|Bid||0.00 x 900|
|Ask||64.00 x 800|
|Day's Range||59.79 - 60.64|
|52 Week Range||54.16 - 66.64|
|PE Ratio (TTM)||N/A|
|Beta (3Y Monthly)||0.84|
|Expense Ratio (net)||0.54%|
The latest short interest report on December 18 indicated that Deere’s (DE) short interest has moved above 2% of its outstanding shares, which indicates that the negative sentiment for the stock is rising. Deere’s short interest as a percentage of its outstanding shares increased to 2.1%, which indicates a marginal increase from the previous report. The trend indicates that Deere’s short interest is building when the stock price increases.
Nutrien, which is based in North America, has exposure to all three crop nutrients including nitrogen, phosphorous, and potassium. The company has a large exposure to potassium fertilizers—unlike CF Industries (CF) and Mosaic (MOS).
Mosaic (MOS) is a dominant player in the phosphate fertilizer segment in North America. Since ammonium-based fertilizers use nitrogen as an input, Mosaic also benefits from low natural gas prices—similar to CF Industries (CF). With Mosaic being one of the best performers in 2018, let’s look at what analysts think about the stock.
The agribusiness sector has largely remained weak in 2018. The agribusiness sector gave up its gains last week when the US and global markets saw a significant sell-off. The VanEck Vectors Agribusiness ETF (MOO) has fallen 1.8% YTD (year-to-date), while the S&P 500 Index (SPY) has fallen 1.4% during the same period. Let’s look at how three major fertilizer stocks have performed in 2018.
In the fourth quarter, Deere (DE) reported total revenues of $9.42 billion, which included financial services and other revenues. Deere’s revenues from equipment operations were $8.34 billion for the quarter—compared to $7.09 billion in the fourth quarter of 2017, which is a rise of 17.6% YoY (year-over-year). Deere didn’t beat analysts’ estimate of $8.57 billion.
VanEck announced today preliminary yearend distribution estimates for its VanEck Vectors® equity exchange-traded funds.
Fertilizer affordability is key for companies including Mosaic (MOS), Nutrien (NTR), CF Industries (CF), and Israel Chemicals (ICL). Higher fertilizer affordability helps increase the demand for fertilizers. When fertilizer prices increase, higher affordability is good for fertilizer demand, which is positive for the earnings growth. Fertilizers became more affordable week-over-week. When the Fertilizer Affordability Index is below one, it suggests that the fertilizer prices were relatively affordable last week compared to the base year of 2005 when Mosaic set the index to one.
Last week, potash prices were broadly flat to positive at the locations discussed below. The potash prices continued to have strong momentum, which is positive for companies (MOO) including Nutrien (NTR), Mosaic (MOS), Israel Chemicals (ICL), and Intrepid Potash (IPI). Let’s look at the price movements in more detail below.
Previously in this series, we discussed how DAP (diammonium phosphate) prices moved in the week ending November 2. The MAP (monoammonium phosphate) prices have also followed a similar trend, which causes concerns for companies (MOO) including Mosaic (MOS), Nutrien (NTR), and Israel Chemicals (ICL).
In the week ending November 2, the DAP (diammonium phosphate) prices were mainly unchanged week-over-week at six of the seven locations discussed below. DAP prices have hit a pause in the upward momentum that’s challenging companies (MOO) including Mosaic (MOS), Nutrien (NTR), and Israel Chemicals (ICL).
In the week ending November 2, urea prices continued to fall—a continuation of the trend we observed in the past few weeks. CF Industries (CF), which reported its third-quarter earnings last week, provided an update on nitrogen prices in its earnings update. Before we discuss that, let’s look at how nitrogen prices performed last week.
On October 31, CF Industries (CF) reported its third-quarter earnings. The company reported revenue growth of 19.5% YoY (year-over-year) to $1.04 billion. According to CF Industries, the revenues were mainly driven by nitrogen fertilizers’ higher average selling prices. However, the company stated that the sales volume was lower compared to the same period in 2017.
The company plans to hold its earnings call on November 1 at 9:00 AM. Wall Street analysts estimate the company’s sales will come in at ~$1 billion, which would be almost a 14% year-over-year increase from $0.87 billion in the corresponding quarter of last year.
In the week ending October 26, MAP (monoammonium phosphate) prices at each of the two locations discussed below experienced a weekly decline. MAP prices also continued to show weakness, which was similar to DAP (diammonium phosphate) prices, as we discussed earlier in this series. Companies (MOO) such as Nutrien (NTR), Mosaic (MOS), and Israel Chemicals (ICL) are set to report their earnings, and we’ll get to hear more about fertilizer prices during their earnings events. But before that, let’s look at the weekly movements of MAP prices.
Natural gas prices for the week ending October 26 increased week-over-week at most of the locations in the US, according to the EIA (Energy Information Administration).
Last week, the overall agribusiness sector was broadly negative with the VanEck Vectors Agribusiness ETF (MOO) declining by ~4.9% from the week ending October 19 to the week ending October 26. The overall fertilizer sector was also in negative territory with five of the six stocks discussed below ending in the negative territory week-over-week.
The Fertilizer Affordability Index moved slightly lower to 0.84x in the week ending October 19 from 0.85x in the week ending October 12. The index is issued by Mosaic (MOS). The index shows the price movement for NPK (nitrogen, phosphorous, and potassium) fertilizers in relation to the price movements in key fertilizer-consuming crops.
In the week ending October 19, urea prices in the NOLA (New Orleans) region of the US and in Brazil paused after a meteoric rise since the beginning of April. The pause impacts nitrogen players (MOO) including CF Industries (CF), CVR Partners (UAN), and Nutrien (NTR).
In the week ending October 19, the agribusiness sector was broadly positive. The VanEck Vectors Agribusiness ETF (MOO) was 25 basis points higher than the week ending October 12. During the same period, the broader market, represented by the S&P 500 Index, ended 11 basis points higher week-over-week. We’ll discuss how some of the major fertilizer stocks performed last week.
Last week, which ended October 12, fertilizer affordability was unchanged week-over-week. The Fertilizer Affordability Index, as you can see in the above chart, was unchanged at 0.85x but fell from the peak of 0.92x in the week ended September 14. The index is calculated by taking the fertilizer price index over the crop index.
Last week, which ended October 12, potash prices were broadly flat to positive in the four locations we’ll look at below. That was unlike phosphate fertilizers that saw an overall weakness. So while the phosphate segments for companies (MOO) such as Nutrien (NTR), Isreal Chemicals (ICL), and Mosaic (MOS) were weak, their potash segments had stronger fundamentals.
Last week, which ended October 12, global tensions remained high, and natural gas prices spiked as the overall stock market traded in the deep red. An increase in natural gas prices raised the costs for companies (MOO) such as CF Industries (CF), Nutrien (NTR), and CVR Partners (UAN). Let’s look at the movements in natural gas prices and the short-term outlook.
Last week, which ended October 12, was a big negative for the overall market and the agribusiness sector. The VanEck Vectors Agribusiness ETF (MOO) fell 3.5% from October 5–12, and the S&P 500 Index fell 4.1%.
On October 10, the VanEck Vectors Agribusiness ETF (MOO), which represents the broader agribusiness sector, fell about 2.9% to end at $63.2 per unit, while the broader US market index, the S&P 500, declined by 3.2% during the day.