Posted on 02/28/2022 5:32:16 PM PST by blam
Don’t underestimate this fertilizer/agriculture fiasco. It is going to be far more severe and prolonged than what the vast majority has led themselves to believe.
As Europe’s farmers prepare to spread fertilizers on fields after winter, sky-high nutrient prices are leaving them little choice but to use less and try to pass on the cost down the food chain.
For growers of staples like corn and wheat, it’s the first time they’ve really been exposed to a fertilizer crisis fueled by an energy crunch, export curbs and trade sanctions. It now costs much more to buy chemicals needed for winter crops coming out of dormancy, and the extra expense could prompt smaller spring plantings that make up roughly a third of European grain.
Europe has been hardest hit by fertilizer-plant cutbacks on soaring costs of natural gas used to run them — and nutrient prices there remain at a record even as the pressure eased in North America.
Europe could face a deficit of about 9% of its annual nitrogen-fertilizer needs in the first half, VTB Capital estimates. Food may get even pricier if harvests suffer or crop prices rise.
Who would have ever thought that the closing of the Dutch Groningen gas field would lead to a fertilizer, agricultural production, food, and inflationary crisis? Well, we did actually, but never mind that. It wasn’t critical to our analysis at the time.
Rather, our thinking was along the traditional energy lines. Simple rising costs of all energy components due to insufficient capex spend in the fossil fuel industry.
The thing is there were multiple reasons (or moving parts) here, and we only needed one or two of them to rear their inevitable and ugly head for profits in this space to come. It’s not always about being right but about running the probabilities and positioning oneself to get lucky.
So we positioned ourselves to get lucky in an asymmetric way. And what do you know, the “Gods of Chance” looked kindly upon us. We mention this because a few subscribers have been thanking us for “our bullish call” on SDF, having bought it in mid 2020. Well, consider yourselves lucky!
By the way, if you think being up 250% is time to “take profits,” we are thinking the upside is just getting into gear.
Here, take a look at the long-term chart on this bad boy. Perspective is everything.
Now, here is something to consider. What if you had bought SDF 2 years ago, before the Corona hit (we were bullish on SDF back then)? Some 6 months later you would have been down 40%. Now, you are up about 120%. Were we wrong when you were down 40%? Equally, are we right now that you are up 120%?
Be gentle with yourself, ensure your position sizing allows you to weather this sort of thing and be patient.
RISING COST OF MCDONALD’S: A GOOD THING
You may be thinking that the rising cost of your Big Mac, soda, and French fries is a bad thing…
Portion sizes shrinking:
And…
If you believe in mean reversion, then there are significant price rises in agricultural products (grains, meats, oils) to come.
Now, here is a thought… are rising obesity levels correlated with falling bond yields (remember bond yields have been in a bear market since 1980)?
Certainly, I think it valid to say that the ease of buying junk food and the lack of self-discipline in financial markets and household budgets correlates highly with the lack of self-discipline in healthcare.
Canada is the #1 exporter of potash followed by Russia, and Belarus.
Because it's sexy.
I refuse to buy from tyrannies.
And trannys.
And tyrones.
While, home gardeners can brew their own, I don’t see it as practical for large commercial growers.
I have been trying to source my food and goods from the “parallel economy” since the pandemic showed us the handwriting on the wall of things to come, but it isn’t as easy as just bopping over to the grocery store.
The 1964 me is still shocked by restaurant portion sizes in 2022.
In 1964, my parents would give us each a dollar at McDonalds. I would get 2 cheeseburgers, small fries (the only size available, I believe), a chocolate milkshake (probably about 15 oz), and a few cents change back.
It’s not just inflation. It’s also the portion sizes.
The potash used in the United States is mined in Canada; the nitrogen fertilizer is manufactured in the US (and the phosphate is mined in Florida).
I guess my point, which I totally did not clarify, is to not rely on large commercial growers, chain grocery stores, etc. We need to bring back the old Victory Gardens & grow a lot of our own food - even small spaces can produce a lot. For things you can’t grow in a garden (meat), people need to try to find local sources (parallel economy) of food other than the grocery store and as you said, it’s not easy.
