Wednesday, May 2, 2012

Big Value In Fertilizer: POT, MOS, AGU, SOIL, YARIY.PK, CF, TNH, RNF, SQM

Currently, there are around seven billion people inhabiting our planet, but that number is forecasted to rise to nine billion by 2040. With populations rising in both developed and emerging markets, producing enough food to feed the world's citizens is becoming a paramount issue. To feed our expanding world, food output will have to increase by roughly 70% over the next four decades just to keep up with demand. While all the links along the agricultural food chain will see robust long-term gains, a value opportunity could be had on the critical first step of that chain. For investors, there's big money in dirt.

Value at the Bottom
While most investors tend to focus on the sexier agricultural plays in GMO seeds, high tech irrigation equipment and pesticides, the boring trio of phosphate, nitrogen and potash could be the better long-term play. Various constraints including the lack of available arable land, water resources and infrastructure place serious pressures on the world's ability to increase food production. While the various high tech seeds and equipment will help push back the tide, the fertilizer sector is poised to do most of the heavy lifting.  (more)

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