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  • Potash ETF To Invest In Fertilizer Industry 0 comments
    May 8, 2013 1:44 AM

    Bilateral factors are driving the investments in Fertilizer Industry today, Market Traded funds in the likes of Potash ETF or a product like, newly introduced Global X Soil, claim to gain from the anticipated increase in demand coming from the emerging markets such as India and China and thus one can easily see that why in this case more than 60% of the assets among these or similar vehicles will be listed on the emerging capital exchanges, But contrary to the ETF routes, a traditional investment in the asset has been the direct equity route, often more news driven than data.

    The suitors of the latter concept take pride in the success of Terra Nitrogen, which has since gained 110 % and next they are targeting the fertilizer equity which are increasing their production infrastructure to feed the industry demands.

    Either ways a Soil ETF will give you exposure to a close to thirty most traded securities from the fertilizer world. This is a reasonably low operational expense and controlled risks environ due to their wide spectrum exposure but a complete lack of historical data along with a limited liquidity are definitely questionable when choosing a fertilizer ETF.

    Fertilizer in simple words is a substance organic or chemical in nature that is added to soil to increase and intensify its fertility by supplying one or more nutrients essential for the growth of plants / crops. The crops are heavily dependent upon the above materials attributing about 50 % of the yield to these fertilizers. If the yields increase, the farms will make greater profits and this fact sums up a direct positive co relation.

    The produce in India is very less (almost less than half) compared to the crop harvest in United States but the population is many times higher than America, similar is the Chinese case and for these reasons both Asian countries account for a sizable share in the global fertilizer consumption.

    There is a big market for (the use of) fertilizers in emerging nations of Asia (such as India and China) and Latin America. The urbanization trend in the emerging economies of the world has led to a rise in the middle class segment and purchasing power of the natives. The local populations have begun to nurture notions associated with high quality living that definitely includes healthier and superior food items.

    Almost close to half of the global fertilizer demand comes from the above two developing countries, this will only rise further (in order to raise the farm produce) with a rise in urban populations, their earnings and increase in food demands. Also not all tracts of land are cultivable, so the need of hour is to enhance the harvest from the existing farms with the use of inexpensive yet effective manures / fertilizers.

    Even Wall Street Gurus have wielded faith in some manure producing companies and they have gained sharply in the recent past. Whether the same is repeated in the case of Potash funds and soil etf remains to be seen, for now the investment calls those only with a long term outlook.

    Invest in fertilizer industry are most often influenced by the demand and supply dynamics as the food demand increases so will the crop prices and simultaneously the fertilizer industry will perform strongly and profitably. The route can allow access to a number of thriving companies at the same time.

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