the fertilizer standoff is coming to an end, page-10

Hi all, IMO it’s just a matter of time before fert demand returns one way or another. With a steadily rising global population and increasing food shortages it will most likely force increased plantings & food production (and fert application along with it) eventually. YellowCake commented that grain prices will indicate when fertilizer prices will once again climb. I believe he suggests that when grain prices go up so to will fert application. I reckon he’s right but in my mind the question remains on what the trigger will be for higher grain prices.

So what will the trigger be?
1. Global economic recovery to shore up, so growing middle class eats more meat much of which is feedlot fattened (a highly inefficient use of calories) so grain consumption climbs and reserves drop so up goes the price of grain,
2. Plus if the global economy continues to recover, this growing middle class wants their own car so fuel consumption also goes up & with that the price of oil and a growing interest in bio-fuels which can drive up grain prices,
3. Global climatic events that decrease crop yields sufficiently to impact greatly on grain reserves, so up goes the grain price,
4. Greatly diminished yields due to depleted soil fertility due to low to no fert application thus a significant reduction in grain reserves, or
5. The ever growing global population simply demanding/consuming more food, so up go food prices, incl grain, as the reserves diminish.

It’ll probably be a combination of some or all of the above to different measures and if enough of these factors come into play with enough force, then we may even see the ‘perfect storm’ as some have suggested. As always, time will tell.

As for me, I’m LT with MAK and look forward to healthy dividends in the years ahead from a serious global phosphate player and potentially a multi-commodity miner. No doubt the LT nature of this last sentence of mine has caused many traders or ST investors to fritz it :-)

Cheers
Brett