have excellent sales and marketing teams, and as they're also the ones doing the research and making the charts there just might be some massaging of the data. Best not to go down that road though, because then we start to question the actual sustainability of what we're doing with agriculture in general in the quest for ever increasing productivity.

Anyhoo, currently fertilizer sales are great, yields keep going up (new GMO/Hybrid crop varieties have amazing yield potential) which require more fertilizer, which increases yields and so on. Like many things it is a bit of a house of cards, but in the short term owning shares in crop input companies in general seems to be a decent way to profit from the current agricultural cycle. As long as it rains of course.
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@FarmerHarv Thanks for the tremendous write up.

So in terms of the flooding, it sounds like those who are getting less flooded and their land is absorbing the rainfall, they'll be able to grow healthy crops and charge a higher premium for those crops, and NTR will be charging a premium for their fertilizer's?

Meanwhile those flooded will be S.O.L. and have to hope for better for next season?
.
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BernBern21 wrote: @FarmerHarv Thanks for the tremendous write up.

So in terms of the flooding, it sounds like those who are getting less flooded and their land is absorbing the rainfall, they'll be able to grow healthy crops and charge a higher premium for those crops, and NTR will be charging a premium for their fertilizer's?

Meanwhile those flooded will be S.O.L. and have to hope for better for next season?
Flooded land usually doesn't stay flooded...if it did it would be called a lake. Smiling Face With Open Mouth Quite often land floods in the spring due to a quick snowmelt when the ground is still frozen and the water has nowhere to go. As the ground thaws it is able to absorb the moisture, and along with evaporation it becomes dry enough to seed into during the usual seeding window. Given enough rainfall land can get oversaturated and flood also, though this is usually shorter lived unless we have an uncharacteristically rainy year...I have some drone footage of our land in late 2016 that had water laying where there had never been water for a hundred years, the same land the next year was basically dry from corner to corner.

All dryland (non-irrigated) crop development and yield are primarily based on rainfall. Snowmelt, spring runoff, backflood areas and formerly flooded ground can be very good for crop establishment (germination and early rooting), but without sufficient and timely rainfall through the growing season there is little change of a decent yield. You can seed into dust and if the rains come grow a fantastic crop, but I have never heard of anyone growing a crop from snow alone, no matter how perfect the moisture levels at seeding were if the rains don't come.

As far as crop and fertilizer prices go, well, they oftentimes seem to have no basis in reality. Like the stock market they can be forward looking, react (sometimes wildly) to news reports and studies, and are part of a global system of input suppliers and commodity dealers that just might be colluding a tiny little bit. Maybe. Farmers for the most part are simply observers and price takers on both the input purchases and crop sales ends, which, quite frankly, sucks. Canadian farmers have it especially bad, as we really don't factor that greatly in the grand scheme of global food production, in spite of what we've been led to and want to believe, and can't dictate prices at all. @DealRNothing probably has more insight into the value and pricing aspects from his research and can probably expand on this.
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Jan 27, 2006
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DealRNothing wrote: A gutting of the European bread basket is not a positive for those democratic countries "hoping" for food deflation... Like the oil markets, China & India will remain Russian stooges for commodities but for the rest of the democratic world not so much.

Crop conditions (or anticipated growing conditions) in China, Australia, US have already reported challenged. There are few democratic grain sources for countries wishing to maintain support for democracy (s).

We have yet to see effects on Russian domestic production due to the war (labour, supply /parts shortages) that may be more significant than expected.
While not the ideal situation, it's better than if the Russians had destroyed the stored grain so that it can't be consumed. Yes, they will sell it to the likes of China and India or former Soviet republics but that just means that those states won't be buying grain on the open market which should leave more for everyone else. Like I said, ideal no, but better than having it destroyed.
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Jul 30, 2012
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FarmerHarv wrote: As far as crop and fertilizer prices go, well, they oftentimes seem to have no basis in reality. Like the stock market they can be forward looking, react (sometimes wildly) to news reports and studies, and are part of a global system of input suppliers and commodity dealers that just might be colluding a tiny little bit. Maybe. Farmers for the most part are simply observers and price takers on both the input purchases and crop sales ends, which, quite frankly, sucks. Canadian farmers have it especially bad, as we really don't factor that greatly in the grand scheme of global food production, in spite of what we've been led to and want to believe, and can't dictate prices at all. @DealRNothing probably has more insight into the value and pricing aspects from his research and can probably expand on this.
Sure...I'll throw my 2c in... I think like most commodities, they take on a "life of their own" when several factors converge... Reality, fear, indifference, greed, ...Like most commodities, grains found themselves caught in the inflation wave starting approx 18 months ago... Low global inventory(s) were real going into inflation (and now war) which layered positive fundamentals in the sector. As for pricing, not unlike several commodities, base pricing(s) can swing 100%+ if conditions warrant (real shortages, inflation, geo-political events, etc). For fertilizer(s), higher grain prices typically lead to higher input prices (farmers "chasing" yield on rising grain prices thus raising input demand). Wheat, specifically started at approx $4 per bushel in the depths of '20 and is now trading $10>$11+. You will see similar percentage move(s) in the various fertilizer types now.

