“The conventional view serves to protect us from the painful job of thinking.”
—John Kenneth Galbraith, Canadian-American economist, diplomat, public official, intellectual, U.S. Ambassador to India 1961–1963; 1908–20
As an emerging worldwide food crisis emerges, Justin Trudeau is introducing new constrictive fertilizer policies to our farmers. I’ll get to how that might affect our country, but more pertinent to this blog discussion is how such policies might effect fertilizer stocks. They have declined of late. Is the game over for these stocks, now that Dutch and Canadian farmers are likely going to be using less of the products?
Nutrien, which we hold in the ValueTrend Platforms, (NTR-T) produces products in the Retail, Potash, Nitrogen, and Phosphate arenas. In taking a quick glance at their financials, they anticipate increased demand in potash and fertilizers in the coming year. The company sells to USA and major international markets including Europe and Asia. I STRONGLY encourage you to view this video I produced on commodities to view population growth in Asia and anticipated long termed commodity demands. We like the potash/fertilizer space – and here’s why: Our foolish boy in parliament may repeat his strategy that he burdened the Canadian energy industry with (to appease his Reset Overlords) by limiting local farmers production. But NTR, like other companies in the industry, has plenty of other customers demanding their products.
The chart tells us that the stock has corrected a parabolic move. It must maintain its trendline. So far, so good….
And its not just Nutrien…
The main competitors of Nutrien include CF Industries (CF), Mosaic (MOS), Scotts Miracle-Gro (SMG), CVR Partners (UAN), American Vanguard (AVD), Marrone Bio Innovations (MBII), AgroFresh Solutions (AGFS), China Green Agriculture (CGA), Save Foods (SVFD), and Calyxt (CLXT). These companies are all part of the “agricultural chemicals” industry. It is my strong opinion that they are worthy of your consideration. Below is the MOS chart, which we do not hold. We like it fundamentally at this time, and have considered adding it to our platforms in the near future. Similar technical profile to NTR.
Clearly, the fertilizer capping policy by the Canadian government is quite controversial. Especially during a growing food crisis. This situation reminds me of the 2020 policies by Trudeau to cap fossil fuel exploration and cancel pipelines. That was right on the cusp of the global supply chain problem and energy crises. Timing is everything, and the timing on that decision was immeasurably bad. I cannot help but feel deja vu at this moment regarding the Potash/fertilizer sector.
However, as I noted waaaaayyyyy back in January 2022 and before then, you can’t fix stupid. But you can profit by it!!Smart readers who heeded my advice back in 2020 to buy energy and other commodities were rewarded. Making money by playing off of ignorance and ideology.
I feel the same situation may be in place for fertilizer makers. Despite losing a small amount of demand due to Trudeaus mistimed and misdirected fertilizer policies, the need for fertilizers in other developed countries, along with developing nations like Asia and emerging markets, will grow. Again….I strongly encourage you to visit this video for more on that story. Supply/demand is the basic premises of economics, and I discuss it on the video. Something our drama teacher won’t understand. But you will.
As an aside – The Trudeau government is seeking expert help on establishing best practices for both humans and animals to eat bugs. This, to deal with the food shortage crisis – which he will no doubt contribute to here in Canada.
Meanwhile, Justin Trudeau billed Canadians $370,000 for food and $3,200 for booze, all during just six trips on a government Airbus in 2019. And he’s burning the carbon in our taxpayer funded private jet going to Costa Rica right now.
I’m sure his high priced food menu doesn’t offer any bug alternatives on this Costa Rica trip. Picture Trudeau in his mansion, and his band of elites in their mansions, eating crickets – along with the rest of us. I just don’t see this happening.
Opportunity in stupidity
In the past year, we’ve been dealing with repercussions of policies like excessive spending/ debt & money supply overflow, pipeline shutdowns & capping of energy exploration, and new carbon taxes during an energy & inflation crisis. This, causing Canadians to pay far more for gas and goods.
This isn’t the UK – we’re an energy producing nation!
And now, a fertilizer reduction policy during a food crisis – hitting farmers and citizens of Canada. This, much as citizens were hit in 2021/22 by the same government over misdirected energy policies.
In the end, I can’t help but think that once again, Trudeau will win against common sense, and we may indeed harm our farmers, meaning less food for our nation. I guess we will have to learn to live with high food prices and supplement our diets with bugs. This, just as we have learned to live higher fuel prices, leaving the private jet travel and filet mignon to the elites like Trudeau.
Meanwhile, by owning shares in fertilizer and energy stocks, we should profit by the immediate demand for their products coming from other nations -even as our farmers are struggling. As an opportunistic trader, I intend to play every opportunity I see. The next one may be in nutrients.
But as a human being, I am disturbed by the growing trend towards political optics rather than common sense.