Separating the Noise from the Song?
A friend sent the attached graphic, and it made me think of all the noise in the commodity industry and how it affects fertilizer prices. How do you separate what is important when buying fertilizer?
“And you may ask yourself, ‘How do I work this?’ “
Annual standard-grade MOP contracts are settled with China and India
Egyptian gas shortages and Indonesian ammonium sulphate tenders
India’s latest Urea/DAP tender/demand. Right amount? Right price?
China. Imports vs Exports vs Domestic Consumption
Exorbitant container freight costs
Product quality and consistency issues
Production rates and turnarounds
In-season vs Out-of-season
World Supply vs World Demand
Crop Price Volatility. Corn vs Beans
Natural Gas, Ammonia and Oil Prices
Floods, fires, monsoons and droughts
Wars, sanctions, tariffs and global supply chain disruptions
Interest rates, exchange rates and financing issues
“And you may ask yourself, ‘Am I right, am I wrong?’’”
In many ways, predicting fertilizer prices is like predicting the flow of water, it goes where it wants to go, to the path of least resistance until there is sufficient pushback.
“And you may ask yourself, ‘Well, how did I get here?’“
Fertilizer prices will rise until they can rise no more. They will decline until the downward trend is finished. The water doesn’t care why the dam broke. It is always perfectly explainable after the fact, but very dangerous to fight the trend. Complexity is a certainty.
So where are prices headed now?
Quotations: ‘Once in a Lifetime’ by Talking Heads