"Very little has change on the fundamental side over the past weeks."
A lot has changed on the fundamental side. Crude is now at $114. POT is an ethanol play, corn has extremely high fertilizer requirements. Take away the subsidized ethanol requirement, and that's far more likely if crude tumbles down, and you're back to the doldrums of the 1990's at a much lower level.
But from a trading standpoint, I don't know enough to argue for or against.
Before crude ramped and the ethanol mandate came about, POT was a $10 stock into the 2000's. One thing that is different from ten years ago is that there is a lot more fertilizer production online.
The fertillizer stocks bear a eerie resemblence to the dot-com's. I'm not an option player, but it might be worth a flyer on the Jan 2010 far out-of-the-money puts.
It's hard to believe that the world needs so much more food than was produced five years ago. I'm convinced that it is biofuels driving the demand, and if that goes away with falling oil prices, these stocks are toast.
i've been stopped out of POT long ago so don't think i'm biased when i come in to defend the story here. hold no position.
dc, i think you're missing the main point here. are china and india the ones fueling the ethanol boondoggle? i don't think so. the demand for the products over there is because they need it for FOOD. the booming economies has created more wealth and has thus allowed many more citizens to enjoy healthier, fuller lifestyles in terms of what they eat. the countries are consuming more food, simple as that.
then throw in the fact that there is very limited supply of potash fertilizer and you've got pure pricing power for the fert co's as evidenced by the constant price hikes. simple supply and demand. oh yea and almost forgot... new potash can't be brought to market until years down the road due to how long it takes to bring a potash mine fully online.
"Very little has change on the fundamental side over the past weeks."
ReplyDeleteA lot has changed on the fundamental side. Crude is now at $114. POT is an ethanol play, corn has extremely high fertilizer requirements. Take away the subsidized ethanol requirement, and that's far more likely if crude tumbles down, and you're back to the doldrums of the 1990's at a much lower level.
But from a trading standpoint, I don't know enough to argue for or against.
dc,
ReplyDeleteI view POT (and other AG's) as food plays. This ofc is linked to corn.
Much of this has been discounted with the recent decline from $240 to $160, imo.
NC
Before crude ramped and the ethanol mandate came about, POT was a $10 stock into the 2000's. One thing that is different from ten years ago is that there is a lot more fertilizer production online.
ReplyDeleteThe fertillizer stocks bear a eerie resemblence to the dot-com's. I'm not an option player, but it might be worth a flyer on the Jan 2010 far out-of-the-money puts.
What about the demand from China and India?
ReplyDeleteIt's hard to believe that the world needs so much more food than was produced five years ago. I'm convinced that it is biofuels driving the demand, and if that goes away with falling oil prices, these stocks are toast.
ReplyDeletei've been stopped out of POT long ago so don't think i'm biased when i come in to defend the story here. hold no position.
ReplyDeletedc, i think you're missing the main point here. are china and india the ones fueling the ethanol boondoggle? i don't think so. the demand for the products over there is because they need it for FOOD. the booming economies has created more wealth and has thus allowed many more citizens to enjoy healthier, fuller lifestyles in terms of what they eat. the countries are consuming more food, simple as that.
then throw in the fact that there is very limited supply of potash fertilizer and you've got pure pricing power for the fert co's as evidenced by the constant price hikes. simple supply and demand.
oh yea and almost forgot... new potash can't be brought to market until years down the road due to how long it takes to bring a potash mine fully online.
yes 160 is the 200 day moving average yesterday was the first time in two years it closed below
ReplyDeleteI am not worried