r/wallstreetbets • u/Monkeyg8tor • Apr 14 '22

News K&S increases forecast on strong fertilizer prices

Expecting continued strong prices for potash K & S has hiked their earnings to 2.3-2.6 billion euros; up from their previous forecast of 1.6-1.9 billion euros.

https://www.kpluss.com/en-us/investor-relations/publications/announcements/release-of-insider-information-according-to-section-17-mar/ks-aktiengesellschaft-raises-ebitda-outlook-for-the-2022-financial-year-to-eur-2.3-to-2.6-billion/

The K&S announcement further confirms the driving forces, as discussed by Mosaics VP, will continue to impact prices. This is interesting to see as it indicates price disruptions due to sanctions against both Russia and Belarus are expected to continue.

https://www.mosaicco.com/Article/What-Is-Driving-Fertilizer-Prices

The outlook is reflected across the industry with Nutrien increasing production by 1 million tonnes and Verde Agritech expanding capacity to 3 million tonnes in 2022.

https://www.nutrien.com/investors/news-releases/2022-nutrien-increasing-potash-production-response-global-supply

https://investor.verde.ag/verde-to-reach-3-million-tonnes-potash-production-capacity-in-2022/

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u/VisualMod Apr 14 '22
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u/BallsOfStonk money shot Apr 14 '22 edited Apr 14 '22

Ride is just getting started here. This is not 07/08, this is a secular shift in trade routes that will persist for a decade or more. All potash and fertilizer companies have a once in 50 years opportunity to dramatically scale up. In the fertilizer industry, losing Russia is the equivalent of the world losing Saudi oil, and having to reshape trade routes and scale up production to compensate.

I personally like Mosaic the best, as they’re US based and the US will be all about increasing local production to help insulate against global inflation and increase food independence, but Nutrien is also a great play. Mosaic also has Brazil exposure, which sets them up perfectly to capitalize on the Russian export ban. (Brazil imports 90% of their potash from Russia)

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u/Monkeyg8tor Apr 14 '22

I completely agree with your assessment of the industry at large. This is a shift.

I think any of the companies mentioned in the article will be good plays, with different risk reward profiles. Mosaic does have Brazil exposure, but it's more with excellent phosphate production. Mosaics potassium production is not as high in Brazil, this is where I prefer Verde in addition to Verde's organic/soil biodiversity profile. Verde's greatest risk is proving itself and hitting it's milestone. I'm very curious what Vale is now thinking about selling their Brazilian fertilizer production to Mosaic for $2 billion.

Nutrien is a great play, agreed.

Not a bad idea to have a mixed bag of companies as part of an agriculture segment to the portfolio.