We have room for chickens, but a marauding fox has knocked our 5 down to 1 laying hen. I just picked up 2 dozen eggs from two properties down so I have a non-store source. They are also raising rabbits & gardening. Fortunately, we have farmer’s markets fairly close by & many are doing ‘regenerative’ agriculture so they’re not dependent on fertilizer other than what the animals put down. I’ve also got 40+ lbs of venison in the freezer.
Anyway, as Jack Posobiec keeps saying “get OUT of the cities”. Not everyone can do it, but if possible, I think those outside of cities will fare better than those in cities. I suspect life is going to get really hard coming up in the not-so-distant future and desperately hard if you can’t feed yourself/family. Most folks I know are just oblivious to it all.
I hear you on the chicken front. My avowed enemies, raccoons and possums took mine out.
I do have a pasture to table meat supplier, and they are wonderful people, but in truth I only know of only one small Texas town (and it’s not mine) where the residents depend on each other, and their various skills, and resources to take care of each other, and supply each other with many things.
Unfortunately, they still have to rely on other places with hospitals, etc for many things.
Good. Any pics of your composter? What % is green vs. brown material? No problem with flies?
I remember the first McDonald's in our area back in 1961. The regular hamburgers were 10¢ each and cheeseburgers were 15¢. You could buy a bag of 10 burgers for a dollar.
Another fear monger. Just wait till after the State of the Union, there'll be loads of prime BS.....enough to ring the equater twice!
My horse provides about a hundred pounds of manure a day, and my trees and grass give me mor good additions to compost. My garden will be okay and I’ll be able to feed myself. But the whole world can’t do that.
No pics - it’s just a square raised bed that I enclosed with 4’ plastic mesh on 3 sides & the 4th side is recycled fence boards stacked in slots so I can add boards one at a time as leaves go in. Boards are removed when it’s time to spread. I put in a layer of leaves (12-18”), wet them a bit & then use grass clippings for my green material. No flies. I can’t turn it enough to keep it going as a hot pile so it eventually goes cold. The first year I raked the leaves - this year we used a mower with a large bagger so the leaves are chopped smaller & should break down faster. I’m really pleased with the results.
I used to have horses, but they & their manure are long gone. Aged horse manure is great stuff. I do have access to small amounts of chicken manure, but haven’t used it yet - it’s an option.
Thanks. And how about cardboard?
Cardboard would be good. Actually, this past year, I flattened out old cardboard boxes that I’d collected and put them down around my tomatoes primarily, and then put pine needle* mulch on top of the cardboard. I had the “cleanest” garden EVER ... the only weed growth I got was right around the plant stalks where there was a slight gap in the cardboard ... just little small stuff that I removed when I saw it.
This fall, when I cleaned up the beds & removed the pine needles, the cardboard in many places was almost totally disintegrated. I pulled out a few of the larger pieces & they went into the compost bin ... the small pieces, I just turned into the soil. I noticed a lot of earthworms which are a very good thing in the soil.
*We have probably a dozen or more 80-90 year old pine trees on our place - they are huge! They also shed a lot of pine needles in the fall. I rake & bag them to use for mulch in the spring. The old mulch needles, when I lift them off the beds, go in the walkways between my raised beds which helps keep the weeds down there. I like to “recycle” whatever & whenever I can.
Hopefully this will mean more people composting and adding food gardens to their yards to combat some of this inflation.
It might also have people think twice about the foods they buy, and they just might learn to cook from scratch or - Heaven Forfend! - learn to bake a loaf of bread.
Every step you can take towards greater self-sufficiency the BETTER, IMHO.
And if you haven’t figured it out by now, Mother Government is NOT your friend...
...but, Mother Nature is! :)
Looks like a liberal hit piece on food. Liberals want us all to live in caves and eat rock and twigs.
And Tonyas. Tonyas scare me.
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