Break-even cost curves

Thread about cost curves. 

Silver:

Zinc:

Copper:

Uranium:

Tin:

Oil:

Gold:

Iron ore:

Platinum:

Palladium:

PGM:

Potash:

Lithium:

Spodumene:

Thermal coal:

Met coal: (2024)

Natural gas:

Potash Vs. Sulphur

Since 20% of sulphur demand comes from fertilizer, there is a correlation between these two commodities. In fact, sulphur is a leading indicator for potash.

 

Russia Potash Production is Cratering

Where will Brazil's farmers get their potash now? Hint: Verde Agritech.

Russia Potash Production Plunges

Russia's potash production has cratered. 

 

This has now channeled through to lower exports to Brazil from Russia.

Potash To Rise 50%

Potash is expected to rise further, possibly 50%. 

The model also predicted potash prices could rise to $1,200/ton, while MAP prices could be in the $1,470/ton range, he said.

For some perspective, the highest average retail fertilizer price tracked by DTN for anhydrous this spring was $1,534/ton. For potash prices, the high point was set at $881/ton, while MAP peaked at $1,083/ton.

Brazil Potash Supply and Demand

Brazil potash demand is rising even while supply has diminished. This is extremely bullish for the potash price.

 

Moreover, supply disruptions aren't as severe as thought. Belarus supply has been disrupted in half, but Russian supply has not changed. Israel has replaced Belarusian supply.

This means that the rise in potash price isn't fully attributable to the lack of supply, but needs to be found in the rising food price.

Potash is cheap

Potash is historically not that expensive when you compare it to the yield gain.

 

The reason for this is because food prices have gone up faster than potash prices.

Brazil Potash Imports Rising

Potash is in high demand in Brazil.

Brazil Potash Premium

Brazil potash pricing is much higher than Canada and U.S.

 

Ukraine grain shipments plunge in March

Grain shipments were 4 times lower in March compared to February. Since potash is also dry bulk like grain, we can conclude potash shipments are also falling off a cliff.

Brazil Net Exporter of Oil

There is no oil shortage in Brazil. But there is a potash shortage. Hmmmm, which company needs low gasoline prices and high potash prices? Got Verde?

Corn Vs. Soybeans

Due to high ammonia prices, farmers are shifting from corn to soybeans. This is to use less of nitrogen. However, they both still need potash! Conclusion: when natural gas rises, ammonia rises and potash will rise.

Corn uses an N-P-K ratio of 120-80-80.

Soybeans use an N-P-K ratio of 0-70-100. No nitrogen is needed because they get the nitrogen from fixating bacteria into nodules that produce plant available nitrogen.

This is the reason why natural gas and ammonia rises first and then potash follows.

Nutrien Strike

Possible strike at largest potash producer.

Nutrien is planning to increase potash production by 1 million tonnes. However, at the same time Uralkali is suspending its potash production of 12 million tonnes. Do the math.

Russian Commodities

How to play Russia. Except they forgot the most important commodity: potash.

 

Palm Oil: The Investment Thesis

It is no secret that crude oil has been falling hard lately, but a less known fact is that another commodity has fallen with it. Palm oil has been hit hard together with the decline in crude oil prices (see chart below created by Correlation Economics). The correlation between palm oil and crude oil is not so apparent before 2007. It was only when the biodiesel and ethanol industry became important after 2007 that we began to see the emergence of this correlation. When you look closely, the palm oil price moves first, while the crude oil price moves several months later. This can be an important tool for investors to predict what's going to happen with the crude oil price (OIL). But let's focus on palm oil here.

Read the entire analysis here.

Has agriculture found a bottom?

The latest interview with Marc Faber (Barron's) sparked an idea with me. In that interview he said that palm oil was going to do well. The palm oil price is very much correlated with the soybean price and we are seeing a rebound in soybeans at this moment, while palm oil hasn't seen a rebound yet. As a Belgian, the best way for me to invest in this idea is to buy shares of Sipef (SIP). These profitable companies will pay dividends of 2%-4%, way higher than what you get in European bonds and cash.

Currently, the low crude oil price has dragged the palm oil business down with it. Why you say? It's all because of the derivatives complex. But we are seeing price reversals in agriculture at this moment. For example, when we look at the overall agriculture commodity index RJA, it is showing a bottom.

Also, potash prices are finally on the rise. We have seen the first uptick move in over more than 3 years and potash companies have seen rebounds as well. So, plenty ideas for your next investment!