Rainfall Vs. Food Production

Generally rainfall is correlated to food production.

 

Deforestation Vs. Food Prices

Under Lula's presidency we saw a massive decline in deforestation, which lead to higher food prices. The reason for this being less farms means less food production. Also, farms are getting depleted of nutrients and will need lots of fertilizer to keep them fertile, while the Amazon would have this natural fertile ground already.

Food production has not kept pace with food prices

Food prices will not come down until production rises.

 

Natural gas will never drop

Natty will never drop. Anyone who thinks natty and food will drop again is dreaming.

Natural gas is the cheapest energy available and many will use it.

And gas supply is going to be flat.

Affordability Fertilizer

Fertilizers are less affordable now, but this should change when food prices skyrocket.

 

Crop Yields Are Stagnating

Crop yields are stagnating while the population is still growing. This means that we need either better technology, more farmland or people will need to eat less. If not, then food prices will continue to rise.

Food Price Vs. Oil Price

Food and oil/gas are closely correlated. 

China Food Inventories

Why does 25% of global population (China) need 60% of global food inventories? 

So is China right or wrong? Does China have too much food or does the rest of the world have too few food?

When we look at the food inflation numbers it's clear that China is the standard.

So that means China is right and the rest of the world has too few food.

To get back to equilibrium, the rest of the world would need to 4x food inventory.

This is massive and tells us that food prices are going to rise a lot in the future.

Nenner says natural gas is going up in the next 5 years

Nenner says food and natural gas will go up (18:00). Oil will go to $250/barrel. You know what that means for food/fertilizers.

 

Food Prices Vs. Drought

Drought is correlated with food prices. Drought monitor here.

 

Food Price Index Vs. Fertilizers

The global food price index is a leading indicator for fertilizer prices. The green line is the Gregg Ibendahl ammonia forecaster, which is a leading indicator for fertilizers.

 

 

Fertilizer price index can be found here.

 

Potash is historically not that expensive when you compare it to the yield gain. Watch the potash cost curve.

 

 

 

Watch the affordability index.

Natural gas is correlated to ammonia and fertilizer prices.

 

Fertilizers are correlated to food prices/production.

Watch the sulphur price as it is correlated to fertilizers.

Check the drought report. Higher drought means higher food prices.

The stock to use ratio is a leading indicator for food prices. Whenever stock to use ratio drops, food prices rise.

• Stock to use ratio wheat.
• Stock to use ratio soybeans.
• Stock to use ratio corn.

The crop yield is a leading indicator for food prices. Whenever crop yields drop, food prices rise. Global crop yields can be found here.

Watch the trend in meat consumption, which is the main demand for feed.

Watch the trend in growing season. As the solar minimum approaches in 2025, the growing season will drop and lead to less food production and higher food prices.

Farmland values are correlated to fertilizers.

U.S. farmland values can be found here.

Brazilian farmers use more and more fertilizers per ha.

Brazil potash imports.

Food is about to go higher

If you don't plant food, you don't eat.

Food Prices To Rise 30%

There is a correlation between food and ammonia.

Core CPI

The discrepancy between CPI with and without food and energy. 

A Sandwich Got More Expensive

Maybe I'll use more coconut oil now. 

Consumer Behaviour

What is ultimately the most important? Food.

 

Agriculture has just started

Since fertilizer prices are correlated to agricultural commodities (aka food), Verde Agritech has just started its multi-year bull market. With tensions in Belarus (Russia is occupying Belarus which provides 15% of global potash), Lithuania (supply chain disruptions) and Russia sanctions (Russia provides 50% of global potash), fertilizer prices will skyrocket.

Ammonia prices are trading below cost of production.

Natural gas is therefore correlated to ammonia and fertilizer prices.

Russia and China are already banning fertilizer raw material exports.

Fertilizer price index can be found here.

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

 

 

There is an optimal fertilizer to crop yield curve.

Video on correlation between natgas and fertilizers.