As a middle class emerges in countries like India and China, the demand for protein-rich foods is straining global food supplies, and that’s putting upward price pressure on fertilizer. China produces 37 percent of the world’s phosphate, and the country’s still gearing up to become a net importer of the nutrient. That demand should drive investing opportunities for years to come.
Agricultural ETFs, Industry Leaders and Small Caps
A simple way to get exposure to fertilizer stocks is via one of two major agribusiness ETFs. The Market Vectors Agribusiness ETF (NYSE:MOO) looks to replicate the performance of the DAXglobal Agribusiness Index, and the PowerShares Global Agriculture Portfolio ETF (NASDAQ:PAGG) invests in stocks that make up the NASDAQ OMX Global Agriculture Index. MOO has returned 35 percent over the past year and PAGG has fared nearly as well, returning 31 percent over the past 12 months.
Both ETFs currently hold fertilizer stocks in two of the top three slots in their portfolios. Potash Corp. (NYSE:POT) – the world’s largest fertilizer company – leads the way with MOO and PAGG dumping more than 9 percent of their capital into the Saskatchewan, Canada, company. Potash’s market cap has climbed to $55 billion as the company’s shares have risen nearly 75 percent over the past year.
MOO and PAGG also hold large positions in The Mosaic Company (NYSE:MOS), another bellweather fertilizer stock that’s up 49 percent over the past 12 months to fresh 52-week highs.
Still, better returns might be found in small-cap fertilizer stocks that are exploring for or working to bring phosphate, nitrate and potash mines online. Shares in Allana Potash Corp. (CVE:AAA) have rocketed up nearly 500 percent in the past year on new financing deals and promising drill results from the company’s projects in Argentina and Ethiopia. While I wouldn’t suggest buying shares in Allana after such a big upswing, junior miners in the sector are abundant and warrant further exploration. Among them:
IC Potash Corp. (CVE:ICP). IC Potash has launched a prefeasibility study on the Ochoa Project, which the company hopes will yield Sulphate of Potash (“SOP”) – a rarer, non-chloride-based potash fertilizer. “I am very pleased with the operational progress made to date,” the company’s President and CEO Sidney Himmel said earlier this month. “We are on plan with our primary strategic goal to be in production for 2014.”
Encanto Potash Corp. (CVE:EPO). Encanto Potash is currently exploring five projects in the potash-rich Canadian prairie in Saskatchewan. The company was formed to assist First Nations Peoples in discovering and developing the land’s resources. Encanto Potash has 100 percent potash mineral title to all of the properties and the First Nations have a 3% GORR (Gross Over Riding Royalty) upon production. The company expects to release a NI 43-101 report on its Muskowekwan property this month.
Western Potash Corp. (TSE:WPX). Based in Vancouver, Canada, Western Potash recently began a prefeasibility study for its Milestone potash project in Saskatchewan. “We are pleased to get the feasibility process underway and we are confident that this process will continue to de-risk what management believes to be one of the largest and best Tier 1 potash, greenfield, solution deposits, still available in the world today,” president and CEO Patricio Varas said last month. Results from the study are due in Q4.
Spur Ventures Inc. (TSE:SVU). Shares in Spur Ventures were up 18 percent yesterday. The Vancouver-based company has two joint ventures with Chinese fertilizer companies Yichang Maple Leaf Chemicals Ltd. (YMC) and Yichang Spur Chemicals Ltd. (YSC). Spur Ventures aims to mine some 60 million tons of phosphate from two undeveloped deposits in China and is planning the construction of two phosphate fertilizer plants in China that should produce 1.2 million tons of fertilizer a year.
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Tags: agriculture stocks, CVE:AAA, CVE:EPO, CVE:ICP, fertilizer stocks, MOO, MOS, PAGG, POT, TSE:SVU, TSE:WPX
I have a web site where I give investment advise on penny stocks and stocks under five dollars. I have many years of experience with these sort of stocks. If theirs anyone thats interested in these type of stocks . you can check out my web site by just clicking my name. I would like to comment about fertilizer stocks. their is a stock that I like in this business the company Bunge Limited symbol {BG} engages in the agriculture and food businesses in approximately 30 countries. It buys, sells, stores, and transports oilseeds and grains; processes oilseeds to make protein meal for animal feed, and edible oil products for commercial customers and consumers; produces sugar and ethanol from sugarcane; mills wheat and corn to make ingredients used by food companies; and sells fertilizer in North and South America. The company was founded in 1818 and is headquartered in White Plains, New York’ this stock has a market cap of just 11 billion dollars but the company does 45 billion dollars in annual sales. I think bunge is still a very undervalued stock that could go a lot higher. I also believe that the company could become an attractive takover target because of its low valuation.