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Varchild2008 (84.44)

When and how will the AG-Flation / Fertilizer Bubble Burst?

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April 27, 2008 – Comments (4)

My REAL portfolio of late is now a little heavy in Agriculture and Fertilizer and God Forbid Ethynol Stock right now.  But the bubble will burst on these stocks just like the Tech Bubble and Housing Bubble right?

Before I get to that...These stocks should be good through this year. 

I am drooling right now at:

FEED
POT
TRA
CAGC
GENC
HOGS
DAR     

ad nauseum

But.... There's a number of things to keep watch and aware of....

 #1:  Agriculture is Cyclical in terms of the Farming Season so dump it at the end of the farming season.

#2:  Diseases happen and when they strike your money is *POOF* gone.   AgFeed Industries and other Hog Farm companies had to deal with a disease that struck Hogs and is in large part creating the AgFlation in China for Pork.

#3:  Fertilizer's price will most certainly come down as soon as enough companies expand so much that there becomes TOO MUCH fertilizer on the market and few opportunities left for expansion.   

Problem #1 happens annually.
Problem #2 is a freak occurance that strikes whenever and is perhaps a good reason not to dump 100% of your money into FEED or other similar companies that are not diversified into non-Meat sectors of Agriculture.

There's a reason people invest in KFT (Kraft) instead of FEED and that's the fact that Kraft is not 100% dependant on 1 product or their sales like FEED is.  Those little piggies get sick and FEED is sunk for the short term.

If you have the stomache to wait out a short term PIG Disease then fine.  Go long on FEED and don't even pay attention to Agriculutural, Farming Season, Cycles.  

Problem #3 shouldn't worry anyone for a couple years or so.  The biggest concern I have is if CHINA or INDIA or other nations decide  to forbid competition for Fertilizer.

Say fertilizer prices continue to go up and companies want to put a stop to that through price controls and single source buying?  If your company you are investing in whether it is POT or TRA or etc. is starting to have difficulty expanding their sales into certain nations... That's a red flag.

And maybe I'm paranoid out of my butt about fertilizer and Ag-Flation.  I plan to profit off this but I am paniced because I don't want to be the next investor who loses thousands of dollars because he/she didn't sell before the disaster struck. 

4 Comments – Post Your Own

#1) On April 27, 2008 at 10:40 PM, devoish (98.76) wrote:

If there is a food shortage because not enough acres are being planted, where is all the fertilizer potash is selling being spread? Seems to me a lot more acres have to be planted to use up more fertilizer. If they grow, there will be a lot of soy and rice and corn and wheat.

Maybe we will find out where it all went this summer.

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#2) On April 28, 2008 at 12:15 PM, motleyanimal (97.81) wrote:

There isn't much room to expand acreage for farming, so the only solution is to increase yield on existing acreage. And that requires heavy use of fertilizer.

 

 

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#3) On April 28, 2008 at 12:27 PM, motleyanimal (97.81) wrote:

There isn't much room to expand acreage for farming, so the only solution is to increase yield on existing acreage. And that requires heavy use of fertilizer.

 

 

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#4) On April 28, 2008 at 8:59 PM, Varchild2008 (84.44) wrote:

Wait for the "Anti-Ethynol" drum beat to finally win out and take out Ethynol out of our global energy sector and then tell me there's nothing to worry about regarding fertilizer stock bubbles.  Even far leftists are abandoning ethynol activism in favor of stopping the food shortage.

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