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Strategies & Market Trends : Value Investing
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To: Elroy who wrote (70559)6/26/2022 3:06:05 PM
From: E_K_S1 Recommendation

Recommended By
pak73

  Read Replies (2) of 78957
 
Yes! and where does most/all of the feed stock come from? (1) pet-coke; a by product from oil refineries and for UAN that is Sugarland TX HQ for CVR Energy and (2) Natural Gas - the dreaded 'fracking' industry (but that technology getting much more efficient & environmentally friendly).

What is the other large input for farmers other than seed & fertilizer? It's Oil, specifically diesel. Now up over +100% from 18 months ago.

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Can you guess why the feed stock and fuel prices increased so much vs 2 years ago? Many reasons but ALL Political in my opinion (Ukraine event & limited US domestic oil/ng production)!

Will these higher prices normalize any time soon? I do not see it and the reasons are due to either (1) no new capital investments because of the uncertainty of future legislation, self imposed sanctions and/or negative business environment (possible recession) and (2) US environmental rules w/ unrealistic time tables, limited lease approvals and not in my backyard mentality (ok for Mexico or even Canada).

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FWIW, I am hearing the US farmland crops need rain (especially wheat). Corn production (uses all that fertilizer) may not achieve break even due to the price of fuel and even soybeans cost are at the high end (again fuel).

Higher food prices, result in higher inflation

Maybe Brazil & South America will do better. Brazil is a huge corn producer. They have political issues to deal w/ too.
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