Farmers seeking commodity cost relief received bad news this week. Six of the eight major fertilizer inputs drifted higher in price again in September, reversing a trend that saw many raw materials retreat from their highs in August.
The closure of the Strait of Hormuz immediately drove up fertilizer components like ammonia, phosphates, urea, and potash, and many companies in the sector saw their stocks rise in unison. But once the shock wore off, fertilizer input price growth normalized, and these stocks declined. However, much like the refining trade, the fertilizer trade has become about spreads, not raw input prices. And the three companies we’ll discuss trade today at a discount to their strong margins.