Fertilizer pricing is set by global negotiated contracts. At one point, the global market was largely controlled by a few export cartels (think "Opec-like") which controlled pricing (up and down). The '08 pricing run-up was partially driven by the Oligopoly cartels (BPC - Belarusian Potash Co., Canpotex, etc). Following the '09 crash, pricing was muted for several years and some members wanted to increase market share. Urakali (Russia) broke with BPC (2013) and basically "broke" the oligopoly pricing models. Pricing did move with grain prices, but never reached 2008 levels until this year.

'08 pricing ultimately collapsed (along with the GFC) with demand destruction. The difference in current cycle, is there (appears) to be no "appetite" for Russian or Belarus supplied inputs. Mosaic (MOS +8.7%) reported today (NTR competitor) and in it's CC believes there is no possibility of sanctions being taken off these regions during '22 (similar to what I had believed several weeks ago based on news flow). Additionally, their view is supply imbalance could last 2 to 4 years.

Regardless, we all know commodities are cyclical but determining price level for "demand destruction" is difficult. I think (like Oil), much will depend on how much of the commodities "leak" out of Belarus/Russia through black market (or "legitimate") channels. That will ultimately be reflected in commodity pricing.

For NTR specifically (or other Ag inputs), we know pricing is pretty much set for Q2, so regardless of grain prices, Q2 fertilizer contracts are going to be large and expensive.
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Aug 17, 2008
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jerryhung wrote: shorted NTR @ $117 yesterday, it's -4% today
------------------------
weakness in Ferts: $CF $NTR $MOS - Fertilizers Piling Up at Brazil Ports Signal Further Price Drop Bloomberg


still, wished I'm all-in in Energy names instead, apparently they only go up LOL
tiny cap energy name HUSA +37% on FOMO?
Nice sale. Noticed this tweet yesterday.



https://stockcharts.com/freecharts/cand ... NTR|C|null
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  • CF_ MOS_NTR - Copy.JPG
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Jul 30, 2012
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Makes for a good trading headline... but the reality is Soybean requires modest fertilizer(s). It was obvious they would obtain from Russia (they buy/import at least double from Russia than any other country - always have).

Corn, Wheat, & Rice require the highest amounts of input nutrients (and most has already been sold for Spring growing seasons in developed crop nations).
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Jul 30, 2012
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DealRNothing wrote: ↑
G7 is far too late to "impose" a price cap on Crude. I mentioned several months ago at the beginning of the conflict India & China would pick up the demand slack on Russian crude as the rest of the (smaller) democratic countries would source elsewhere. Oil investors (N. America) were (are) hoping for a "net" price benefit as global supply sources shifted. China & India have been buying (increasingly) Russian crude at discounts for several months now. The only possibility of Oil price rising is if supplies out of Russia (and other rouge providers) do not meet slowing demand out of EU/China/India, etc. (not likely IMO).

The real linchpin was NG and EU folded as this is crucial to their "existence" (not economic growth).

SA is trying to "stabilize" Global price(s) through spearheading OPEC+ supply cuts.

I expect Oil to be range bound (to lower) as EU / China enter recessionary territory which will ultimately keep Oil prices stable (to lower).

As for East/West sanctions, those will continue to ripple through all sectors (Nvidia one of the latest casualties).
I remain most bullish on the Ag/Fertilizer sector, as this season's weather events in India, China will (have) created food shortages which will still require net increase imports from the West on a price basis they can't control.

Russia offers "more" discounted Oil to India

Moved from Oil thread:
@smartie wrote: Thanks as always
Regarding to AG/ fertilizer sector, I am on the fence between NTR and DBA, which one is better buy now in your opinion?


@DealRNothing wrote:
As I posted prior, NTR has been my "top of the foodchain" play for some time... My preference has been for direct input companies (several here one can look at MOS, CF, etc) and those that affect direct grain/cereal production.

I think we are generally entering the final innings of inflationary plays (I'm cautious on new money other than for a trade, and my take on some of the plays in DBA is that for some the game is already over. Others will make that call for themselves.

That said, I have a current target of $102.50 US on NTR and it will remain a core position for me while I will reduce as inflation shows signs of subsiding.

Charting for what you make... Nutrient input providers have generally come out the best (MOS, CF, NTR, etc)

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