The U.S. Midwest is seeing the worst drought since 1956 sending corn prices soaring. In case you missed it, in late June our P.A.C.E. portfolio (precious metals, agriculture, commodities, and energy) recommended the purchase of Teucrium Corn (NASDAQ: CORN). Since then prices are up nearly 20%!
The severe weather conditions are wreaking havoc on corn crops. As a result, corn futures are trading near all-time highs and relief doesn’t seem close by. There’s little in the forecasts for rain (about a quarter of an inch) in the Midwest and the crisis seems to be spreading to the Northwest as well. This should further escalate corn and feed prices.
Ways to Profit on Rising Corn Prices
Our P.A.C.E. portfolio is poised to benefit from rising corn prices. We have owned shares in Teucrium Corn (CORN), PowerShares DB Agriculture Fund (DBA), and 3 fertilizer stocks (SQM, RNF, and UAN).
We are bullish on fertilizer stocks like CF Industries Holdings Inc. (CF), Potash Corp (POT), and The Mosaic Company (MOS). In order to get a lay of the land I wanted to spend some time covering 10 fertilizer stocks worthy of consideration for your portfolio:
Top 10 Agricultural Fertilizers
* Price and yield info as of 7-18-12
DuPont (NYSE: DD) is a diversified chemical company operating in more than 80 countries. Its massive portfolio includes agriculture, coatings, electronics and communication, construction and transportation, and safety and protection. DuPont has increased its research into genetically modified seed technologies over the years, making it one of the most prominent global seed providers.
Agrium Inc. (NYSE: AGU) engages in the retail of agricultural products and services worldwide. The company operates in three segments: Retail, Wholesale, and Advanced Technologies. The Retail segment supplies crop nutrients, including dry and liquid nitrogen, phosphate, potash, sulfur, and micronutrients; crop protection products, such as herbicide, fungicide, and insecticide products; seed products; merchandise products comprising wool, fencing, feed supplements, animal health products, and other products, such as irrigation equipment; and provides product application, agronomic, soil and petiole testing, and crop scouting services, as well as other services comprising wool sales and marketing, livestock auction, insurance, and real estate agency services. This segment markets its products and services through 1,177 retail outlets in the United States, Canada, Australia, Argentina, Chile, and Uruguay.
Nitrogen Based Fertilizers
CVR Partners, LP (NYSE: UAN) engages in the production, distribution, and marketing of nitrogen fertilizers in North America. Its nitrogen fertilizer products include ammonia and urea ammonium nitrate.
Rentech Nitrogen Partners, L.P. (NYSE: RNF) engages in the production of natural gas-based nitrogen fertilizer and industrial products for agricultural uses. The company primarily offers ammonia, urea ammonium nitrate, urea granule and urea solution, nitric acid, and liquid carbon dioxide. It markets its products in the states of Illinois, Iowa, and Wisconsin.
Terra Nitrogen Company, L.P. (NYSE: TNH) engages in the production and sale of nitrogen fertilizer products. It primarily offers anhydrous ammonia and urea ammonium nitrate solutions.
CF Industries Holdings, Inc., (NYSE: CF) through its subsidiary, CF Industries, Inc., manufactures and distributes nitrogen and phosphate fertilizer products, serving agricultural and industrial customers worldwide.
CF, TNH, RNF, and UAN are currently on our BUY LIST. They are among our favorite fertilizer stocks.
Chemical and Mining Company of Chile Inc. (NYSE: SQM) engages in the production and sale of fertilizers and specialty chemicals in Chile and internationally. The company’s specialty plant nutrients include potassium nitrate, sodium nitrate, sodium potassium nitrate, and specialty blends for crops, such as vegetables, fruits, flowers, potatoes, and cotton, as well as Ultrasol for application via fertigation; Qrop for field application; Speedfol for foliar application; Allganic for organic farming; and Nutrilake for aquaculture. It also produces iodine and iodine derivatives, which are used in a range of medical, pharmaceutical, agricultural, and industrial applications, including X-ray contrast media, polarizing films for liquid crystal displays (LCDs), antiseptics, biocides, and disinfectants; and in the synthesis of pharmaceuticals, herbicides, electronics, pigments, dye components, and heat stabilizers. In addition, the company provides lithium carbonate for use in various applications comprising batteries, frits for the ceramic and enamel industries, heat-resistant glass, primary aluminum, lithium bromine for use in air conditioner equipment, and continuous casting powder for steel extrusion, pharmaceuticals, and lithium derivatives; and lithium hydroxide, which is used as a raw material in the lubricating grease industry. Further, it offers various industrial chemicals, such as sodium nitrate, potassium nitrate, and boric acid; and potassium chloride and potassium sulfate. The company was founded in 1968 and is based in Santiago, Chile.
Syngenta AG (NYSE: SYT), an agribusiness company, engages in the discovery, development, manufacture, and marketing of a range of products designed to enhance crop yields and food quality worldwide.
SQM is current on our BUY LIST.
Phosphate/ Potash Fertilizers
The Mosaic Company (NYSE: MOS) engages in the production and marketing of concentrated phosphate- and potash-based crop nutrients for the agriculture industry worldwide.
Potash Corporation of Saskatchewan Inc., (NYSE: POT) together with its subsidiaries, produces and sells fertilizers and related industrial and feed products primarily in the United States and Canada.
The bottom line is that rising corn prices have presented a great investment opportunity in the short-term. These are also great long-term plays in my opinion as we should be dealing with food and water shortages for the foreseeable future. Fertilizer products should see great demand over the next few decades.
Join our VIP Service
“The Faith Based Millionaire”
This is Jay’s foundation book that is sweeping the country.
This is not just another book on ‘finances,’ but the first book to thoroughly cover how our values, beliefs and faith affect our finances.
“The Faith Based Investor”
Want to just hit investing specifically?
This has principles from ‘Faith Based Millionaire’ but expands on investing specifically!
- Insightful Market Commentary
- Dueling Duo Top Investment Picks
- 5 Distinct Model Portfolios — Holdings & Historical Performance
- Access to article library on a wide variety of financial topics
- 24 hour alert service – receive our latest picks a full 24 hours before we recommend buying or selling
- Online access to other faith-based investors