subman

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Adding Fertilizer and Mulling the Market as a Commodity [view article]
I'm long on MOS but I hedge by shorting or buying POT depending on the day. So far, its been a profitable strategy. I suppose options are the better play, but I'm not that savy on how to trade them, yet. The recent correction may or may not be over but the underlying story supporting growth in fertilizer prices and profitability remains intact and shows no sign of diminishing. While I agree that the price of rice is on the rise, I believe the reasons driving this spike in prices have little to do with corn and fertilizer. Just like the shift in acreages to corn has impacted wheat prices and soybeans, similarly, many farmers in Asia are being forcibly compelled to grow crops other than rice such as latex. Also, regulatory forces and government subsidies are driving the conversion to Ethanol-based fuels and until this pressure abates, the need for corn and indirectly, fertilizer, will continue to spike. It is incorrect that market forces will function perfectly, adjusting corn consumption downward as fertilizer and oil prices increase, replacing corn with rice in people's diets, since the industry applications for corn and Ethanol usage around the world will continue to climb. Also, much of the world remains under the control of goverment authorities that will impede the free response of markets in these countries to increases in commodity prices. May 12 06:16 PM

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