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.
I used to care, but I no longer do. Ukraine has become more important than our own well being.
People get what they deserve.
BTTT
Another success for Chomo Joe to brag about tomorrows night.
Seeing one of those graphics, what is it with fast food joints and giving you a gallon of soda with your order? I can’t drink that much of that stuff anymore, is it just to wash down the overpriced, sloppily made burger they give you?
Why would you buy something you consider to be so bad?
𝘞𝘩𝘺 𝘸𝘰𝘶𝘭𝘥 𝘺𝘰𝘶 𝘣𝘶𝘺 𝘴𝘰𝘮𝘦𝘵𝘩𝘪𝘯𝘨 𝘺𝘰𝘶 𝘤𝘰𝘯𝘴𝘪𝘥𝘦𝘳 𝘵𝘰 𝘣𝘦 𝘴𝘰 𝘣𝘢𝘥?
It used to be a guilty pleasure, but the whole covid thing, bad dietary habits, and some recent scary bloodwork has me walking away from fast food. That, and some burgers or chicken sandwhiches I’ve had as of late were poorly put together.
Espoma 27 lbs. Organic Holly Tone Fertilizer
Bkmk
When Russia stopped nitrogen and potash shipments last week in response to Sanctions, I stocked up, and told gardeners I know to do the same.
In our area the lines at the fast food places are ridiculous. Just think. . . the price of the meal doubles while the car/truck is idling. For the most part, they have taken off any semblance of nutrition. McDonald’s is really pushing exorbitantly priced desserts/breakfast muffins, etc. The prices at our grocery store delis are cheaper for a full 3 piece chicken, ham or meatloaf meal.
No one uses Liquid Manure ?
Doesn’t Canada have mountains of potash
My BIL here in N. GA. went get fertilizer for his hay field today. He said it was double last year’s price.
Germany has bent over and grabbed their ankles for every leftist, socialist, woke, and NATO scheme there is - from green energy, to millions of migrants, to the war in Ukraine.
they really deserve to be screwed hard until they come to their senses.
they do, but the USA and Asia need it too. Cut off Russia, and what remains will get rationed by higher prices.
Jut harvest the bull$h!t coming out of D.C.
I have composted leaves from the yard the last two falls. I had been buying “LeafGro” to amend my veggie garden raised beds. When I started, it was $3/bag - last year it was up over $5. So, I could only buy so many bags (10), enough for 2 beds.
Composting my own leaves, I was able to add compost to ALL the beds last fall, when I made room for the new batch of fallen leaves. When I calculated what I’d saved, it was close to $175 at a minimum.
I do add some Milorganite fertilizer to the composting leaves - helps them break down & works well in the garden. A 32 lb bag is $16.98 .... I’ll have to get a bag this year, but I still have some left over from last year.
Yep.
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